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|Sonics fans are ready to make some new signs: "Brought Back our Sonics."|
This story appears in ESPN The Magazine's Feb. 18 Music issue. Subscribe today!
THE SIGN OUTSIDE Oskar's Kitchen changed sometime during the foggy morning of Jan. 21. Not far from the shadow of Seattle's Space Needle, two Oskar's employees climbed a small metal ladder to raise a banner, its green-and-yellow lettering graffitied over in black marker. The first word -- Bring -- was crossed out by a thick ink bar, like an item on a to-do list.
The new message -- Brought Back Our Sonics -- was hastily scrawled. But no matter. What mattered, four and a half years after an NBA team left Seattle, was that a new one appeared to be returning.
If Oskar's owner had been there that morning to hang the banner himself, he might not have needed the ladder. That owner, after all, is 6'10" former Sonics forward Shawn Kemp. The prior night, when rumors of the deal first broke, he had been out on the town, surrounded by revelers chanting "Sah-nics! ... Sah-nics!" -- some wearing the No. 40 jersey he made popular during his run in Seattle. "The reports were coming in, and I'm looking at the Sonics jersey, which was cool," Kemp says. "But as excited as we were, we were trying to wait. When it's the NBA, you're never sure."
By morning, they were sure -- all sides confirming an agreement had been reached. The Maloof family, owner of the ailing Sacramento Kings, had secured a $340 million deal for 65 percent of the franchise from an ownership team led by San Francisco investor Chris Hansen -- the $525 million valuation being the highest in NBA history. Hansen, in turn, would move the Kings to Seattle, the city he considered his hometown, and hold a controlling interest in the team.
The deal looked good for Seattle, too good for the Maloofs and lousy for Sacramento. All that stood in the way were approval from the league (to be voted on by owners in April) and a metaphorical last-second shot from Sacramento Mayor Kevin Johnson. Johnson is a former All-Star, which goes to show that the bonds of NBA fraternity are not stronger than half a billion dollars.
Absent from the day's revelry was Hansen, a 45-year-old hedge fund mogul unknown outside the investing world -- and little-known within it. A year before, The Seattle Times had dubbed him a "San Francisco mystery man." But this was likely the day many in Seattle first seriously wondered: Who the heck is Chris Hansen?
Funny enough, that was the very question Seattle Mayor Mike McGinn had asked in the spring of 2011, when Hansen first contacted him about bringing an NBA team back to the city. Hedge fund managers are inherently difficult to valuate. Their wealth, inextricably tied to their holdings, can fluctuate wildly from quarter to quarter. But Hansen, a 20-year Wall Street veteran who had launched a fund called Valiant Capital in 2008, had by the summer of 2011 amassed some $2 billion in assets under management. McGinn, understandably, took the meeting.
On the afternoon of June 16, 2011, the two men met at Seattle's Rainier Club, a members-only, 125-year-old institution a few blocks from City Hall. They talked for an hour; it was all the time McGinn needed. "This wasn't the first time it was like, 'Oh, somebody's interested in the Sonics,'" he recalls, "but it was clear that Chris was serious." That clarity, McGinn says, arrived in the form of one sentence.
Seattle operates under a law called I-91, which in effect forbids the city from spending taxpayer money on teams. When the voter initiative passed in 2006, it was widely seen as having hastened the departure of the Sonics to Oklahoma City -- and also seen as a poison pill for any future team. But when McGinn raised I-91 during the meeting, Hansen was unfazed. "You put the effort in on your side," he told McGinn, "to see what you can do within those constraints."
After the meeting, sold on Hansen and sensing he was about to enter a financial and legal thicket, McGinn covertly signed a $19,500-a-month, taxpayer-funded contract with sports arena consultant Carl Hirsh -- the first of what would be five such contracts, totaling $551,000. In a bit of cloak-and-dagger to avoid scrutiny, the mayor's office didn't file those contracts until seven months later. Legal, but sneaky. And effective. During those months, as the contracts went undetected by the public and city council, McGinn's team met privately with Hansen's at least half a dozen times.
Once the broad strokes of the plan were released in February 2012, Hansen began meeting with the council -- talks that grew heated. At one point, eight of nine council members signed a letter demanding he modify the plan to protect the public. Their hard line was understandable. It was, after all, only six years since another financier had whispered sweet nothings to the city. That man, Clay Bennett, chairman of Dorchester Capital, proceeded to ship the Sonics to Oklahoma City two years after buying the team in 2006.
But by October 2012, as arena terms were revealed, the pressure had clearly paid off. Hansen's group -- including Microsoft CEO Steve Ballmer and department store moguls Erik and Peter Nordstrom -- had agreed to spend $800 million on a new arena and an NBA team in exchange for $200 million in local bonds to be repaid over 32 years. No new taxes would be needed for the $490 million arena. And Hansen promised to pay the city's debt if the arena wasn't profitable -- something virtually unheard of in such sales.
It all sounded ducky, assuming Hansen had the cash. Which raises one last issue: What is he worth? Hedge funders, venture capitalists and private-equity types -- inherently high-risk investors -- are increasingly the buyer of first resort in the NBA. Four franchises have been sold to financiers in the past three years alone. In 2011 the Pistons were dealt to Tom Gores and the 76ers to Joshua Harris, both founders of private-equity firms. That same year, the Magic were taken over by venture capitalist Dan DeVos. In 2010 the Warriors went to Joe Lacob, another venture capitalist.
While tallying the net worth of such private investors is an inexact science -- they tend to keep their books, well, private -- the math is most doable at a hedge fund like Hansen's. Factor Valiant's annual returns and assets under management, plus standard 2 percent management and 20 percent performance fees, and one can estimate a net earnings range for Hansen of $100-200 million in the past five years combined. Nice work if you can get it -- but hardly Warren Buffett money. Hansen's total net worth is harder to estimate, and he refused to be interviewed for this story. But given his deep presence in the volatile tech sector, his wealth is hardly flameproof.
Sonics fans would surely like the comfort of knowing their owner won't one day be where the Maloofs are today -- underwater, looking to shed assets, maybe shedding those assets right out of town. But that's just business. And after all, the sign outside the bar can always be changed again.
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