Darrell Steinburg, left, is not happy with Microsoft CEO Steve Ballmer.

Nasty, angry, threatening — these are words that describe a letter sent on Tuesday from a California politician intending to vilify Microsoft CEO Steve Ballmer.

Ballmer is co-leading a Seattle investment group that is extremely close to purchasing the Sacramento Kings and moving the NBA team to the Emerald City for a reported $341 million.

California state Senate President Pro Tem Darrell Steinburg isn’t happy about that — not one bit.

He’s so angry that the 53-year-old addressed a letter to California Department of General Services director Fred Klass asking why Microsoft and Ballmer are “engaging in activities which are clearly measurably detrimental to our State’s job and revenue base — not to mention use profits earned through business with our State to appropriate a California-based asset.”

Yep, the sparks are a-flyin’. Steinburg, a former Sacramento City Council member who was heavily involved in keeping the Kings in Sacramento two years ago, also asks Klass to provide several bits of information relating to how much money Redmond-based Microsoft has earned from the State of California over the past decade.

Reports came out in June that Ballmer was part of the investment group led by Hansen. It’s not surprising: Ballmer was a regular at Sonics games before the team departed for Oklahoma City in 2008 and also was part of another investment group that tried to keep the team here. Seattle has been without a team since then.

USA Today, among a few other media outlets, received the letter that was dated for Tuesday. I’m not sure what to make of this — this letter alone won’t exactly help the Kings stay in Sacramento. It may, however, convince some Californians to stop purchasing Microsoft products.

There are some hurdles to jump over before the deal is done. The NBA Board of Directors still needs to approve the agreement in April — Yahoo calls it a “formality” — and Sacramento mayor Kevin Johnson is making a last-second attempt to put together an ownership group to keep the Kings in his city.

Here is the memo in its entirety:

January 22, 2013

Fred Klass, Director

California Department of General Services

707 Third Street

West Sacramento, CA 95605

Dear Director Klass:

I read with distress recent media accounts reporting that Steve Ballmer, CEO of Microsoft Corporation, is actively engaged in discussions and may now have a general agreement to purchase NBA’s Sacramento Kings — a franchise which has generated significant jobs and revenue for both our region and the State of California for 27 years — and move it to another state.

If true, I am troubled that a company and a CEO that has for so long enjoyed a prosperous and beneficial working relationship with the State of California and its taxpayers would blatantly engage in activities which are clearly and measurably detrimental to our State’s job and revenue base – not to mention use profits earned through business with our State to appropriate a California-based asset.

As a legislative leader with direct budget authority, I’m obviously concerned about what impact these events might have on state and regional revenue, as well as our recovering economy.

I would appreciate your help – as the director of the department in charge of most state procurement – in obtaining some information that in light of these reports is certainly relevant to California taxpayers, particularly those in the Sacramento region.
Specifically:

– How many technology contracts and at what total cost to state taxpayers does Microsoft Corporation currently have with the State of California?

-In total dollars, how much has the State of California paid Microsoft Corporation for its products and services over the last 10 years?

– Can you send my office terms of contracts and representations made by Microsoft Corporation regarding their contracts with the State?

-To your knowledge, does any other state in the United States pay more annually to Microsoft Corporation for products and services than the State of California?

– What is Microsoft Corporation’s record of performance with the State of California?

As a state legislator, I am well aware that I have no direct role in the day-to-day management of the State’s technology procurement processes, but I cannot stand idly by while a prominent out-of-state company that has significantly profited from business with the State of California actively attempts to acquire and remove one of my State and my region’s leading private assets.

Thank you in advance for your time and assistance in responding to this information request. Please do not
hesitate to contact my office to discuss this issue in more detail.

Sincerely,

DARRELL STEINBERG
Senate President pro Tempore
State of California
6th Senate District
cc: Governor Edmund G. Brown, Jr.
Secretary Anna Caballero, State and Consumer Services Agency

UPDATE, 4:18 P.M.: Here’s a statement from Microsoft:

“The effort to build a new professional sports arena in Seattle was initiated and is led by San Francisco-based developer, Chris Hansen, who has announced a number of investors, including Steve Ballmer.  Microsoft Corporation is not involved in the effort.”  — Microsoft spokesperson

Comments

  • FAUXHAWK70

    I am willing to bet and think it is probably safe to say that Microsoft has contracts all over the world and he would probably be hearing this kind of crap from just about anyone and everyone and with whatever team that he decides to buy!

