Melissa Griffin: Trying To Keep The Kings And Their Money In California
SAN FRANCISCO (CBS 5) – While the Niners lost the Superbowl, it could be worse. The Sacramento Kings have inked a deal to go to Seattle and it’s gotten political.
Recently, it was announced that the family who owns 65% of the Sacramento Kings basketball team entered into an agreement to sell their stake for $340 million. The buyer is a Seattle-based fund led by investor Chris Hansen and Microsoft CEO Steve Ballmer, who are expected to move the team to Seattle, a town without a basketball team since the Supersonics left in 2008 to become the Oklahoma City Thunder. In the meantime, Settle has agreed to a deal for an NBA stadium and just needs a team to fill it.
In light of that news, the leader of California’s State Senate, a Democrat named Darrell Steinberg who represents Sacramento, is asking how much money California state spends on Microsoft products. In a Jan. 22 letter to the state Department of General Services – the people who oversee state contracts – Steinberg demanded to know how many technology contracts California agencies have with Microsoft and how much the state has paid to the company over the last decade. In the letter Steinberg wrote, “I cannot stand idly by while a prominent out-of-state company that has significantly profited from business with the State of California actively attempts to acquire and remove one of my State and my region’s leading private assets.”
Note that Steinberg can’t prevent future contracts with Microsoft; he can only use this for whatever leverage it provides for publicity to discourage contracts with the company. Also, Ballmer doesn’t even own a controlling interest in Microsoft, and is investing in the Kings in a personal capacity only, not on behalf of the company.
It’s hard to blame Steinberg for playing hardball, though. Losing the team means a serious loss of revenue for the state. The Wall Street Journal estimates that the team’s players pay roughly $7 million in income taxes to the state of California. That number will go up with the passage of Prop 30, which is retroactive. This year, they’ll pay 13.3 percent of their income to the state of California. Washington State does not have an income tax.
In fact, California doesn’t just tax its residents, it taxes folks who live in other states but work here. So when teams from other states play games in California, they have to pay our income tax rates for those days spent here. For example, when the San Antonio Spurs come to play a basketball game against the Warriors, they have to count how many days they were in the state and pay a share of income taxes. And this is no small potatoes. The state has more than a dozen professional teams and receives over $100 million dollars a year from visiting athletes.
Losing those taxes would be huge, not to mention the lost revenue from the businesses – concessions, cleaning services, etc. – that support the team.
The move isn’t a done deal. Rhe agreement to purchase a controlling interest in the Kings still has to be approved by the NBA’s Board of Governors at a meeting in April.
At the time Sacramento Mayor Kevin Johnson will get to make his case as to why the team should stay. Word is, he’s lining up some investors of his own. Two years ago, Johnson was able to prevent the Kings from moving to Anaheim, so we’ll see if he can keep the players, and all that tax money, in our state’s capitol.
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