Wednesday, April 18, 2007

When one door closes, another door opens – the Sonics appear headed to Oklahoma City

Friday the New Orleans/Oklahoma City Hornets played their last home game at Oklahoma City’s Ford Center, the Hornets temporary home for the last two years. The Hornets did manage to play nine home games over the last two years at the New Orleans Arena, and the franchise has committed to moving back to the Big Easy full time at the start of the 2007-08 season. It appeared the NBA was bidding adieu to Oklahoma City Friday (at least temporarily), but after the news Monday night that the Seattle Sonics had failed in their bid to secure funding for a new arena the Sonics could be headed for Oklahoma City as early as the start of next year.

The Sonics play in a facility so terrible it forced Seattle native and Starbucks founder Howard Schultz to sell the franchise to Oklahoma City interests. Just before the start of the season the NBA approved the transfer of the teams’ ownership to Clay Bennett. Bennett paid Schultz $350 million for the Sonics. For months Bennett said all the right things about the team staying in Seattle, but let’s make it clear – Bennett is from Oklahoma City, and after Monday’s outright rejection of a funding plan to support the building of a new arena for the Sonics, Bennett will move his team to the city he lives in.

In a statement, Clayton Bennett, the chairman of the Professional Basketball Club, LLC, expressed his disappointment with the Legislature for its inactivity.

"This a staggering and quite likely a debilitating blow to our efforts to develop a world-class arena facility," said Bennett. "Clearly at this time the Sonics and Storm have little hope of remaining in the Puget Sound region.

"We believe we have gone to extraordinary lengths with significant time and resources to craft a proposal for a global-caliber multi-purpose event facility that would be a valuable public asset for the region for years to come and have minimal impact on taxpayers. By its inaction the Legislature has delivered the message that they are indifferent to the notion of the Sonics and the Storm leaving the market."

“We remain willing and available to work with the Governor and the Legislature to explore every conceivable funding option for the building. We are also receptive to analyzing any private financing mechanisms that are brought to our attention. But at this time we have no other concepts on the table.

“We want to recognize Senator Margarita Prentice and Representative Eric Pettigrew for their courageous leadership in the Legislature. We also want to thank the good people of Renton who have enthusiastically supported these efforts. In addition we wish to thank the many supporters and advocates who have worked hard on our behalf.

“As owners we remain absolutely committed to restoring the Sonics to a championship caliber team – on this subject we will not waver. Further we are committed to delivering the very best fan experience and sponsor value that we can. We thank our fans, season ticket holders and sponsors from the bottom of our heart. We also thank our professional staff, our players and coaching staff, all of our friends who work at KeyArena and everyone who has believed in us.”

Outside the Sonics & Storm organization, supporters also responded with frustration to the Legislature's decision.

"As a season-ticket holder since 1978, I am interested in knowing what the next step will be for the Sonics organization and what more we fans can do," said Judi Childs, the president of the Sonics Booster Club. "I am so disappointed in the Legislators for killing the King County Events Center bill and think they are being very short-sighted. I feel that sports are a very important part of our community as are the arts, museums, theaters, etc. All of them together make our great city and county on of the most desirable in the US."

"While we are disappointed with our state leadership in Olympia for failing to find a solution to this problem, we will not let today's announcement detract from the real progress that has been made," Save Our Sonics & Storm co-founders Steve Pyeatt and Brian Robinson said in a statement.

"Mr. Bennett and the Professional Basketball Club have had a very short time to overcome substantial adversity. During this period they have established an impressive coalition of community and business leaders. They assembled a first-class design and development team and put together a very viable funding package which came closer to passing than most people probably realize. Additionally, the city of Renton has proven to be a remarkable advocate for the Sonics & Storm in this region. It is our sincere hope that all of these parties will continue to move forward until the King County Events Center becomes a reality."

Renton Mayor Kathy Keolker questioned the Legislature for not allowing King County to make a decision on the Sonics & Storm proposal.

"It is unfortunate that the Legislature refused to allow this local option funding package to be discussed here in King County, where the actual revenue streams would have been generated," Keolker said in a statement. "This proposal contained no new taxes and used a tool that is already in place. In fact, counties throughout the state have created 21 similar public facilities districts and each one is generating significant economic benefits for their communities."

NBA commissioner David Stern hasn’t been proactive in working with Seattle area business people or Washington state politicians since the start of the NBA season. While Stern and the NBA are front and center in trying to ensure the future of the Sacramento Kings (Stern emissary John Moag is trying to make things work in Sacramento) Stern made it clear he wasn’t going to get involved in debating the Sonics future until the process (Monday’s decision) played itself out. Stern did offer these comments regarding the Sonics at the start of the current NBA season.