    Ballmer and company makes profits and creates jobs all over the world… The guy sending the letter sounds like a complete idiot! I do however understand and appreciate that he loves his team and wants them to stay! I felt similar frustration a few years back!

    Go Sonics!

  • http://www.timacheson.com/ Tim Acheson

    Steinberg is acting suspiciously like a glove-puppet. Google has the Senate in its pocket along with other US politicians.

  • http://www.timacheson.com/ Tim Acheson

    If Americans don’t want Microsoft, here in Britain we welcome them with open arms. We’ll take the jobs and income if US politicians don’t value it.

  • SilverSee

    From all reporting I have seen, Microsoft has nothing to do with this; it’s a private investment by Ballmer, so this letter makes no sense on it’s face.

    It’s rather amazing that California voters tolerate this sort of salacious grandstanding by a senior elected official. He probably had coffee with Eric Schmidt.

    • http://twitter.com/puckyourself Joe McGrath

      Not only tolerate it, re-elect it, time and time again.

  • l.W

    Lets put aside the fact that this is Ballmer, not Microsoft the one buying the team. lets put aside all the jobs created in any local economy, like California, by tech companies like Mcrosoft as there is a whole ecosystem: Value added resellers, It administrators, developers, etc and then the secondary type of jobs that support this ecosystem. What a stupid remark from a politician that clearly does not understand the fundamentals of economy.

    What is California in the narrow mindset of this pseudo politician? A self sustainable ecosystem where money does not come out or money never comes in? He can probably move to Cuba or any other socialist heaven to enjoy the many blessings of this type of system. No wonder the state is broke.

    I am not a Microsoft fan, I actually got dissapointed with the company years ago and left the company after an argument with Ballmer on the future of mobile and the place of Apple in that new emerging category ( emerging back then) , but I respect Microsoft as a company and Ballmer as a passionate leader. He is also passionate about basketball and about Seattle and he has every right to do whatever he want to do with his money as long as it is done withing the legal rules of the land. Unlike Communist and socialist regimes where politicians are the ones that dictate what to do with personal wealth and personal wealth only exists on the members of the party, the rest of the people just have an equal sharing of misery as Churchill well said.

  • Guest

    Dear California state Senate President Pro Tempore Darrell Steinburg:

    You can’t buy anything. Your state is broke. Now kindly F off.

    With love in Christ,
    Seattle

  • http://twitter.com/puckyourself Joe McGrath

    This letter is evidence of the pervasive sickness within the mindset of politicians; that they alone have the final say on all actions, that no one may complete an action without their buy off, that their power is absolute.
    It is terrifying actually, and even more terrifying as it grows we continue to accept it.

  • Moron1MeetMoron2

    So a bully who’s high up in the leadership of a failing state is bullying the bully CEO of a failing company.

    And all this over a game where thugs bully and cheat to win (of course, that’s all professional sports, right Lance?).

    Who do you root for in this one? You hope everyone loses.

    This whole episode shows clearly how dysfunctional things are. Maybe if the bully legislator spent more time creating real jobs rather than minimum wage jobs selling beer and maybe if the bully CEO spent more time creating products that were relevant rather than trying to buy a sports team we wouldn’t be up to our eyeballs in debt?

    And maybe if we got rid of professional sports, we’d quit glorifying thuggish behavior and people would be decent to one another and get out and get some exercise.

  • guest

    Screw California. They were the first to sue Microsoft in the 90s, effectively doing plenty of damage to our local economy.

  • Etan

    Ridiculous letter. Steinberg clearly has no concept of what a “private asset” is, since it can be bought and sold across state lines. He’s just sad to be losing his team.

  • RunTheNumbers

    “…significantly profited from business with the State of California…”

    The suggestion is that the State of CA significantly affects MSFT’s business and Mr. Ballmer’s personal wealth. In that absurd assumption, let’s run some correspondingly absurd numbers.

    – Ballmer makes $1.3MM year in salary (per Y finance)
    – Ballmer owns 333MM shares in MSFT, worth around $9B at the moment (per Forbes)
    – Ballmer presumably has investments elsewhere. Conservative assumption of 11% of the value of his holdings in MSFT (way too risky a portfolio, IMHO). Call it $1B.
    – Microsoft contracts with the State of CA are worth…$20MM annually? $50MM? $100MM? I have no idea. There are about 350k state of CA employees, and a contract for $100/employee/year would amount to $35MM. It sounds high, but for the sake of argument, let’s call it $100MM.

