No one really knows what the Maloofs are thinking at any point in time, and that's by design. When a family makes its mark in gaming, as the Maloofs did in the 1990s, it develops a good poker face. When a family is insular by nature and reeks confidence, the public just doesn't penetrate. There's a reason so much mystery surrounds the motives and plans of the Maloofs, who potentially watched a plan to move the Kings from Sacramento to Virginia Beach crumble last week. The Maloofs remain a mystery because they like it that way.
For now, at least. Joe and Gavin Maloof, the eldest of five children, weren't always so camera shy. In fact, for a period of time, they were the exact opposite of camera shy. They appeared in a Lil' Wayne video, could be found smiling on whatever red carpet they stumbled upon and filmed this, a paean to the carnivore class of the 1 percent:
Yes, that ad does boast about the Maloofs' net wealth. Can you imagine any other NBA owner doing that? That speaks to a central quality of the Maloof family: it is proud. Part of it all is a playboy schtick that Joe and Gavin, the stars of that ad and the visible masters of the Kings franchise since 1999, honed beautifully back when their team was on national TV 20 times a year and in the playoffs every spring. Part of it is that Maloof pride. They built immense wealth. Why shouldn't everyone know it?
Well, it's a bad idea to boast about immense wealth when you're asking taxpayers to help build a new arena, as the Maloofs were in 2006 when this ad began running 25 times per Kings broadcast in Sacramento. That deal died for any number of reasons, but many Sacramentans forgot all of the other contributors and remember this ad, that Dean Martin ditty, those women, that wine, that glossy sheen and that net worth boast. "$1 billion." It was probably never even true, but that didn't stop the Maloofs from saying it and it didn't stop Sacramento from believing it. And the blowback from this ad and the subsequent failure of the local arena tax measure in Sacramento was impressive. Sacramento doesn't have a reputation as a grumpy town, not like Philly or Cleveland. But when Sacramento gets grumpy, you know it. And it's not pretty.
And Sacramento has been grumpy at the Maloofs since 2006.
But it's important to point out that, though 2006 was a long time ago, the Maloofs are still in Sacramento. The Kings are still in Sacramento. Most teams playing in grumpy cities bail much more quickly: the Hornets lasted four years in Charlotte after George Shinn slapped the city in the face. The exit of the Sonics from Seattle was even more swift, taking only a sale to an Oklahoman and a terrible stageshow in which said Oklahoman pretended to want to stay, the Seattle billionaire who sold him the team pretended to care and the politicians involved flailed like sea lions in the desert. The Kings are still in Sacramento, six years after the Maloofs, for the most part, became personas non gratas in Sacramento. That's something.
It's not like the Maloofs couldn't use the money that would come if they sold the club. (And they are plenty of interested buyers, from Chris Hansen in Seattle to Larry Ellison in San Jose to Henry Samueli in Anaheim to Ron Burkle, who has committed to keeping the team in Sacramento.) Since that Carl's Jr. ad, the Maloofs' net wealth has fallen precipitously from anything close to $1 billion. While that ad was playing on repeat in Sacramento, the second tower of The Palms, as imagined by George Maloof, Jr., was welcoming its earliest guests. Replete with huge luxury suites and clearly aimed at the young and rich, it was a wonderful backdrop for the Vegas boom of the times. But after 2006 was 2007. And the entire nation -- not just the young and rich, not just Vegas -- felt 2007. Vegas felt it the most. The young and rich dried up, and so did The Palms.
With Sacramento's arena issues in the background, the Maloofs' core business fell off hard. The Palms became a money loser -- a big one -- as financing the debt created to build that second tower became overwhelming. The Maloofs shuttered the WNBA team in Sacramento, citing operating costs that reports said were $1 million a year. (Since when do folks who drink $6,000 wine for lunch miss $1 million?) Reports leaked that they were flying coach between Vegas and Sacramento. (Coach!) Bank stocks tanked as the financial crisis blew up, and wouldn't you know it? A huge chunk of the Maloofs' reserves were tied up in shares of Wells Fargo.
The debt became so massive that in late 2009 the family decided to sell their New Mexican liquor distributorship for a reported $400 million. This was said to be the family's new moneymaker, its blue chip. Liquor and beer don't lose in a recession. The casino and resort lost big. The bank stocks lost big. The basketball team lost big. Liquor and beer? They aren't supposed to lose. But selling the business -- the business that their father George Sr. had built from nothing to plant the Maloofs' feet in the ground -- became the only way to become liquid enough to save The Palms. So the Maloofs sold it, their dad's business.
And they lost The Palms anyway.
Raising money from the sale of the distributorship wasn't enough to erase the massive debt piled up from the construction of the second tower, and in late 2011 the family's creditors took over the casino and resort. The Maloofs now own 2 percent of the hotel they built. Two percent.
But here's the question that always stuck with those of us who pay way too much attention to all of this: if you need cash, why not sell the Kings? There are buyers, plenty of them. It's not a revenue-generating business, and if you do it right, it may never be. The days of rap videos, burgers with Bordeaux and feature spreads in The New York Times Magazine are over. When The Palms' future was at stake, having another few hundred million dollars would have helped. Even now, re-investing the money tied up in the Kings could help the Maloofs re-invent themselves. Why not sell?
That one's all about Joe and Gavin, and it goes all the way back to 1979.
