Sports Authority

Loss Recovery

KINGS SCORE BIG WITH PRIVATE EQUITY BUCKS

Photo by Aniko Kiezel

Some NBA teams don’t worry about balancing the books. Their owners swim in deep green seas of personal wealth. They treat league membership as an extension of their entitlement, a bragging right with benefi ts of ballooning equity.

The Kings are different. Their owners are rich, relatively speaking, but can’t matchup against billionaires. A welterweight bank account is a big disadvantage in a game played by heavyweights.

NBA players and their agents recognize the Kings’ fi nancial anxiety. Nobody wants to waste time and talent on a tourist-class franchise. The Kings are tourist class: no legroom, extra fees for a sandwich and baggage, best to avoid.

The welterweight bank account almost sank the Kings under the

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By R.E. Graswich Sports Authority

pandemic. While NBA teams are guaranteed to grow in value, they demand signifi cant cash fl ow to keep the doors open. Suddenly, the Kings had zero cash fl ow and serious problems.

To compensate for canceled games, the NBA and players union allowed teams to withhold about 25 percent of salaries. The Kings went further. They laid off staff and used a loophole in their city lease agreement to skip payments on Golden 1 Center. They rented out old Arco Arena as an emergency COVID hospital. They tapped an internal NBA charity fund to help struggling teams survive fi nancial convulsions.

The NBA is sympathetic toward poorer owners, but generosity has limits. Financially soft ownerships eventually have to go. Many have been pushed out as the game became more expensive.

Historically, the Kings have languished among the league’s lowbudget operations. Fiscal distress clouded the Cincinnati and Kansas City eras. After moving to Sacramento in 1985, the team sweated to pay bills. Players sprinted to the bank to cash paychecks, fearing the paper would bounce. Vendors were stiffed, team credit cards canceled.

Today, things are different—not because managing partner Vivek Ranadive swims in money (by NBA standards, he just wades), but thanks to new investment rules to accommodate fi nancially weak teams.

The new rules allow private equity groups to buy into NBA clubs. The embrace of private equity is a big policy shift for pro sports. It means teams don’t have to constantly tap their stockholders when stars demand pay raises. Capital calls can wreck small-time owners and their partners, especially the Kings.

Until recently, private equity money was barred from the NBA. The league’s stockholder model relied on car dealers, real estate guys and eventually tech moguls—the local business community.

The Kings are a good example of the old ways. Unable to purchase the team on his own, Ranadive corralled Bay Area fi tness club operator Mark Mastrov and a bunch of buddies in 2013. He sold stock to several local businessmen, including Mark Friedman and Kevin Nagle. The group bought the Kings and quickly expanded into Downtown real estate, which helped reduce the pain of a loss-making basketball team.

Eight years and one pandemic later, with no end to the ruinous cost of running the Kings, Ranadive turned to private equity. The timing was perfect. Major League Baseball was fi rst to welcome passive professional investment in 2019. The NBA soon followed.

Last June, the San Antonio Spurs sold shares to equity investors. The Kings jumped in months later. Mastrov, Friedman, Andy Miller, Brad Jenkins and Shaquille O’Neal sold out to Arctos, a private equity fi rm that manages $3 billion in assets. Nagle dumped most of his Kings stock.

Can private equity dollars improve the Kings? Not likely. Arctos can’t get involved with basketball operations (unfortunately). But institutional investors don’t care about courtside seats. They care about profi ts, which arrive only when the team is sold. Until then, Arctos brings something more important than a playoff invitation: cash.

R.E. Graswich can be reached at regraswich@icloud.com. Previous columns can be found and shared at InsideSacramento.com. Follow us on Facebook, Twitter and Instagram: @ insidesacramento. n

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CLUE: The Musical

May 4 – May 22 Sac Theatre Company 1419 H St, Sac 95814 Sactheatre.org

Based on the internationally popular board game, this fun-filled musical brings the world’s best-known suspects to life and invites audience members to pick the who, what, and where cards and then play along to help solve the mystery: who killed Mr. Boddy, where in the mansion, and with what weapon. There are over 200 possible solutions but only one hard-nosed female detective is qualified to unravel the merry mayhem. Comic antics, interactive fun, and a possible surprise twist await you in this clever who-dunnit! Subscriptions are currently on sale for our 2021-2022 in-person Season of WHO, WHAT & WHERE. Single tickets go on sale September 7th. The ASL Interpreted performance will take place on Friday, May 20th at 8:00pm

The Barber of Seville

May 7 Presented by Sacramento Philharmonic and Opera SAFE Credit Union Performing Arts Center 1301 L St, Sac Sacphilopera.org

Many years ago, two great composers once met in Vienna. “Rossini, I congratulate you. The Barber of Seville delights me. It will be played as long as opera exists,” Ludwig van Beethoven excitedly told him! The Sacramento Philharmonic & Opera presents Rossini’s masterpiece, The Barber of Seville. Fully staged, with costumes, lighting, and sets – at the new SAFE Credit Union Performing Arts Center. The Barber of Seville will truly be a performance to remember!

Tootsi

May 17 – May 22 Presented by Broadway Sacramento SAFE Credit Union Performing Arts Center 1301 L St, Sac Broadwaysacramento.com

Call it “musical comedy heaven” (Rolling Stone). Call it “the most uproarious new musical in years!” (The Hollywood Reporter). Call it TOOTSIE! This laugh-out-loud love letter to the theatre tells the story of a talented but difficult actor who struggles to find work until one show-stopping act of desperation lands him the role of a lifetime. “In these turbulent times, when the world seems out of balance, we need a place to let the good times roll,” raves Rolling Stone. “TOOTSIE is it!”

Livin’ Fat

May 6 – May29 Celebration Arts 2727 B St, Sac Celebrationarts.net

LIVIN’ FAT, directed by Michael Benjamin. Set in the 70s, the Carter family is guaranteed to warm your heart and make you smile.

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