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Kings agreed to phase out revenue sharing to keep team in Sacramento

One of the biggest questions facing NBA owners as they decided whether the Kings should remain in Sacramento or move to Seattle was whether the resulting franchise would be a revenue-sharing recipient or payer. Why would an owner vote to keep a franchise that would continue to suck millions out of the league coffers on an annual basis?

We have our answer, at least in part. As part of a negotiation with NBA owners, the proposed ownership group that would keep the Kings in Sacramento agreed to phase out its receipt of revenue-sharing funds once the team moves into a new publicly funded downtown arena, a person familiar with the matter confirmed to

As part of the arrangement, the proposed ownership group -- led by software magnate Vivek Ranadive -- would continue to collect any revenue-sharing funds due the franchise during an estimated two-year period when the team will continue to occupy the bedraggled Sleep Train Arena. But the revenue-sharing spigot will shut off once the Kings move into a new arena that Mayor Kevin Johnson was able to push through the city council as the city tried to fend off the team's proposed move to Seattle.

The revenue-sharing arrangement was first reported by the Sports Business Journal. The league office declined to comment on the matter.

Last week, the owners' relocation committee voted 7-0 to recommend that the full Board of Governors reject the Kings' application to relocate to Seattle as part of a purchase agreement reached by the Maloofs and a group led by Chris Hansen and Steve Ballmer. The full board is scheduled to meet May 13 and is widely expected to follow the committee's recommendation, effectively killing Seattle's bid for the team.

Hansen has stated he's not giving up and hopes to get one more shot at making Seattle's case to the full board next week.

The Kings have been near the bottom of the NBA in payroll and revenues for several years as the franchise struggled under the crippling weight of the Maloofs' ownership and poor management. A person familiar with league finances estimated the franchise has been receiving about $15 million to $18 million a year under the league's revenue-sharing program, which was revamped after the new collective bargaining agreement with the players was adopted in 2011.

The Ranadive group's willingness to phase out revenue-sharing receipts was based on vastly improved financial projections once the team moves into a new arena in downtown Sacramento, sources said.

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