Steinberg covers his tracks with sports ownership bill 

California Senate President Pro Tem Darrell Steinberg is nothing if not adaptable, as demonstrated by his latest dealings with the Sacramento Kings NBA team. The team’s current owners, the Maloof family, have fallen on bad times and clearly want to move the team to greener pastures, specifically Anaheim.

In 1997, Steinberg was a Sacramento city councilman and the Kings were owned by Jim Thomas. The Sacramento City Council floated bonds to give the team a $70 million loan because Thomas said if he didn’t get the loan, he’d be forced to move.

Steinberg voted for the loan. And later when he became an assemblyman, during a hiatus from the Legislature he worked for the Maloofs on an arena deal that never materialized.

The Sacramento city loan included a proviso that it would have to be repaid if the team moved. But it also contained an escape clause. In lieu of cash repayment, the Kings could simply give the city its collateral — the arena and a $20 million stake in the team, since raised to $25 million.

The arena is now valued at just $35 million, and the loan principal has grown to $77 million, including a $10 million prepayment fee. Moreover, Sacramento’s city treasurer agreed to subordinate the city loan to the millions that the Maloofs borrowed from the NBA, which clouds the issue even more.

If the Kings move and dump the aging arena on the city, there would be little cash to repay the bondholders. The city would either have to pony up the money or see its credit rating crash.

Whether the Kings really move, at least anytime soon, is uncertain. They would be entering a Southern California territory that already has two NBA teams, the Lakers and the Clippers, whose owners are not pleased by the prospect of slicing the local sports dollar any thinner.

Such shifts have become commonplace in professional sports, as team owners try to maximize lucre, playing one city against another. The Raiders NFL team moved from Oakland to Los Angeles, then moved back to Oakland.

The league has indicated it wants the Kings to remain in Sacramento at least for another year, giving more time to develop a new arena. And this could be an indirect league move to compel the financially strapped Maloofs to sell the team.

But now Steinberg, the leader of the state Senate, is carrying a bill that would require teams that move to meet all of their financial obligations to their former home cities, posting bonds if necessary.

Steinberg calls it “a simple and fair bill” and acknowledges that Sacramento’s 1997 loan terms could have been tighter. He denies that he’s just trying to save face for himself and other local politicos who agreed to a hastily and sloppily drafted deal for the Kings, saying he “just want[s] to make sure” the Kings pay up before leaving. But his bill certainly looks as if it’s about saving face.

Dan Walters’ Sacramento Bee columns on state politics are syndicated by the Scripps Howard News Service.

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Dan Walters

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Thursday, Apr 19, 2018

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