SACRAMENTO, CA - Days after the deal to build a new entertainment and sports complex in downtown Sacramento fell through, email correspondence released Monday show the term sheet red-lined by the Kings' owners, the Maloof family, and the city's response to the document.

LastFriday, NBA Commissioner David Stern said the deal for a new arena was off after a tentative deal between the league, the city of Sacramento and the Sacramento Kings fell through because of disagreements overthe term sheet. Sacramento Mayor Kevin Johnson met with the Maloofs later that day but it was clear the arena deal brokered several weeks earlier was dead.

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In the Friday meeting, the Maloofs said they sent city officials the red-lined term sheet days after a framework deal was reached in Orlando during All-Star Weekend at the end of February. Johnson said the city did not receive the modified terms when the Maloofs said they returned it.

Some highlights of the Maloofs' wanted changed:

  1. Kings did not want to provide collateral for re-doing bonds
  2. Kings did not want to sign a 30-year agreement to keep theteam in Sacramento for 30 years
  3. Kings did not want to pay pre-development costs
  4. Kings did not want to pay game-day operating expenses
  5. Kings not want to pay for municipal services (Police, traffic control, medical etc.)
  6. Kings wanted several sets of deadlines, and would have the option of pulling out if not met.
  7. Kings wanted non-disclosure of transaction and financial details

READ MORE: Maloofs' red-lined term sheet

The document notes that changes were made on March 1, 2012 at 10:41 a.m. which is the day the finalized term sheet was due.

The email chain indicates it was sent to the NBA shortly after, but there's no indication it was sent to the city of Sacramento.

The Mayor's chief of staff said it wouldn't have mattered because so many of the changes the Maloofs were requesting were deal- breakers.

The city's arena consultant, Dan Barrett, responded to the red-lined term sheet with an email and attached a document that addressed the Maloofs' requested changes.

The email, sent to Maloof family attorney Scott Zolke, said:

Attached are preliminary comments to the "redline" term sheet that you provided to me on April 13, 2012. As we discussed, we were not provided with a copy of this document before our meeting in New York with the Mayor, the Maloof family, and the other members of our respective teams. Any suggestion that we were in receipt of this document and somehow not responsive to it is simply incorrect.

As the City has done throughout this process, we are responding with our comments in a prompt and thoughtful manner. As you review our comments, please note the following:

  • Substantially all material issues identified in your redline had been previously and repeatedly discussed and negotiated for several months between the City, AEG and NBA leading up to the final term sheet that was published March 1st and approved by the City Council on March 6th.
  • The City had been working under the premise that the NBA represented the Kings in negotiations. As you know, we had countless conversations and had negotiated directly with the NBA for months.
  • The City's positions on many issues had been communicated repeatedly to the NBA (and to the Kings). Of particular surprise to us were changes requested in the redline to provisions that had been clearly communicated as non-starters for the City, most notably, the requirement that the City receive "adequate security or collateral" as part of any refinancing of the Kings loan, a shorter lease term than 30 years, an unwillingness by the Kings to pay for any predevelopment expenses, an unwillingness by the Kings to pay for municipal services, and even an unwillingness by the Kings to pay game day expenses for its own events, among others.
  • The redline that you provided was not based on the final version of the term sheet; as a result, it does not reflect certain changes agreed to by the City, AEG and NBA.

Some items that Barrett noted in the document include:

  1. City has no obligation to refinance the Kings loan. City willing to refinance the loan if adequate security and collateral is provided.
  2. City is looking for a combination of lock box, land, and a lien on the team as examples. City willing to be reasonable - see final term sheet language. If NBA is willing to provide a guarantee, the City would consider that option.
  3. City said 30-year lease was a must. Barrett wrote: "City requires a 30 year lease. The Kings indicated they wanted a 15 year lease (potentially with termination penalties) in the meeting with AEG on March 21. This is simply not acceptable."
  4. City refused to pay more than 50 percent, pointed to AEG stepping in to reduce Kings' contribution to 25 percent.
  5. As for game-day expenses, Barrett wrote, "Issue has been raised and discussed with NBA. Virtually every NBA team pays for its own game day expenses. Kings must pay game day operating expenses."
  6. Barrett replies that the issue of paying for municipal services has been discussed, Kings are currently paying this at Power Balance Pavilion.
  7. Barrett said the Kings request for luxury and furnished suites needed to be discussed with AEG.

READ MORE: Barrett's response to Maloofs' redlined term sheet

While sending out Barrett's response to the city council, Sacramento Assistant City Manager John Dangberg wrote:

Mayor and Council,

Earlier today, Dan Barrett sent an email to Mr. Scott Zolke, attorney for the Maloofs.

Dan's email contains the City's feedback on a "redlined term sheet" that the Maloof family first shared with the City last Friday, April 13 (also attached) during the Mayor's meeting with the Maloofs in New York. It has been inaccurately suggested publicly that the City was in receipt of this document prior to April 13 and was somehow non-responsive.

The "redlined" version is attached, along with Dan's comments.

This feedback is intended in the spirit of the City's consistent efforts to be responsive and transparent, and should not be seen as somehow re-opening negotiations with the team.

A brief review will show that this document was not a serious attempt to reach a constructive outcome within the framework of the Orlando deal, or with the City's best fiscal and economic interests in mind. Several requested changes (e.g. striking out language requiring adequate collateral for the Kings' loan) were completely at odds with positions the City had consistently made clear as non-negotiable items from the very beginning of the negotiations.

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