The Work

April 15, 2011 7:11 PM

The Score: A Sacramento Lawyer Works to Save the Kings

Posted by Brian Baxter

If one Sacramento lawyer has his way, professional basketball in California's capital city will not end with the conclusion of the team's season this past week. The Sacramento Kings, who lost to the Los Angeles Lakers 116-108 in overtime on Wednesday night, could soon be headed to Anaheim.

Kings owners Joe and Gavin Maloof, two billionaire brothers who made their fortune in the entertainment business, are planning to file documents with the league to move the team to Anaheim for the 2011-12 NBA season. The brothers have been seeking a new arena for the Kings, which currently play in the outdated 17,300-seat Power Balance Pavilion.

The Maloofs are represented by Loeb & Loeb media and entertainment partner Scott Zolke in Los Angeles. Their deadline to produce a relocation application for the move to Anaheim to the league originally was set for April 18.

On Friday, NBA commissioner David Stern announced that the league had extended the deadline to May 2, giving the lawyers involved two more weeks to work their magic.

Jeffrey Dorso, chair of the land use and environmental law department at Sacramento firm Diepenbrock Harrison, is representing the Committee to Save the Kings. The group is an ad hoc collection of local business leaders and Kings fans, Dorso says, and it hopes to prevent the team from relocating to Anaheim.

Dorso"I grew up in this area and I've been a Kings fan for a long time and always had an interest in sports," says Dorso (pictured right), who is handling the matter pro bono. "People seem to think Sacramento is a small town, which it is, but as a media market we're actually the twentieth-largest in the country, larger than several other markets that have thriving NBA franchises like Charlotte, Portland, and Utah."

One of Dorso's legal strategies in preventing the Kings from moving is blocking a $75 million bond offering by the city of Anaheim being used to finance a potential relocation of the team. Dorso says about $25 million from that sum will be used for improvements to Anaheim's 18,300-seat Honda Center, where the Kings would play, with the remaining $50 million able to pick up relocation costs and a fee the Maloofs would have to pay to other NBA owners to move the franchise.

As Dorso sees it, if Anaheim's city council approves a resolution allowing for an issuance of the bonds without taxpayer approval, it would be violating California law. Dorso requested that the resolution be amended so that the selling of bonds could only go into effect after 60 days, giving his group enough time in the interim to collect signatures from Anaheim residents calling for a public referendum repealing approval of the bonds.

Dorso's effort so far has been fairly successful, to the chagrin of some Anaheim supporters. The lawyer says that within the next two weeks he should have enough signatures to file for a referendum by May 2. The next time such a referendum could be scheduled is June 2012, thereby postponing an imminent move of the Kings. Anaheim could still line up the necessary $75 million from elsewhere, but Dorso says the "deal points" of any potential transaction would change.

Sacramento city attorney Eileen Teichert is advising the city in its efforts to hang on to the Kings. The city's mayor, Kevin Johnson, is a former NBA player. After the Kings concluded their season this week, Johnson flew across the country to meet league officials and executives in New York to pitch a rescue plan for the team. Johnson's pledge includes more corporate sponsors, plans for a new arena, and even a potential new owner for the team in billionaire Ronald Burkle.

But the Maloofs reportedly have no interest in selling the franchise to Burkle or any other group that comes forward to try and keep the team in Sacramento. Loeb & Loeb's Zolke, who is advising the Maloofs, did not respond to a request for comment.

The Maloofs bought the Kings in 1999 and for many years the team was successful. But the team's financial fortunes took a turn for the worse in recent years as the economic downturn left the Maloofs cash-strapped. (Earlier this year reports surfaced that the Maloofs were considering selling a controlling stake in one of their signature properties, The Palms Casino & Resort in Las Vegas.)

Dorso says there are other issues complicating a potential move of the Kings to Anaheim. Another franchise in Southern California would impinge on the territory of the Lakers and Los Angeles Clippers. Dorso says the Lakers have a lucrative television contract that contains a provision calling for it to substantially decrease in value if a third NBA team moves into the Greater Los Angeles media market.

"This is certainly an important issue for our community," Dorso says, "and I just hope that I can help out in some way."

The next two weeks will likely see a lot of work occur behind the scenes by various parties seeking to push forward or stymie a potential move of the Kings. The Am Law Daily has previously reported on lawyers seeking to preserve and acquire NBA franchises in cities like New Orleans and Louisville.