You see, Joe and Gavin are roughly a decade older than George Jr. In 1979, George Sr. got the itch to own a pro sports team. The Houston Rockets were up for sale. So he bought them for less than $10 million. Joe and Gavin were in their early 20s. They became integrally involved in running the team -- not just the basketball side (though they were involved there), but the business side. They sat courtside every night. They fell in love with the game. George Jr. was a teenager, and while he's never talked to the media about that time in his life, one assumes he had fairly mundane teenaged interests in addition to the family's pro sports team, budding bank in Albuquerque and alcohol distributing business. At the very least, he wasn't in any sort of leadership position with the Rockets -- he didn't get to run the team like Joe and Gavin did.
In 1980, George Sr. died of a heart attack. Gavin, then 24, took over as president of the Rockets. (He's still the youngest team president in major American pro sports history.) Joe, then 25, kept the Rockets in his portfolio, but also managed the other family businesses. George Jr. was 16.
George Sr.'s sisters -- that'd be the boys' aunts -- had an equal stake in the Maloof empire, too, and had no interest in pro sports and, perhaps sensing their own mortality, wanted to liquidate the businesses and cash out. The boys and their mother, Colleen, had no such interest. The aunts particularly loathed the family ownership of the Rockets, thinking purchasing it had been George Sr.'s boyish folly and that it was a hobby, not a growth industry. To stave off a battle to sell off all of the business George Sr. had built from the ground up, the Maloof boys agreed to sell the Rockets. (They made $11 million.) The concession didn't stave off the aunts, though: a year later, a decade-long legal battle with the aunts began. It wasn't resolved until 1990.
I talked to Gavin in June 2011, just after the family had declined to file for relocation to Anaheim. He said that agreeing to sell the Rockets remains his biggest regret in life. It's easy to see why: David Stern took over the NBA in 1984, MJ showed up and the league exploded. Gavin says his dad saw all of that coming -- not the specifics, but that there was huge money to be had in pro sports. That's why he bought the Rockets. Gavin and Joe were there in the guts of the Rockets, and when they look back, they can't help but imagine themselves playing integral roles in the rise of the league. The Rockets were good, remember -- in the Maloofs' final year of ownership, Houston went to the NBA Finals -- and the city itself has boomed. The Maloofs sold the club for $11 million in 1982. It's currently worth more than $400 million. Biggest regret ever? Yep, I see it.
Once the legal battle with the aunts ended, Joe and Gavin tried endlessly to get back in pro sports. They bought a World League team in Alabama. They were in final escrow to buy the Tampa Bay Lightning. (Gavin says they pulled out at the last minute because one of their finance guys was confident pro hockey in Florida wouldn't break even unless they sold out every game.) They almost bought the Toronto Raptors in 1997. (Let that soak in for a while.) They finally got back into the NBA in Sacramento in 1999. They inherited some debt ($70 million to the city), a rapidly aging arena and a team poised to be great with a little more cash on hand. The Kings soared. The Maloofs soared. Sacramento soared.
The Kings crashed. Sacramento crashed. The Maloofs crashed. And here we are.
What's worse than making a decision that turns out to be your greatest regret in life? Making virtually that same exact decision again. Gavin and Joe regret selling the Rockets every single day. And you think they are going to agree to sell the Kings? These are desperate times, but apparently not desperate enough to repeat history. (One wonders if enough desperation will materialize in the near future.)
George Jr., meanwhile, fancies himself the brains of the operation. He appointed himself the point person on all arena matters a few years ago. The reasons are unclear. Was it because you don't really see his face in that Carl's Jr. ad? Was it because he has the expertise in financing very large, very expensive buildings? (Never mind that he also has the expertise in being crushed under debt of his own creation.) Does he believe Joe and Gavin to be too emotionally attached to Sacramento to see the dollar signs popping up in cities like Virginia Beach?
Whatever the case, his sneering, churlish performance in the infamous New York City press conference that killed Sacramento's arena deal -- a deal that had made Gavin cry in front of cameras, that led to Gavin and Joe raising their arms with Mayor Kevin Johnson at center court of a Kings game -- made George more reviled in the city than a thousand $6,000 Combo ads could have. The common perception in Sacramento these days is that George continues to drive the relocation train, and some believe he even wants to sell the club and re-invest the proceeds back into Vegas. (The family has an option to re-purchase up to 20 percent of The Palms.) George doesn't believe he killed the family fortune by overextending himself in a boom period with that second tower. He thinks the economy tanked it. He wants another chance. He wants to be back on top. Remember: the Maloofs are a proud bunch. George can't like the looks he gets from the casino operators who survived the Great Recession in tact. He can't enjoy the mocking tone of Kings fans who call him "The 2 Percent" in a nod to the Occupy movement. He can't enjoy any minute he's reminded that the Kings are in Sacramento and that his two older brothers like it that way.
The Maloofs employ a dynamic that requires the entire clan -- all four boys (including Phil, the youngest who has been to this point uninvolved in the Kings), daughter Adrienne (who you know from Real Housewives of Beverly Hills) and matriarch Colleen -- to reach consensus on big decisions. It was that dynamic that led the family to hole up in a Los Angeles mansion for two days in May 2011 as the deadline to file for relocation approached. Gavin and Joe, who wanted to give Sacramento another chance, won that time. Gavin even told me a month later that it took some convincing to get more skeptical members of the clan -- that'd be George -- on board. But it happened, and Sacramento came through with a plan that city officials, the NBA, a major operator (AEG) and, for a spell, the Maloofs themselves liked. George must have won that next vote to pull the rug out, or he just tanked it on his own.
Now, we see whether Joe and Gavin have the will to overpower their little brother again and do what they know to be right: keep the Sacramento Kings right where they found them.
***
The Hook is an NBA column by Tom Ziller. See the archives.