    The consideration becomes: what would happen to Ballmer’s income if contracts with the State of CA disappeared? (Hey, the politician is the one drawing the lines here, not me. Apparently the eco-system and ripple effects don’t matter.)

    Gross revenues for MSFT, past 3 years:
    2010 – $62.48MM
    2011 – $69.94MM
    2012 – $73.72MM

    Losing the State of CA contracts @ $100MM/year would negatively impact revenues for MSFT to the tune of:

    2010 – $62.38MM (-0.16%)
    2011 – $69.84MM (-0.14%)
    2012 – $73.62MM (-0.13%)

    Suppose this reduction directly translates to Ballmer’s personal wealth. So, let’s drop Ballmer’s salary and personal MSFT holdings by the same percentage.

    – Reduce Ballmer’s salary each year by those percentages. In 2010, he earns $2080 less; 2011, $1820 less; in 2012, $1690 less.
    – Let’s reduce the market value of MSFT by $300MM. Heck, let’s extend the value of those contracts as something the market cares about, so reduce the market value of MSFT by $1B. (Dr. Evil reference with the pinky.)
    – MSFT’s current market cap (this morning) is $229.73B. Taking the $1B hit for losing the State of CA’s business, MSFT is now worth $228.73B. There are 8.42B shares outstanding, so the net effect on the share price is -0.43% (-0.0043). At today’s price of $27.14, the price goes to $27.03 (a hit of 11 cents.)
    – So, reduce Ballmer’s holdings in MSFT by the same percentage. His holdings are now worth $8.96B.

    The investment group buying the Kings team is reportedly spending around $380MM, and Chris Hansen is the lead investor. Given that there are a few investors, let’s estimate Ballmer’s percentage at 33%, so his share of this purchase is approximately $127MM. Or, 1.4% of his MSFT holdings. Or, 12.7% of any non-MSFT investments (estimated) he holds in his portfolio.

    It’s imperfect, but I’m reasonably certain that Mr. Ballmer could afford to participate in this investment group regardless of the value of Microsoft’s business contracts with the State of California.

    • RunTheNumbers

      Typo:

      Gross revenues for MSFT, past 3 years:
      2010 – $62.48B
      2011 – $69.94B
      2012 – $73.72B

      Losing the State of CA contracts @ $100MM/year would negatively impact revenues for MSFT to the tune of:

      2010 – $62.38B (-0.16%)
      2011 – $69.84B (-0.14%)
      2012 – $73.62B (-0.13%)

  • Forrest Corbett

    His office probably messed up by sending the letter to any media outlets other than The Onion.

  • http://tdhurst.com/ tdhurst

    Oh please. The entire state is going to stop using Microsoft products?

  • Guest

    Steinburg,

    This is Ballmer. After we are done taking the Kings from Sacramento, we’ll gladly pull out our employee base in the Bay Area and move them to a state where they appreciate what we have done for the economy. You can keep Facebook and Google, oh wait, they are also opening up expansive offices in other states (like Washington), so you might want to try not pissing them off too.

    The Kings are MINE, MINE, MINE and you can kiss my A$$ buddy.

  • http://www.facebook.com/profile.php?id=504497130 Joseph Scott Greenburg

    California alone is the 9th largest economy in the world (http://www.sacbee.com/2012/09/11/4807346/california-economy-ranked-9th.html).
    There may just be some other revenue to be had.

  • Allen

    Is this just a California politician pandering to the Apple and Google fanboys?

  • airflex

    what an idiot. Larry Ellison buys the Island of Lanai, doesn’t that take away from California taxes…oops, there is a little Claif based company called Apple that shield Billions in calif taxes through offshoring jobs and profits…maybe he should spend more time on things that make a difference.

  • http://twitter.com/RogWilco Nick Williams

    I have to agree that this guy is just embarassing himself. That being said, judging from the comments, it *is* interesting how the tune changes when on the receiving end of a potentially moving team…

  • My Sonics

    Typical politician to show up at the eleventh hour to save his “regional leading private asset?” The asset you should be saving is your states economy.
    Take your broke ass back to your office start working on game plan to fix your mess and lets us take your incompetent run private asset off your hands!

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