SBD/Issue 198/Franchises

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  • Sonics Leave Seattle, Part I: Bennett's Group To Pay City Up To $75M

    Bennett To Pay At Least $45M To Get
    Out Of Final Two Years Of Arena Lease
    The Sonics' 41-year history in Seattle came to an end Wednesday when the team and the city reached a settlement in the trial over the Sonics' KeyArena lease, agreeing to allow Sonics Owner Clay Bennett to "take the team immediately” to Oklahoma City in exchange for a $45M payment and Seattle “gets no promise of a replacement team," according to a front-page piece by Brunner & Pian Chan of the SEATTLE TIMES. The deal, which was finalized "just hours before U.S. District Judge Marsha Pechman was scheduled to issue her ruling" in the case and was announced at simultaneous news conferences in Seattle and Oklahoma City, requires Bennett to pay Seattle $45M immediately and $30M more in five years “if the city doesn't get a new" NBA team. The Seattle City Council is "likely to approve the settlement at its July 14 meeting." The Oklahoma team will "play under a different name, with the Sonics' history and colors to remain in Seattle." Seattle Mayor Greg Nickels "defended the city's settlement ... saying it will give Seattle a real chance to secure another NBA team for KeyArena." Nickels said that a "key element of the settlement for the city was a statement by the NBA that a renovated KeyArena could work for professional basketball." Seattle Deputy Mayor Tim Ceis said that city officials began negotiations with Sonics owners for the settlement three weeks ago (SEATTLE TIMES, 7/3). Ceis added, "We think that with the assurances we’ve received and the opportunities we have to get another franchise based on this settlement that this was the best decision for the city and for the fans” (KCPQ-Fox, 7/2). ESPN.com's Lester Munson noted Bennett before the trial offered to pay Seattle $26M to buy out of the KeyArena lease, and Bennett "increased his offer by nearly” $20M after “watching both the city's lawyers and his lawyers score some points in the trial." Bennett "clearly thought there was a chance that he would be forced to stay in Seattle." Most legal experts "agree that the city would have prevailed and could have held the team in Seattle for two years" (ESPN.com, 7/2). The SEATTLE TIMES outlines the terms of the settlement (SEATTLE TIMES, 7/3). Meanwhile, Sonics employees Wednesday were "off-limits to reporters," as all questions were directed to Sonics PR Dir Tom Savage. No one was "given permission to talk about the settlement" (SEATTLE POST-INTELLIGENCER, 7/3).

    Washington Legislature Must Approve KeyArena
    Funding For Seattle To Receive Additional $30M
    SEATTLE'S NEXT STEP: Nickels said that getting another NBA team "will be possible only if” the Washington state Legislature authorizes money for a $300M KeyArena expansion “by the end of 2009" (SEATTLE TIMES, 7/3). In Seattle, Johns & Galloway note Bennett's ownership group will owe Seattle $30M if the Legislature "approves funding for a new arena or a KeyArena renovation at its next session and the city then fails to land a new NBA team by 2013." The $45M figure is $10M "more than the current remaining debt on the arena bonds," and Nickels said the amount "makes us whole for the next two years and pays off the debt at KeyArena." The NBA was "part of the settlement process," as Nickels noted that it "stipulated in writing that KeyArena could be a viable arena if renovated." But Nickels said there is "no guarantee" of a replacement team. Nickels: "There is an agreement that the NBA will notify us when teams are for sale, relocating or expansion (is possible). My understanding is that they do not have plans for expansion." Nickels said that the settlement was "part of a realization that the team would only stay at most for two more years even if it had won its case." Nickels said that the city in the meantime "hopes to keep KeyArena viable with concert dates, the WNBA Storm and other tenants." Nickels added that Seattle officials are "in talks with Seattle University about possibly renting the facility for some sports events" (SEATTLE POST-INTELLIGENCER, 7/3).

