SBD/Issue 142/Franchises

Howard Schultz Filing Suit To Rescind Sale Of Sonics To Bennett

Schultz Seeking To Have His
'06 Sale Of Sonics Rescinded
Starbucks Chair & CEO Howard Schultz, who in '06 sold the Sonics to current team Owner Clay Bennett, is "preparing to file a lawsuit against [Bennett] to rescind" the sale, according to Percy Allen of the SEATTLE TIMES. Seattle-based law firm Yarmuth Wilsdon Calfo (YWC) attorney Richard Yarmuth said that his firm will represent Schultz and plans to sue Oklahoma-based Professional Basketball Club, the Sonics' ownership group, in the next two weeks. Yarmuth: "It's not money damage. It's to have the team returned. The theory of the suit is that when the team was sold, the Basketball Club of Seattle, our team here, relied on promises made by Clay Bennett and his ownership that they desired to keep the team in Seattle and intended to make a good-faith effort to accomplish that." Bennett paid $350M for the Sonics and the WNBA Storm, and as part of the deal he "agreed to a stipulation that he would make a good-faith effort to keep both teams in Seattle." However, as reported last week, Sonics investors Tom Ward and Aubrey McClendon in August '06, two weeks after the sale, sent a series of e-mails about moving the team to Oklahoma City "as soon as possible." Yarmuth said that the e-mail exchanges, which also included Bennett, "detail a breach of contract." Yarmuth also cited comments made by McClendon in '07, in which he said, "We didn't buy the team to keep it in Seattle; we hoped to come here (Oklahoma City)." Yarmuth: "The issue is did the Oklahoma group fraudulently induce the Seattle owners, Howard Schultz and the other owners, to sell the team on a misrepresentation of their intentions at the time." Schultz, around the time of the sale, said, "As part of the negotiation, I asked for something that was a deal breaker in negotiation. What I asked for was a side letter to our ownership group and to me ... that said basically [Bennett] would honor the four-year [KeyArena] lease in terms of the 2010 terms, and use his best efforts over the next 12 months ... to get something done." Neither Bennett spokesperson Dan Mahoney nor NBA VP/Basketball Communications Tim Frank could be reached for comment (SEATTLE TIMES, 4/15).

Stern Says That He Feels Sonics Owners
Have Been Negotiating In Good Faith
AN HONEST EFFORT: NBA Commissioner David Stern yesterday said that he "had not looked closely" at the e-mails but added that he "believes Bennett acted in good faith to keep the team in Seattle." Stern: "My sense of it was that Clay, as the managing partner and driving force of the group, is operating in good faith under the agreement that he made with Howard Schultz." Stern also said that "'extraordinary efforts' were made to seek an interested local ownership group to keep the team in Seattle when Schultz sold the team, but none was found" (Tacoma NEWS TRIBUNE, 4/15).

ROCK THE VOTE: In Seattle, Johns & McNerthney report the NBA BOG Thursday or Friday will meet in N.Y. and is scheduled to vote on Bennett's request to relocate the Sonics to Oklahoma City. A spokesperson for Washington Gov. Christine Gregoire said that she is drafting a letter to the NBA "that will be co-signed by numerous political leaders in the state in an effort to present a case for keeping the Sonics in Seattle." The relocation also is contingent on a trial between the city of Seattle and the Sonics' owners or "some other sort of resolution of the KeyArena lease." Meanwhile, the Sonics yesterday sent a letter to season-ticket holders, indicating that "no renewals will be accepted until the team's future is clarified" (SEATTLE POST-INTELLIGENCER, 4/15). Meanwhile, the Oklahoma House of Representatives yesterday approved a measure that would give Sonics owners "financial incentives" if the team relocated. The state Senate is expected to take up the measure later this week. The bill would "expand the state's Quality Jobs program to include major league teams," which would amount to about $4M annually for the Sonics (DAILY OKLAHOMAN, 4/15).

REAX: In Seattle, Jerry Brewer writes Schultz's "dire attempt to right his wrong is the longest of all shots. And though he probably won't admit it, he's motivated in part by a desire to suppress fan anger. If Seattle becomes an NBA ghost town, he doesn't want to walk around fearing for his coffee beans" (SEATTLE TIMES, 4/15). Suns President & COO Rick Welts, formerly Sonics Dir of PR, said of the Sonics' situation in Seattle, "It breaks my heart, but at the same time I understand it. But even if the team leaves, I believe there will be another NBA team. It would be the most attractive (U.S.) city not in the NBA." Welts added: "If an arena is built, I just think the market would be incredibly attractive for another NBA team. But that's my heart talking. There's not much I can do about it professionally." Welts said of Stern, "It's a subject I don't discuss with him because it's too personal for me" (SEATTLE POST-INTELLIGENCER, 4/15).

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