SBD/Issue 198/Franchises

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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