    Schultz (l) Still Seeking To Rescind
    Sale Of Sonics To Bennett
    POTENTIAL COMPLICATION: The lawsuit filed against Sonics owners by Starbucks Chair & CEO Howard Schultz seeking to rescind his '06 sale of the team to Bennett remains "one major complication." Schultz has "accused Bennett of violating a promise to try to keep the Sonics in Seattle" (SEATTLE TIMES, 7/3). A source close to Schultz' former ownership group indicated that Schultz "will not file an injunction seeking to prevent the immediate move of the team to Oklahoma City." Rather, Schultz "will let the team transfer to Oklahoma City and seek a trial by next spring, at which time his lawyers would have full opportunity to present their case and seek a reversal, while also giving the city and [a prospective ownership group led by Microsoft CEO Steve Ballmer] the opportunity to line up an arena solution." Schultz "does hold out hope of ultimately overturning the process and getting the Sonics back to Seattle by 2009-10." Bennett tried to get Schultz to "drop his lawsuit as part of the agreement" with the city, but instead settled for a clause that allows the Oklahoma owners to "get their money back if they ultimately lose the team." If the Sonics are "prevented from playing home games in Oklahoma City in either of the next two seasons as a result of the Schultz suit,” the city will repay Bennett's group $22.5M for each season. Additionally, if the Sonics are "required to play in KeyArena in the 2008-09 and 2009-10 seasons as a result of the Schultz suit," the Sonics ownership group is "released from its obligation” to make the $30M contingent payment (SEATTLE POST-INTELLIGENCER, 7/3).

     
    REAX: In Seattle, Art Thiel criticizes the settlement under the header, "In The End, Little For The City, Nothing For Fans." The settlement "gave Seattle little more than cover for the bean-counting City Council constituencies and nothing for its sports fans." The $45M that Bennett will pay is the "least the city should have accepted. Yet applause is expected?" And the notion that the NBA will create an expansion team in Seattle is "based on two wafer-thin assumptions: That the national domestic market will be flush, and that the 2009 Legislature in a declining economy will authorize tax money" to renovate KeyArena. Thiel: "Bennett is still a liar, [NBA Commissioner David] Stern is still unconscionably remorseless, and the Sonics are gone" (SEATTLE POST-INTELLIGENCER, 7/3). In New Orleans, John DeShazier writes, "It's business. But that doesn't mean it's not heartless, disingenuous and undeserving what Clay Bennett and his Oklahoma City ownership group did to Seattle" (New Orleans TIMES-PICAYUNE, 7/3). In Seattle, Jerry Brewer writes Nickels, "once intent on letting the Sonics go only with a guarantee that NBA basketball would return to Seattle, ... settled for a tub of cash and a promise from the NBA to be nice." The "only good news is that the NBA has reversed its stance on KeyArena." But Brewer writes, "Dim the lights on NBA basketball in Seattle. And prepare to sit in the dark for a while. It could be a long, frustrating wait." Wednesday will "go down as the final bungle in a mortifyingly poor endeavor" to keep the Sonics in Seattle (SEATTLE TIMES, 7/3). The SEATTLE TIMES' Steve Kelley writes pro basketball in Seattle is "dead, and don't look for any miracle resurrections. Chances are good that an entire generation will grow up in this town without the NBA to watch." In this "lopsided deal, the NBA didn't even guarantee Seattle another team." Kelley: "Why should anyone believe the NBA, which steadfastly has said a remodeled KeyArena is not a viable solution to keeping the team in town, when it now says the remodeling plan will work?" (SEATTLE TIMES, 7/3). But a SEATTLE POST-INTELLIGENCER editorial written under the header, "OKC Sonics: It's A Fair Deal," states Seattle "has an unexpectedly good settlement with the Sonics." The editorial: "The financially rewarding terms appear fair to city taxpayers. We hope city leaders can translate their effective court action into a viable plan for restoring NBA basketball here" (SEATTLE POST-INTELLIGENCER, 7/3).

