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City treasurer explains Kings’ contracts

Kings vs. Mavericks, Dec. 4, 2010

City Treasurer Russ Fehr explained the city’s contracts with the Sacramento Kings in a Tuesday interview, saying that the 1997 contracts anticipated a scenario in which the Kings may move.

Kings owners are legally bound to pay the city $77 million in lease revenue bonds before relocating.

Fehr pointed out specific paragraphs in July 1, 1997 agreements that say that if the Kings have not paid their loan, they cannot move out of town. The city’s concern that the Kings repay the loan in light of the team’s possible move is not a new development, Fehr said.

“It was thought of 14 years ago” in the 1997 contract, Fehr said.

The 1997 agreements were made between the city and the Kings’ former owner, Jim Thomas. The Maloofs assumed the debt to the city in 1999, when they purchased a majority share of the team.

A “team owner’s relocation assurance agreement” between the Sacramento Kings Limited Partnership and the city includes language saying that the Kings must pay their debt.

“That’s what we’re trying to enforce,” Fehr said last week, referring to the relocation agreement, which is a public document.

The agreement confronts the possibility of the Kings leaving town without paying the loan.

“The team owner hereby covenants and agrees it will not relocate the Kings from Sacramento, California to another venue if the city obligation is not satisfied,” according to the document.

If the Kings move to Anaheim despite the rules in the contract, they would still have to pay back the loan and would also be the arena’s owner.

The Kings face an April 18 deadline to ask the NBA if the team can be relocated.

View the contract here.

Staff reporter Suzanne Hurt contributed to this report. Kathleen Haley is a staff reporter for The Sacramento Press. 

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