Sacramento: What if Maloofs Sell to Seattle and Fail to Repay Loan to Sacramento?

Credit: Kelley L Cox-USA TODAY Sports

There have been recent concerns the Maloofs may default on their loan to the city of Sacramento, as reported in the Sacramento Bee.  With a prepayment penalty the loan amounts to $77 million. That is a pretty hefty sum, if the owners should decide to walk away from it.

I asked Michael McCann about it. He is a legal analyst and writer. Here what he had to say:

@marilynkenyon As I understand this loan, Maloofs have to pay it back + $13 mil penalty but Maloofs might default & give arena back to Sac.

— Michael McCann (@McCannSportsLaw) January 29, 2013

Adding…

@marilynkenyon And Maloofs defaulting would have effect of harming credit rating of Sacramento. Maloofs would hurt city in multiple ways.

— Michael McCann (@McCannSportsLaw) January 29, 2013

There are those who say this would never happen that the Maloofs would pay off the loan. There are those who say the NBA would never allow this to happen. If they are wrong, the consequences to Sacramento could be very damaging.

UPDATE:

McCann added this tweet:

@marilynkenyon @fcmedina24 City could sue a bad faith default theory & hope for injunction; California’s financial laws progressive.

— Michael McCann (@McCannSportsLaw) January 29, 2013