The NBA's Board of Governors voted Wednesday to keep the Kings in Sacramento and rejected Chris Hansen's planned relocation of the franchise to Seattle.
The vote was 22-8 by team owners, commissioner David Stern announced.
"This was not an anti-Seattle vote, it was a pro-Sacramento vote," Stern said during a press conference.
The Maloof family, current owners of the Kings, had agreed in January to sell a 65 percent share of the team to a group led by hedge fund manager Hansen and Microsoft CEO Steve Ballmer, who were looking to move the Kings to Seattle and rename it the SuperSonics. The Board of Governors followed an April committee recommendation to stop the Kings from relocating.
Seattle lost its NBA franchise to Oklahoma City in 2008.
Stern said the Maloofs have the right to retain ownership of the franchise instead of selling the team, but the commissioner said it's likely the Maloofs will make a deal to transfer ownership to businessman Vivek Ranadive and said he'd like to see it done "as soon as possible."
Reports indicate the group led by Ranadive has offered the Maloof family $341 million for the 65 percent share of the team. That's much less than the $406 million reportedly offered by Hansen.
"Vivek and the Maloof team, we're going to be negotiating around the clock for the next two, three days to try to get this resolved," former NBA All-Star and current Sacramento mayor Kevin Johnson said.
The Maloof family was reportedly threatening not to sell the Kings to the group that wanted to keep the team in Sacramento.
"They were clear on that point until the end, but their agreement ended effectively with the vote," Stern said. "We think that now because the Maloofs have been overall good for Sacramento and the NBA, they will be motivated to do something fast so the franchise can get cranking."
On March 27, the Sacramento City Council approved a public-private deal to build a new 18,500-seat arena and retail center downtown.
"In terms of building a brand-new building, it has been very clear, and we have said this time and time again, building a building downtown is bigger than basketball," Johnson added. "It's transforming. You're going to see a situation where Sacramento will be changed forever for the good."
The league would ultimately like to return to the Seattle market, though, according to Adam Silver, the NBA's current deputy commissioner.
"The league continues to enjoy strong support in the Seattle market," Silver said. "We want to wait and see what happens in our next national television negotiation. We are confident we will return there one day."