Covington & Burling and Milbank, Tweed, Hadley & McCloy have landed the lead M&A roles negotiating a potential sale of the National Basketball Association's Sacramento Kings to an ownership group that is expected to move the team to Seattle next season.
Yahoo Sports broke the news this week of the proposed sale of the Kings, whose future in California's capital city has been in doubt for several years as a result of the deteriorating finances of the Maloof family, which took control of the team in 1999.
The Maloofs made their fortune in the entertainment and gaming industry, which has been hit hard in recent years amid the economic downturn. The family sold its majority stake in Las Vegas's Palms casino in 2011 and now appears poised to unload the Kings for $525 million—a record sum for an NBA franchise—to a group led by hedge fund manager Christopher Hansen and Microsoft CEO Steven Ballmer, according to an unconfirmed report on Friday.
In order for the Kings to move to Seattle next season, the team's new ownership group must submit relocation plans to the league by March 1. A source with knowledge of the sale talks told Yahoo that it was "first and goal at the one" in terms of the Kings being sold.
The Am Law Daily has learned from two sources knowledgeable about the matter that Adam Moses, a corporate partner with Milbank in Los Angeles, is taking the lead for the Maloofs on the Kings sale talks. Moses did not respond to a request for comment, nor did Milbank financial restructuring coleader Paul Aronzon, who has handled work related to the Palms in Las Vegas. (Aronzon led a Milbank team that helped Station Casinos—which took control of some of the Maloofs casino properties a decade ago—exit Chapter 11 proceedings in 2011.)
David Price, general counsel for the Kings and a solo practitioner in Roseville, California, declined to comment on the potential sale of the team when contacted by The Am Law Daily. Price—who has served as outside counsel to the Kings since the team moved to the city in 1985 from Kansas City, Missouri—took over the general counsel role in 2010 after the departure of the franchise's previous in-house legal chief Jason Levien.
Levien, a former sports agent, was part of an ownership group that bought the Philadelphia 76ers for roughly $280 million in 2011. He went on to become the new CEO and managing partner of the Memphis Grizzlies last fall following the close of that team's $377 million sale to technology investor Robert Pera. (Levien was also part of a group that bought Major League Soccer's D.C. United last year.)
The Kings are the latest NBA team to hit the auction block despite more than two years of efforts on the part of city officials to keep the team in Sacramento. That campaign appeared to be on the verge of success in early 2011 when a civic group represented by Jeffrey Dorso, chair of the land use and environmental law group at Sacramento's Diepenbrock Harrison, successfully fought off a bid to move the Kings to Anaheim, according to our previous reports.
But Diepenbrock Harrison broke up shortly thereafter, and in early 2012 the Maloofs backed out of a handshake deal to keep the Kings in Sacramento that would have used municipal funds to help finance a new home for the team to replace the outdated Sleep Train Arena.
NBA executive counsel for business and finance Harvey Benjamin, a former Proskauer Rose partner, mediated the talks between city officials and the Maloofs, whose lawyers from Loeb & Loeb submitted a huge public records request for details on the proposed arena financing deal. The Associated Press reported at the time that the deal called for the city to contribute $255.5 million in public funds through the leasing of parking garages around a new arena, the Kings another $73.5 million, and $58.75 million coming from sports and entertainment giant AEG, which would run the new facility.
