6:25 PM AKST, December 6, 2011
The Power Balance Pavilion sign went up less than a year ago, but lawsuits challenging the effectiveness of its energy bands sent the company into a tailspin.
It's now being targeted for purchase in a bankruptcy court.
While the Kings got assurances from Power Balance that the team is a priority, all bets are off in a bankruptcy.
"Chances are the outstanding obligations really don't mean much," said Sanjay Varshney, Professor of Finance at California State University at Sacramento who is also the dean of its business school.
You do have to put things in perspective. The deal is worth around $750 thousand a year. Compare that to the salaries of key players.
John Salmons was scheduled to make $8.5 million this year. The lowest paid player is little used reserve Hassan Whiteside at $789 thousand a year, about the same as the naming rights deal.
And the team is expected to spend up to 20 million dollars on free agent players.
But the five year length of the naming rights deal represents several million dollars, a big deal for a team that was on its way out of town in search of bigger profits.
"Any amount of money on the table, when it disappears is a loss," said Varshney.
Replacing that loss in a bad economy won't be easy, especially on the heels of trying to recover from the NBA lockout and trying to get a new arena built.
"Any bad news at this point in time given the environment and the climate that's already been extremely negative just serves to make it worse," said Varshney.
There is a chance the name will remain, depending on who buys Power Balance in bankruptcy...but look for any new company to renegotiate the contract if it even chooses to keep the name on the building at all.
The bankruptcy court is expected to choose a buyer by Dec. 20. In the meantime, the Kings are cranking up their ticket sales operation following the release of the shortened NBA schedule.