“Well, actually I have sort of a sense of optimism because although Clay and his ownership group are based in Oklahoma City, almost from the first day that Clay started looking at Seattle as an investment and then as a purchase, he stressed to me the vibrancy of the Seattle market, the revenue streams that could be available there, and its jumping off status to Asia and its business relationships to Asia, which is a subject on which the Board spent some time today, not in terms of Seattle, but in terms of the NBA’s opportunities. So, I went from kind of skeptical in a way, to kind of getting on line with “Ok, I get what you see here.” But, of course, the large investment that they’re making and that they’re continuing and willing to stand behind is dependent upon a new building. And, they actually have committed to resources for experts and consultants and the like, to follow a critical path that seems designed to exhaust every opportunity, including the political route, the governmental route that is necessary to have a new building. I’m delighted to see the effort so focused, and hopefully their intentions here will be reciprocated by the decision makers who have the opportunity to impact it in a positive way, “Stern offered after the BOG’s approved Bennett’s ownership of the franchise.

“David has said it very well. We, first and foremost in our evaluation, made a decision to invest in the NBA and to be a shareholder in what we view as a very important and growing, global business. We also view the Seattle marketplace as a remarkable opportunity – very dynamic, expanding economy, beautiful place to be. The connection to the Pacific Rim, the existing trade that is there, the future trade that will happen, and the league’s potential internationally and really a lot of work that is already being done in that pursuit. So, our interest is in that marketplace and in that economic model. I am encouraged by what has happened so far in terms of the development of a building. I think we’re being well received, and I think we’re making constructive progress toward that end. So, we’ve been working -- although we didn’t receive board (NBA Board of Governors) approval until today – we’ve been working, really since the day we announced (the purchase), on this project. So, we’re excited to really hit the ground and begin some serious work,” Bennett saying what any new owner would say on the eve of his first year as owner of an NBA franchise based in Seattle.

The reaction from Seattle and Washington state politicians, business people and interested parties Tuesday was a mixture of resignation regarding the Sonics future and reflection of lost opportunity.

Senate Ways and Means Chairwoman Margarita Prentice, D-Renton, made it clear to The Seattle Post Intelligencer she believes Bennett has done his part.

"He gave on everything," she told the P-I's Chris McGann, adding there is little to no chance the Legislature would convene for a special session for the Sonics after the issue died Monday evening.

Prentice said the last efforts to negotiate a deal came "a mite bit late."

"We wasted this entire session," she said. "(Bennett) deserves better than that and the state deserves better from us. Sacrificing 5,800 permanent jobs is a very big deal."
"What is the deadline? How flexible can we be? What are his commitments, legally, to the NBA? That's what we are going to explore," Prentice added.

According to a report in The Seattle Times: a clause in the purchase contract Bennett signed in July for the team states that if a new arena in the Seattle area is not agreed upon by Oct 31, 2007, the team could move to Oklahoma City, home to Bennett and his investment group.

Bennett has said the Sonics would play at least one more season in KeyArena even though the team is contractually obligated to play there until 2010.

To move by the start of the 2008-09 season, Bennett would have to petition the NBA by March 1, according to NBA rules.

Even if they want to pull up stakes, the Sonics are bound to KeyArena and the city of Seattle with a lease agreement that runs through 2010. If the new owners were to seek to end their lease early, they'd have to negotiate a buyout with the city.

"We have a lease through the 2010 season and it's enforceable and we expect the Sonics to honor it," Deputy Mayor Tim Ceis told The Seattle Times. "If the Sonics want to do something else they have not contacted us in that regard and we would have to be made whole."

How much would that cost, "that would be subject to negotiations should they approach us," Ceis said.

"This is all speculative. ... We have not had any contact with the Sonics organization in quite some time."

Seattle's Finance Director Dwight Dively said getting out of the lease could be costly for the Sonics.

"Our view is that we have an absolute guarantee that they will be here through the end of our lease and if they wanted to leave before that we would demand substantial financial damages," Dively said in a Seattle Times report.

How serious were the Sonics about a new arena in Renton, Washington? The Seattle Sonics & Storm opened an Information Center in downtown Renton in late March. The new Information Center is located at 232 Burnett Avenue South, less than a mile from the proposed site of the new King County Events Center. The Center was opened with a ribbon cutting ceremony organized by the Renton Chamber of Commerce. Renton city and business leaders were present to celebrate the opening and welcome the Sonics & Storm. More than 100 Sonics & Storm staff also participated in the ceremony. Needless to say the future of that off ice is very much in doubt as is the Sonics long-term future in the Seattle area.