Ex-Linebacker Slams Greenberg Traurig

Bill Romanowski, a former NFL linebacker for the San Francisco 49'ers and Denver Broncos, has sued Greenberg Traurig over the firm's alleged role covering up a tax scam that cost him and his wife about $1.3 million, according to the Denver Post.

Harvey Steinberg and Jeffrey Springer, founding partners of Denver's Springer & Steinberg, are representing Romanowski in the suit. According to a 15-page civil complaint, Romanowski claims that he invested millions in a racehorse-breeding program in order to collect millions more in tax write-offs. But the company running the program, ClassicStar, later collapsed leaving Romanowski holding the bag for millions in losses.

The former linebacker-turned-bestselling author now claims that Greenberg Traurig steered him into making the investment because the firm was also working for ClassicStar and had an incentive to bring in new investors.

Michael Hutchinson of Denver's Treece Alfrey Musat & Bosworth is representing Greenberg Trauring in the case. A firm spokeswoman said in a statement to The Am Law Daily that "we plan to vigorously defend the firm in this matter and when all the facts are known we are confident we will be vindicated."

Ownership Carousel

Four current and former owners of major professional sports franchises made legal-related news this week.

Bingham McCutchen's adventures with Los Angeles Dodgers owner Frank McCourt continued this week as the firm filed suit against its former client, as reported by The American Lawyer's Drew Combs. The ongoing dispute is tied to McCourt's divorce case, the subject of a March feature story in the magazine, which ended with a judge invalidating a marital property agreement granting McCourt sole ownership of the team. McCourt is now publicly lashing out at Bingham.

We reported last week on Bingham and Katten Muchin Rosenman's roles advising on the sale of the NBA's Detroit Pistons to private equity billionaire Tom Gores. But Fortune's Dan Primack wrote an interesting piece this week questioning whether it was Gores or his firm, Platinum Equity, which was buying the franchise. The New York Times's DealBook has more background on Gores, who met with NBA officials on Thursday.

The bankruptcy battle over ownership of baseball's Texas Rangers might be over--it did mint one of The American Lawyer's Dealmakers of the Year--but litigation between some of the same parties continues. The team sued its former owner Tom Hicks this week in state court in Tarrant County, Texas, as part of an ongoing dispute over a stadium parking agreement, according to the Fort Worth Star-Telegram.

And while the NFL lockout continues to drag on, one of the league's lead negotiators, New York Giants owner John Mara, has his hands busy with jury duty. The Associated Press reported last week that Mara, a former labor associate at now-defunct Shea & Gould, had been chosen as an alternate juror for an international drug case in federal court in Manhattan. This week, Mara gave up his alternate status to become Juror No. 1, according to The AP. The trial is expected to last another two weeks.

Around the Horn

-- Unless you've been under a rock this week, you might have heard that a federal jury in San Francisco convicted Barry Bonds on one count of obstruction of justice, but was deadlocked on three perjury counts. Many have been critical of the prosecution's case, and Bonds's defense team from Skadden, Arps, Slate, Meagher & Flom and Berkeley-based Arguedas, Cassman & Headley hailed the verdict as a victory for their client, according to sibling publication The Recorder, which notes the former San Francisco Giants slugger could have a powerful case on appeal.

-- When Lenny Dykstra filed for bankruptcy two years ago, we reported on the former baseball star's staggering legal bills. Dykstra, affectionately known as "Nails" to some, was at one time actually considered an investing savant. But on Friday, Dykstra's gradual downfall continued, as federal prosecutors in Los Angeles charged him with embezzlement from a bankruptcy estate, according to The Associated Press.

-- Player agent Casey Close, best known as the agent for New York Yankees star Derek Jeter, has left CAA Sports to join NBA player agent Jeff Schwartz's Excel Sports Management, according to The Business Insider. The deal makes Excel, which Schwartz founded in 2002, a player of its own across two major sports. Sheppard Mullin Richter & Hampton corporate associate Gabriel Matus in New York advised Excel on the matter.

-- Susman Godfrey star litigator Stephen Susman is known for his high-profile cases. But the veteran plaintiffs lawyer will need to conserve his energy for his next endeavor. Texas Lawyer, a sibling publication, reports that Susman will join about 12,000 other riders this weekend bicycling 180 miles from Houston to Austin for charity. The race will raise money for multiple sclerosis research and Susman--riding on the firm's team called Swift Justice--is already one of the event's top individual donors.

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