As a lifetime Seattle SuperSonics fan and former Sonics employee (best college job ever), I was excited when I got a call from Q-13’s sports director Aaron Levine to get an opinion on the latest drama involving the Sacramento Kings who may soon become the Seattle SuperSonics.
To make a long story short, the Sacramento Kings have a minority owner who controls 7% of the team and filed for bankruptcy. This means that a bankruptcy trustee was assigned to his case and has the duty to liquidate non exempt assets for the benefit of his creditors. As I have read, there is a auction date to be held in April, with the interest going to the highest bidder. The partnership agreement among the current Kings ownership group may contain a “right of first refusal” which would allow minority owners to match any offers for the team. As it stands now, none of the minority owners can afford to match the offer made by Seattle native Chris Hansen, however if the partnership agreement states that a right to first refusal may be transferred to any new owners then this may cause a problem in a potential sale if the shares are picked up by a billionaire, such as Ron Burkle who is interested in keeping the team in Sacramento. The bankruptcy trustee is tasked with getting the most he can out of the 7% however he must administer the bankruptcy estate in a fast and efficient manner. An argument that the bankruptcy trustee could argue is that if the right of first refusal is not transferable, then the value of the shares may drop significantly therefore discriminating against Cook’s creditors.
In my opinion I think this strategy is too little to late for Sacramento. The Hansen group has a binding agreement which will surely be approved by other NBA owners and the NBA board of governors. At the end of the day, having a basketball team in Seattle is better for NBA owners and for the NBA with TV revenue sharing. There is also the issue of the auction for the 7% share being held in April, but by that time the sale of the team may already be finalized and voted upon, including voting on relocation to Seattle.
If you have additional questions please visit our Washington State bankruptcy lawyer homepage.