    TO SERVE & PROTECT? ESPN.com's J.A. Adande wrote the NBA "should be banned from using the phrase 'NBA Cares'" in future PSAs because "that's the message the sad Sonics saga sends out. The league doesn't care one bit unless you're willing to give up your money to enable its profits." Keeping the Sonics in Seattle "should have been up to David Stern. Instead, he was more interested in helping his buddy Bennett and maintaining leverage for the other owners than serving the fans who had supported a team and were responsible for millions of dollars of NBA revenue over the years" (ESPN.com, 7/2). TRUEHOOP's Henry Abbott wrote a local NBA team is a "region's lone outpost for the best of basketball," and anyone “who loves the sport is prone to following the NBA." Abbott: "That's what the NBA is entrusted with protecting. And that's what the NBA did not, in my estimation, protect in this case" (ESPN.com, 7/2).

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  • Sonics Leave Seattle, Part II: Move To Oklahoma City Underway

    Team To Begin Season-Ticket
    Sales Today In Oklahoma City
    The Sonics will begin moving to Oklahoma City today in preparations of playing the '08-09 season at the Ford Center after reaching a settlement in its trial with the city of Seattle, and "Oklahoma and its capital city will never be the same," according to Bob Barry (KFOR-NBC, 7/2). At a press conference Wednesday night in the city, Sonics Owner Clay Bennett said, "We made it. Congratulations. The NBA will be in Oklahoma City next season playing their games.” Oklahoma City Mayor Mick Cornett called the announcement "a red letter day in the history of the city --right up there in the top five or 10 days that we've ever had” (Ellis & Casteel, DAILY OKLAHOMAN, 7/3). Sonics GM Sam Presti and Sonics interim President & CEO Danny Barth will lead the transition process (Sonics). Bennett said that season-ticket sales "for the soon-to-be-named franchise at Ford Center would begin Thursday" (SEATTLE POST-INTELLIGENCER, 7/3). He added that his ownership group will "unveil a new nickname and new colors in the next few weeks after considering all the suggestions they've received" (DAILY OKLAHOMAN, 7/3). Bennett added that the Sonics' "championship trophy and banner will be left in Seattle," and a "new banner and replica trophy will be made for the franchise in Oklahoma City" (DAILY OKLAHOMAN, 7/3).

    READYING FOR ARRIVAL: Bennett said that tickets to games at the Ford Center, which hosted the Hornets after Hurricane Katrina from '05-07, will "be generally higher than they were for Hornets games, but promised there will still be affordable seats." He added that "all home regular season games will be played in Oklahoma City, but talks are in progress that would allow some preseason games to be played in Tulsa." Bennett noted that the team will "establish a temporary office somewhere in downtown Oklahoma City and move to permanent office space in the Ford Center once it is constructed." Cornett: "Somebody is going to have to pinch me to think this day is really here. If I had a concern -- and my tongue is not in my cheek -- I'm concerned we don't have enough seats in that arena. I think the season ticket sales are going to blow the roof off the building" (DAILY OKLAHOMAN, 7/3). Bennett said that the franchise "will do everything it can to allow former Hornets season ticket holders an opportunity to reclaim their tickets," though a plan for that "has not been finalized and the franchise cannot make any guarantees" (DAILY OKLAHOMAN, 7/3). Daily Oklahoman reporter Darnell Mayberry: "They have a good foundation because you had the Hornets here and they have that database with season-ticket holders. ... But I think you really have to get out there and market your team and sell tickets at this point” (NEWSOK.tv, 7/3).

    FORD CENTER CHANGES: In Oklahoma City, Randy Ellis reports renovations to make the Ford Center ready for the Sonics, including "brighter lighting and upgrades to wiring and the broadcast infrastructure," will begin this summer and are scheduled "to be completed by the fall of 2010" (DAILY OKLAHOMAN, 7/3). Also in Oklahoma City, Steve Lackmeyer reports Oklahoma Ford Dealers for a 90-day period now have "exclusive rights to negotiate a new sponsorship deal with the city" and the team. If a deal is "not struck after that 90-day period, the team is free to seek a new sponsor," but Oklahoma Ford Dealers during the next 180 days "must be given a chance to match or beat any new naming rights deal" (DAILY OKLAHOMAN, 7/3).

