Steinberg relocation bill passes first obstacle.

Thanks to the Sacramento Bee, we have learned that California Senate President Pro Tem, Darrell Steinberg, received the necessary three votes to get his “Kings Bill” or Senate Bill 652 through its first political hoop today.  Clearly intended to complicate the Sacramento Kings’ move to Anaheim, the bill would force a California sports franchise to first pay off any debts with a public entity before they would be allowed to negotiate a relocation agreement with another California public entity:

 

This bill would prohibit a professional sports team that has
previously entered into a financial agreement with a public entity
from entering into a relocation agreement, as defined, unless it
first provides to the public entity a bond, undertaking, or deposit
in an amount adequate to ensure that its obligations under the
financial agreement will be satisfied. The bill also would prohibit a
professional sports team from entering into a relocation agreement
if that team is in breach or default of any financial agreement, or
if entry into a relocation agreement would cause a breach or default
of any financial agreement, unless and until the breach or default is
cured.

The Sacramento Kings owe the City of Sacramento more than $67 million from a 1997 bond issuance that was paid out to the previous majority owner.  There is an early pay-off penalty that increases that figure to nearly $77 million.  The original bond issuance has language that might leave the door open for the Maloof family to buy back a $25 million stake in the club from the City, but leave the Arco Arena property behind to satisfy the remainder of their financial responsibilities.  If this were to occur, the City would be on the hook for any shortfall should the Arco property not sell for the necessary $52 million (after fees).

Although the Maloof’s have continued to profess that they would make the City whole on the bond measure, Senator Steinberg’s bill is meant to ensure just that.  The bill will need a 2/3 vote from both houses in order to become in effect immediately.  The Maloof family has until May 2nd to announce their intentions to either stay in Sacramento or attempt to relocate to the City of Anaheim.  If the Maloof’s do decide to leave, it will be at great personal expense.  Between the $77 million owed to the City of Sacramento and a standard NBA relocation fee of some $30 million, the Maloof’s are on the hook for $107 million and that is before the NBA even begins to talk about monetary adjustments for both the Lakers and Clippers for territorial infringement.

The Maloof’s already worked out a deal with the City of Anaheim for a $75 million bond issuance, $25 million of which was supposed to go to stadium upgrades at the Honda Center, while the remaining $50 million was to go directly to the Maloof’s for relocation expenses.  Political consultant Rob Stutzman of Sacramento blocked the Anaheim bond issuance last week by collecting thousands of signatures in Anaheim, forcing the city to hold a public vote before money can be distributed.  Stutzman’s work will stymie the $75 million bonds until 2012, unless a costly special election is held.

While Sacramento is not known for its fortune 500 businesses, it is the political capitol of California.  Kudos to Steinberg and Stutzman for fighting fire with …. water, lots of water.