One-on-One With Joe Maloof
The Maloof family is a powerful force in business, both in sports as owners of the Sacramento Kings and organizers of the Maloof Money Cup, and in Las Vegas, where they own The Palms. I sat down with the oldest brother Joe Maloof to talk about their sports enterprise.
Darren: Let's start with the Maloof Money Cup. Two years ago, you started this skateboarding event with the goal of having it become the premier event in its niche and I think you're pretty much there. You have an event coming up this week in New York and it seems like everyone who is everyone in the game is showing up.
Maloof: We're doing really well. Hits to our Web site are exploding and we've truly become the greatest skateboarding event out there. Our goal continues to be to get the top skateboarders in the world to our events and we did it here again. Out of the top 48 skateboarders, it looks like we'll have at least 47, including P-Rod and Chris Cole, and might get them all if Ryan Sheckler comes. Then we have it live on Fuel TV and taped on Fox Sports Net.
Darren: How'd you bring it to New York?
Maloof: My brother Gavin kind of thought that in order to make it bigger, we had to do it in New York .So we went to the New York City Department of Parks and Recreation and told them that we'd build a street course — marble, granite, cement — designed by the skateboarders themselves. And when are done, we'd leave it there for everyone to enjoy. The idea for us is to shut it down for a month before the event each year to rebuild it a bit and come back.
Darren: I've seen in previous Maloof Cups the prize money is around $400,000. What are we talking about this time?
Maloof: It's $100,000 first prize. We're giving away about $275,000 in cash and it comes to about $350,000 when you talk about all the in-kind stuff. It's only going to get bigger. We expect to have about 4,500 spectators in the crowd in New York as well as the majority of the skateboarding community. We invite all the skateboard companies to come out and sell their products along with the skateboarders themselves who can sell their merchandise as well. We signed a three-year deal to bring the Maloof Cup to South Africa and I can see doing three to five events in the United States each year as well.
Darren: Is it profitable yet?
Maloof: No. But we're committed to putting any money we make back into the future of this franchise to make sure it's the premier event in the sport.
Darren: Let's talk about your Sacramento Kings. You guys became the majority owners on July 1, 1999. So we're coming up the 11 years now. I think some people would have predicted you would win a title by now. You've clearly had your ups and downs. Is this NBA ownership thing harder than you thought it would be.
Maloof: I've never seen anything like it in terms of the peaks and valleys we've gone through. It's the greatest feeling in the world when you are winning and when you are losing, you are so depressed. Having not made the playoffs for three years now, we're pretty depressed. But we like where we're at and we think there's light at the end of the tunnel. We have the Rookie of the Year (Tyreke Evans), the fifth overall pick in the draft, and with our payroll at $33 million and the cap at $56 million, we have some money to spend on free agents.
Darren: Let's talk about that cap space that you have. Obviously we have the biggest free agent class we've ever seen coming up — names that you can't mention or you'll be fined, but everyone knows who they are. When people talk about what teams will get these stars, they say New York, New Jersey and Chicago most often. Are you guys in the game?
Maloof: We're trying to figure out what will happen with the Collective Bargaining Agreement because who you sign now could affect you later. But if we feel like there's a player out there who will change the direction of this franchise, we're going to try to get him. We're not out of anything. If we don't think that the time is now, we'll hold on to that money and spend it later and, in the meantime, continue to build with youth.
Darren: A lot of NBA teams lost money this year. You drew on 13,200 fans a game this past year. What's the state of business with the Kings?
Maloof: We had years where we made money and we had years where we lost more than $20 million. We reduced expenses enough this year so that no matter how many fans showed up, we'd have a chance to make a profit. Do I love doing that? No. I hate it. I want to compete. I want to fill the building.
Darren: Speaking of the building, you guys have been lobbying to get out of Arco, which was built in 1988, for a long time. But things have changed in the business landscape. The reason for wanting to get out of Arco was to enjoy all the luxury suite revenue that all the new arenas provided teams. That revenue isn't what it used to be. Does that change things?
Maloof: That's true. It's a lot different from two or three years ago when franchises were depending on selling out those suites or club suites or bunker suites. So the truth is that we don't need a new building as much as we did a couple years ago. If we can't fill the suites now, what's a new arena going to do? They won't automatically fill up. We have to go back to customer, we have to do a great job with group ticketing and we have build a team that will win.
Darren: Vegas has had a hard couple years. A couple years ago, a lot of people were saying we'd see a pro franchise in Vegas. Still true today?
Maloof: I just don't see it. What is someone going to build an arena for $600 million and pay $400 million for a franchise? I just don't see that.
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