    TV POSSIBILITIES: Even though Oklahoma City's FSN Southwest shows Mavericks games, the RSN said it is prepared to bid for Bennett's team starting next week. FSN Dir of Corporate Communications Chris Bellitti: "FSN Southwest is a fully distributed network throughout Oklahoma. We look forward to conversations with the Sonics now that they are free to discuss their future in Oklahoma." Cox, the main cable company in the area, aired Hornets games while they played at the Ford Center, on a local origination channel (John Ourand, THE DAILY).

    GRACIOUS IN VICTORY: The DAILY OKLAHOMAN's Berry Tramel writes Bennett in announcing the move Wednesday in Oklahoma City was "received like a hero," but he "didn't act like a hero." Bennett: "I don't feel, standing here today, victorious. I just don't feel that" (DAILY OKLAHOMAN, 7/3).

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  • Sonics Leave Seattle, Part III: Who Will City Target To Fill Void?

    Stern Says Renovated KeyArena Would
    Be Viable Option To Host NBA Team
    Several NBA teams "possibly could relocate or be sold in the next five years" and be targets to replace the Sonics in Seattle, including the Hornets, Grizzlies, Kings, Bucks and Hawks, according to Percy Allen of the SEATTLE TIMES. But Seattle "isn't the only city in the market for an NBA team," as K.C., Las Vegas and San Jose are "among those who also would like teams." Seattle Mayor Greg Nickels and NBA Commissioner David Stern, "staunch enemies during the city's trial, appeared aligned Wednesday," as the NBA for the first time expressed that a renovated KeyArena could be viable for a future NBA team. Nickels: "This is a crucial point for us. A KeyArena with professional basketball is a cornerstone for the Seattle Center. The NBA has committed to helping us secure a future team." Stern on Wednesday recognized Seattle Center Investors (SCI), a potential local ownership group led by Microsoft CEO Steve Ballmer and Seattle-based developer Matt Griffin, and said the NBA "would be happy to return to the City of Seattle" (SEATTLE TIMES, 7/3). In Tacoma, Williams & Lynn note hopes for a new team in Seattle "seem to rest in part" with SCI, which also includes Western Wireless Founder John Stanton and Costco CEO Jim Sinegal (Tacoma NEWS TRIBUNE, 7/3). Seattle City Council President Richard Conlin: "We’ve set ourselves up for the possibility of getting a team. My best guess would be 50/50" (KCPQ-Fox, 7/2).

    ATTENTION TURNS TO ARENA PROBLEM: The NEWS TRIBUNE's Williams in a separate piece reports Seattle business and political leaders are turning their "attention toward solving the main problem that hampered efforts to keep the team here: Financing an arena that meets the NBA's needs." Overcoming a "chilly relationship between Stern and Seattle city officials is another hurdle for the city," and "now the city finds itself with the task of having to smooth over that relationship since it needs Stern's help to secure a new NBA team." King County (WA) Council member Pete von Reichbauer: "I've said this before -- don't demonize Commissioner Stern. You can disagree with him, but today's opponent may be tomorrow's ally. Clearly now if you are going to have an NBA franchise in this region, it's going to come through Commissioner Stern's office" (Tacoma NEWS TRIBUNE, 7/3).

    RETURN TO SENDER? In Tacoma, John McGrath writes, "Understand this: The NBA is coming back to Seattle, coming back to KeyArena, coming back in green and, yes, gold." The "only problem with an NBA team returning to Seattle as the Sonics: The team most likely will be uprooted from Memphis, or Sacramento, or Charlotte" (Tacoma NEWS TRIBUNE, 7/3). Meanwhile, any new Seattle team "could inherit the Sonics name and the team's green and gold colors" (USA TODAY, 7/3). ESPN’s Michael Smith said of the city retaining the franchise marks, “That’s good, assuming they get a team." But he added, "If you retain a franchise history, does it matter if you don’t get a team? ... I don’t know if the NBA is going to be hard pressed to put a team in Seattle” ("Mike & Mike in the Morning, ESPN2, 7/3).

