I'm betting what happened was, Paul/Vulcan was trying to use SD and KC as leverage to strong arm the city into ponying up more $$ or something. And the exec that "told MB" was spinning it.
Also, I hate how they act like it was Portlands fault that the team was threatening to move. Brandon Roy didn't "save" the team, having decent talent saved the team. They had just come off of years of having bums on the team (*on purpose*) and pissing off the fan base. We were ready to cheer for anything that wasn't crap. When 3 of your 4 best players are Zach, Darius and Ruben, you got problems.