NBA commissioner David Stern has remained tight-lipped about Monday night’s decision but did share these thoughts last week about the Sonics.

“We’re cautiously optimistic in terms of where things stand at the state level. I know time is getting short. The legislature adjourns April 22, and we’re hoping that there will be a vote prior to that point to authorize King County to utilize some of the tax revenues requested so as to fund a new arena. In the meantime, Clay Bennett is working hard with the City of Renton to secure a site. We were obviously pleased to hear that an agreement in principle has been reached with the people who own rights to the Boeing property that they are targeting for the possible arena site. And so, there is a long way to go still, in Seattle, but Clay has done some terrific work and ultimately the politicians and the people will speak to this.”

The Sonics close their 2006-07 season tonight at Seattle’s KeyArena with a game against the Dallas Mavericks. With a 31-50 record the Sonics are looking at playing for nothing more than Ping-Pong tonight. Is tonight the last Sonics game in Seattle? Or will Clay Bennett exercise the escape clause in his lease and play one more year in Seattle? And if Bennett decides to play at least one more year in Seattle does that leave the possibilities Washington state politicians might reconsider their funding decision at a later date.

It makes more sense for Bennett to move his team to Oklahoma City in time for the 2007-08 season. However that may be next to impossible. The NBA has a March 1 deadline for any franchise interested in relocating for the following season. That said NBA history suggests the Sonics have one more season in Seattle.

Just check how the NBA handled the Grizzlies move from Vancouver to Memphis. After the NBA lockout season (1998-99), the attendance at Grizzlies games began to drop, and the team's owners, OrcaBay (who also owned the Vancouver Canucks of the NHL) began to lose money. Businessman Michael Heisley bought the team in 2000, and one year later, after considering New Orleans, St. Louis, Louisville and Anaheim among others, the team moved to Memphis, in 2001. And that was after the NBA refused to approve Orca Bay’s sale to former St. Louis Blues owner Bill Laurie.

Tuesday, speaking with the media Bennett made it clear he’s had enough. When asked if he would be prepared to bring the Sonics arena proposal next January when the Washington State Legislature could again consider the proposal Bennett conceded he would be well into the process of moving the Sonics. Bennett mentioned the clause included his lease agreement that allows Bennett to move the team if he doesn’t have an agreement in place by October 31, 2007 to build a new arena. Given that the deadline is October 31 and the State Legislature can’t consider any proposal to fund an arena well past the deadline the Sonics are all but done in Seattle.

"I don't think having a franchise that is leaving town is good for anybody," Bennett said during a conference call with reporters discussing the failure in the state Legislature of the team's proposal to build a $500 million arena in Renton.

As Bennett suggested playing what amounts to a lameduck season in Seattle makes no sense whatsoever if Bennett intends to move the team to Oklahoma City. NBA basketball was a tremendous success in Oklahoma City during the Hornets two year stay, something NBA commissioner David Stern acknowledged last week before the Hornets last game at the Ford Center how the NBA felt about Oklahoma City.

“It could not have been better. It exceeded our expectation at every level. Mayor Mick Cornett, the city manager, the newspapers, the business community; but particularly the fans have been outstanding and they made the NBA and the Hornets feel very welcome. To answer your questions, I don’t have a team to send and I can’t tell you a date, but it’s my expectation that the NBA has not played its last game in Oklahoma City.”

And consider these comments Bennett offered Tuesday evening: "I'm not sure it makes sense to play there if relocation (is imminent)."

As the saying goes – ‘There is no time like the present’. It makes perfect sense for the NBA to allow the Sonics to move to Oklahoma City immediately. It’s in the best interest of everyone concerned. As Bennett suggested it makes no sense to play in Seattle if the team is moving. It makes perfect sense to continue the success the NBA has enjoyed in their two years in Oklahoma City by permanently moving a franchise to that market, a team owned by Clay Bennett and a group of Oklahoma City businessmen. The NBA has had a team in Seattle for 40 years, but the Key Arena doesn’t offer the amenities an NBA team needs to generate the necessary revenues to operate a franchise. Bennett and the Sonics are gone, what David Stern should suggest to Seattle basketball fans get an arena deal done and we’ll be back with an expansion franchise. That’s how George Shinn moved the Hornets from Charlotte to New Orleans and then a few years later awarded an expansion franchise (the Charlotte Bobcats) to Robert Johnson.

For Sports Business News this is Howard Bloom. Sources cited and used in this Insider Report: The Seattle Post Intelligencer and The Seattle Times

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