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  • Oilers Fight Anti-Edmonton Sentiment; Katz Formally Introduced

    Oilers Fighting Anti-Edmonton Sentiment
    From Pronger's Departure From Team
    The Oilers are “waging a campaign to dispel the anti-Edmonton backlash” that came out of Ducks D Chris Pronger’s “rejection of the city and its hockey team in June 2006,” according to David Staples of the EDMONTON JOURNAL as part of the paper's series looking into the team's ownership change. The Oilers in the past two years have made such moves as “sending out pro-Edmonton promotional videos to player agents, hiring a concierge to look after the wives and families of players” and “increasing the budget in the spring of 2007.” However, Oilers President & CEO Patrick LaForge said that Pronger's trade demand following the '05-06 season for family reasons "continues to have repercussions … both when it comes to the Oilers pursuing other major NHL free-agent players and also in terms of a new arena getting approved for downtown Edmonton.” LaForge: “That one decision by Chris, it will probably take us five years, maybe longer, to get out of that ditch. … We saw in him a Stanley Cup, a championship or two, at least five years of elite level play. On him is a new building. On him is new recruiting. People want to play with that guy. We talked it over as a strategy. He was a key part of a big vision.” LaForge said Pronger's demand "was a big blow. It was the kick in the shins, I tell you, maybe higher up. … Various people took that as an opportunity to take Edmonton off the list, agents and players.” Former EIG Chair Cal Nichols said, “It has sent way too many wrong signals about our community. … The publicity that we got was very hurtful.” LaForge added after Pronger left, “we got on the very, very darkest end of the cities list: Buffalo, Edmonton.”

    FIGHTING MISPERCEPTIONS: Staples notes one of the first moves of the Oilers’ “counter-offensive” in the spring of ‘07 was to send NHL agents a hand-carved box made in Alberta. Inside was a video recorder, which “turned on to play a video" hosted by former Oilers player and coach Craig Simpson that "promoted Edmonton and the Oilers.” Current players C Shawn Horcoff, LW Ethan Moreau and D Steve Staios all “spoke glowingly about the city” on the video, which ended with GM Kevin Lowe “talking about the [Oilers'] commitment to winning another Stanley Cup.” The team's signing of restricted free agent RW Dustin Penner last year “got players, agents, managers, and the rest of the hockey world talking about Lowe’s aggressive tactics, rather than focusing on any perceived shortcomings of the city” (EDMONTON JOURNAL, 7/2).

    Oilers Formally Introduce
    Katz As New Team Owner
    NEW MAN IN CHARGE: New Oilers Owner Daryl Katz was officially introduced at a press conference Wednesday and announced that Nichols has been named the club’s Chair and Alternate Governor. NHL Commissioner Gary Bettman said of Katz, “We’re confident we’re getting an owner who can take this franchise into the future.” The GLOBE & MAIL’s Allan Maki writes, “By many accounts, Katz is everything his predecessors in the now-disbanded [EIG] were not. He is single-minded, deep-pocketed, able to move quickly and personally capable of leading the charge for a new arena.” Katz also joins the league "with no serious baggage" (GLOBE & MAIL, 7/3). In Edmonton, Terry Jones writes, “If first impressions are everything, [Katz] definitely made a good one.” Katz, who has committed $100M to a new downtown arena, said “the sooner we can move into a new arena, the better” (EDMONTON SUN, 7/3). Also in Edmonton, Graham Hicks writes Katz Wednesday “did all the right things.” Katz “lauded Oilers management, Kevin Lowe, Pat LaForge and [coach] Craig MacTavish, ending speculation about LaForge’s future.” Katz: “They are the team that will lead the Oilers” (EDMONTON SUN, 7/3). 

    STAYING THE COURSE: The EDMONTON SUN’s Derek Van Diest writes the Oilers are “one of the healthiest franchises in the [NHL] operating under a strong business plan. It’s a plan that won’t change too drastically with Katz at the helm.” LaForge: “The business operates in the black and we already play to the cap. (Katz) is more strategic and more competitive in the sense that he’s always asking ‘What else could we do’? And I really enjoy that” (EDMONTON SUN, 7/3). Katz said, “More than anything, we will instill a vision of limited bureaucracy. We won’t have committee meetings or board meetings. Decisions will be made very quickly” (EDMONTON JOURNAL, 7/3).

