Just how close to insolvency is the Maloof Family? Last year, Adrienne Maloof alone had an estimated net worth of $300 M, making her the wealthiest of all the RH’s.
Between bad investments, worse decisions and extravagant lifestyles, it looks like the Maloof fortune, made by their father, is being squandered.
excerpted from Aaron Applegate The Virginian-Pilot
As basketball fans filed into the corporate-park beige building hulking over spotty suburban sprawl a few miles north of downtown, it was clear why Virginia Beach has a chance to lure away this NBA team.
But with the Kings struggling – they’ve won eight games and lost 17 – talk of relocation to Virginia Beach rampant, and fans fed up with the Maloofs, the colorful Las Vegas-based family that owns the team and the arena, even a last-minute $5 ticket promotion couldn’t fill the building this night.
Coach Keith Smart brushed off pregame questions about the effect of a possible move on team morale. Players suiting up and stretching in the modest locker room said they didn’t know anything about the move or much about Virginia Beach.
Sacramento Mayor and former NBA All-Star Kevin Johnson has said the building, now called Sleep Train Arena after the mattress company that bought its naming rights this year, is one of the league’s worst.
Plans to replace the arena have come and gone, the most recent effort failing in dramatic fashion last spring. Most locals blame the Maloofs, who they believe don’t want to be in Sacramento anymore, can’t afford to help build a new arena, or both.
“It’s like they almost want an arena given to them, but then want all the revenue back!” yelled MacIntosh over pounding pregame music as dancers gyrated bare midriffs at half-court. A buzzer sounded. The Kings took the floor. Cheering fans jumped to their feet.
Virginia Beach officials quietly began laying plans for an 18,500-seat arena blocks from the Oceanfront early last year. It would need an anchor tenant, and sources have said since August that the target is the Kings.
City officials maintain that Hampton Roads could sustain a major pro team. The region’s population is about 1.7 million, compared with 2.1 million in the Sacramento area. The median household income is $54,000, not far behind Sacramento’s $57,500.
The framework of the Virginia Beach deal calls for a $346 million facility and an additional $80 million to move the team. The city would put in $241 million, and city officials want the state to put up $150 million. Comcast-Spectacor, the sports and entertainment company that would operate and lease the arena for 25 years, would put in $35 million.
As the deal stands now, 92 percent of the project would be publicly funded, with no money from the Maloofs.
Although that family – four bachelor brothers, a reality-TV-star sister and their mother – are widely disliked in Sacramento now, that wasn’t always the case. They took full control of the team in 1999, bringing Las Vegas glitz to the staid state capital.
“When the Maloofs hit town, they really excited the city,” said Councilman Rob Fong, who likens Sacramento to a Midwestern town. “They were a shot of adrenaline.”
The family, particularly brothers Joe and Gavin, won fan loyalty as part of the first wave of NBA owners to sit courtside during games to cheer on the team. They had experience, too, having run the NBA’s Houston Rockets for a few years in their mid-20s after the 1980 death of their father, who ran a successful beer distributorship. The family later sold the Rockets.
Shortly after buying the Kings, the Maloofs built the first tower of their Palms Casino Resort in Las Vegas. The cast of the MTV reality show “The Real World: Las Vegas” stayed there. It became a hotel of choice for the young rich and famous.
The Kings kept making the playoffs, and the Maloofs added a $600 million building – the “Fantasy Tower” – to the Palms. It included a suite with a half basketball court, electronic scoreboard, locker room and cheerleaders for hire.
(As seen on the first season of the Real Housewives of Beverly Hills)
Meanwhile, Arco Arena was aging. A 2006 plan to raise the sales tax to help build a new arena on a downtown railyard was put up for a vote. During a campaign to secure public funds, the Maloof family angered some fans by appearing in a fast-food restaurant commercial filmed in their casino that touted their net worth at $1 billion and advertised a $6,000 combo meal – burger, fries and a 24-year-old bottle of Bordeaux.
Councilman Fong, who was an architect of the 2006 sales-tax plan, said the Maloofs never got behind it and eventually came out against it.
The referendum bombed. Eighty percent of voters were against it – and fans began to doubt the Maloofs’ commitment to Sacramento.
In 2007, for the first time in eight seasons, the Kings lost more games than they won and failed to make the playoffs..
By 2009, the Kings had one of the worst records in the NBA, and it appeared that the Maloofs were having financial trouble.
A third tower at the Palms Casino Resort, built just before the economy crashed, reportedly racked up $400 million in debt. The Maloofs sold their New Mexico beer and liquor distributorship – the foundation of the family’s wealth – and eventually most of their interest in the Palms casino.
(It’s widely reported that they retain 2 percent.)
Adrienne Maloof, the most well-known of the siblings, joined the cast of the TV show “The Real Housewives of Beverly Hills.” Joe Maloof and Gavin Maloof continued work on their skateboarding competition, called the Maloof Money Cup. Phil Maloof, a former New Mexico state senator, focused on the family’s record label and TV interests. George continued to run the Palms for the new owners.
And, of course, they still had the Kings.
Then, in 2011, the Maloofs stunned Sacramento when news broke that they were in talks to relocate the team to Anaheim, Calif. Fan-based grassroots efforts popped up to keep the team, including the production of a full-length documentary called “Small Market, Big Heart.”
Sacramento Mayor Johnson went to New York and helped convince NBA team owners and league Commissioner David Stern to delay relocation for a year to give the Maloofs and the city another chance to hammer out a deal.
Last February, after months of negotiations, the Maloofs, Stern and Johnson announced the framework of a plan for a nearly $400 million sports and entertainment complex in the railyard. The city estimated that the project would generate $157 million in revenue annually in the region. It’s estimated that the Kings now pump about $100 million a year into the local economy.
To make the deal work, the city planned to privatize downtown parking to raise up to $255 million, according to The Sacramento Bee newspaper. The Maloofs would put in $73 million, $67 million of which, it was later learned, was a loan from the NBA. The entertainment company AEG would put in $59 million. The NBA offered an additional $7 million, it was also later learned. The public share of the project would have been around 65 percent.
The City Council approved the plan in front of cheering kings fans who packed City Hall.
Only a few weeks later, it all fell apart.
George Maloof called a news conference and argued that the deal was a bad one for his family, Sacramento and the NBA. He suggested renovation of the existing arena. Johnson responded that the city wouldn’t invest in the aging venue.
A city negotiator compared working with the Maloofs to “dealing with the North Koreans.” George Maloof said he couldn’t work with Johnson anymore. It’s been a stalemate since.
Through a spokesman, the Maloofs declined to comment for this story.
Virginia Beach Mayor Will Sessoms has said Comcast-Spectacor, not the city, is negotiating with a team. City officials said that, by early January, they hope to have a deal struck that they can pitch to General Assembly members.
George Maloof has made at least one trip to Virginia to meet with Gov. Bob McDonnell and Sessoms, according to sources and reports.
“All parties reached a deal earlier this year… and the door remains open on that plan,” Johnson said recently in a statement. “I fully respect the Maloofs’ right to evaluate all of their options. However, I do not believe the grass is greener elsewhere and will not let our community be used as leverage.”
The Real Housewives of Beverly Hills airs Monday nights on Bravo TV.