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  • Raptors Deny Talk Of Regular-Season Games In Buffalo

    Raptors Deny Talk Of Playing Regular-
    Season Games At HSBC Arena In Buffalo
    There is "no chance" the Raptors will play regular-season games in Buffalo, according to Michael Grange of the GLOBE & MAIL. U.S. Sen. Charles Schumer (D-NY) and Buffalo News Publisher Stanford Lipsey Tuesday suggested that the Raptors could be "looking to expand their presence" in New York by playing preseason and possibly regular-season games at HSBC arena. But Maple Leaf Sports & Entertainment (MLSE) President & CEO Richard Peddie said, "We're not thinking home games. No, no, no, no. We're not giving those up. We have our fan base here we want to service." Schumer Tuesday said of regular-season games in Buffalo, "I wouldn't say it's done, but I think it's on the table." But an MLSE source said Schumer's "at a table set for one." Peddie said that the Bills playing five regular-season and three preseason games at the Rogers Centre in Toronto over the next five seasons "did not necessarily translate into playing NBA games in Buffalo." Peddie: "We know there is a relationship there, but really we have nothing to do with the Bills." Grange notes while the Bills' interest to play in Toronto was "inspired by the ability to enhance revenues," it is "unlikely the Raptors would be able to command a premium over what they earn at" the Air Canada Centre by playing in Buffalo. The Raptors have previously held a training camp in the Buffalo area, and two seasons ago played a preseason game in Rochester, New York (GLOBE & MAIL, 7/3).

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  • Franchise Notes

    CBSSPORTS.com's Scott Miller reported Mariners Owner Hiroshi Yamauchi reportedly is "looking to get out of the baseball business and is intent on selling his controlling share of the Mariners." Microsoft exec and Mariners Minority Owner Chris Larson, "it is said, wants to become the controlling owner." Miller wrote one "fascinating rumor making the industry rounds" indicates that an investment group led by Larson and former Mariners GM Pat Gillick would assume "control of the Mariners sometime in the near future, with Gillick running the baseball operations and naming the new GM" (CBSSPORTS.com, 7/2).

    Final Price Tag For Recent Wild
    Sale In Neighborhood Of $265M
    WILD: Sources said that the final sale price of the Wild from Bob Naegele to new owner Craig Leipold was "nearly $256[M]," and Naegele "provided bonuses of about $4,000 for each employee who had been with the franchise from inception." Leipold and hedge fund manager Phil Falcone "own nearly 90[%] of the Wild, with assorted investors making up the rest." One of the "noted Marvin hockey family members" is joining the ownership group, while Wild Vice Chair Jac Sperling has "pulled out as an investor" (ST. PAUL PIONEER PRESS, 7/3).

    CARDS: In Arizona, Kent Somers reported NFL Cardinals season-ticket sales are "lagging behind the pace of the team's first two years" at Univ. of Phoenix Stadium, but team officials "don't expect a streak of 20 straight sellouts to end" next season. Cardinals VP/Marketing & Sales Ron Minegar said that the team has sold "more than 55,000 season tickets, 2,000 to 3,000 short of the previous two years." Also, the waiting list for season tickets has "decreased from about 7,500 to 2,000," but Minegar said that the "downturn isn't unusual." Minegar added that the Cardinals' "challenge over the next month will be getting the word out that season tickets are available." The team's "advertising efforts will increase after the July 4th holiday" (ARIZONA REPUBLIC, 7/3).

    ASTROS: In Houston, Richard Justice writes Astros GM Ed Wade "hasn't done a terrible job. It just seems that way at a time when the Astros appear to be going nowhere for a third straight season." Wade has "no chance of filling all the holes because the Astros neglected their minor league system for too long." The problem is "not going to be fixed overnight, and until it is, the Astros will have to spend millions more in free agency just to stay afloat" (HOUSTON CHRONICLE, 7/3).

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