Tuesday, September 25, 2007

The fate of the Seattle Sonics was pre-determined a long time ago

The last few days have seen the battle between Seattle Sonics owner Clay Bennett and the City of Seattle ‘heat up’. Friday Bennett filed his legal move -- filing papers seeking arbitration on the KeyArena lease. Bennett while not stating what his true intentions are, intends to do what he wanted to do since he bought the Sonics for $350 million from Seattle native and Starbucks founder Howard Schultz on July 18, 2006. Monday, the City of Seattle filed a lawsuit in King County Superior Court in an attempt to force the Sonics to continue playing at KeyArena through 2010.

"Too often pro sports teams have run over local governments and gotten their way with them. Today we are standing up and saying 'no.' We have an agreement. We are going to enforce that agreement. We want you to honor your promises," Seattle City Attorney Tom Carr said in a prepared statement Monday.

How serious is the City of Seattle – they’ve retained former U.S. Sen. Slade Gorton legal firm to handle their lawsuit.

"Regrettably, almost from the beginning those Oklahoma owners gave every indication that they did not intend a longtime stay in the city of Seattle," Gorton said, citing recent comments from part-owner Aubrey McClendon that the new owners never wanted to keep the Sonics in Seattle despite their public statements.

"The issues with the Sonics profitability at KeyArena have less to do with KeyArena than perhaps the Sonics' ability to defend the high pick & roll," Carr said. "Good teams, competitive teams have done well here."

Bennett did most of his talking when he fired the first salvo in this war Friday, holding a major press conference after he announced he has had enough with the Sonics KeyArena lease.

“In an effort to bring some clarity as to where we are relative to our lease, we believe it’s time to take some formal action and find the legal determination as to certain elements of the lease. This morning we have filed for a ruling through the arbitration process, by which we hope to find some clarity, or more understanding, of the elements of our lease document. As we approach the Oct. 31 deadline, we’ve seen nothing tangible, we’ve seen nothing come together that is formal, legal or binding that would suggest the development of an arena. Given the tenor of the city in enforcing and demanding that we play in KeyArena for the next three years and given the city’s retention of a highly-respected former U.S. Senator and given their efforts in their own statement of ‘lawyering up,’ we believe it is time to engage.

“Further, we believe it does not make sense to stand and wait and watch the clock strike twelve on Oct. 31. It’s clear that we need to make things happen and get more engaged in advance of that deadline. KeyArena is not a viable NBA arena. A renovated KeyArena is not a viable NBA arena. I understand the timing of this legal filing is in advance of Oct. 31. I want to be very clear that we remain absolutely committed to engage in the same process that would bring about the development of a new building. This is absolute consistent with our original commitment to the selling group, the NBA and the public at-large. We have been consistent about the perimeters and the framework of this acquisition. The franchise will not remain in this marketplace without a new arena. We will not break the lease. We will operate within the legal perimeters set forth in the document, which we now hope will be more clearly defined, and with the guidance of the NBA commissioner and the other owners.

“I’ve said previously that we were going to move the date of the actual filing of our relocation application off of Nov. 1, which I’ve previously stated. This is an effort to move it away from the opening of our season. Hopefully this will give a platform for our team, our coaches and our entire organization to launch a positive year. There is no new time or date set, except to say that we are developing our application, and we will file.

“We’ve also been made aware that there is interest in local investors acquiring the team. The teams are not for sale. We remain bullish on the NBA for many, many reasons, notwithstanding our current operating challenges which are tied to playing in an unworkable facility.

“I want to speak to our most important constituency: our fans, season ticket holders and our courageous sponsors. This is the first year that we’ve really had an imprint on this team and we’re very excited about the season. We have a dynamic mix of young and dynamic players, a first-rate coaching staff and a basketball staff led by Sam Presti and P.J. Carlesimo. You’ll see a disciplined, hard working, smart team on the floor working hard every day to get better. We are committed to providing the ultimate basketball entertainment and social experience to our fans. We will provide solid and meaningful value for our sponsors and marketing partners.

“I want to close and reiterate with what I think are the important points. Our action today sends a signal of urgency and will serve as a catalyst to bring leadership together to find a solution. We will engage in any realistic, leadership-driven opportunities that come our way. Nothing has changed in our commitment on July 18, 2006. If we can reach an acceptable lease agreement with a new arena facility, the Sonics and Storm are here for a very long time. If a commitment for a new building is not realized, we will evaluate our options, which will include relocation. We are seriously committed to finding an answer in this marketplace. We stand ready to engage with our professional consultants and anyone we can bring to the table that can assist in the development of a workable plan. But we cannot stay at KeyArena. I implore leadership – elected leadership, business leadership, civic leadership and people of influence who can move this thing forward – please, come to the table. Let’s talk.”

If only anyone would care to believe Bennett is really interested in talking. All one has to do is examine the history behind Bennett’s $350 million purchase to understand from the day Clay Bennett bought the Sonics his sole goal was to move the team to Oklahoma City.
During the 2005-06 NBA season, Bennett, along with Aubrey McClendon of Chesapeake Energy, Tom L. Ward of SandRidge Energy, and G. Jeffrey Records Jr. of MidFirst Bank, partnered with the City of Oklahoma City and the State of Oklahoma in providing a revenue guarantee for the NBA's New Orleans/Oklahoma City Hornets. This resulted in the temporary relocation of the Hornets to Oklahoma City for two seasons.

Bennett had offered to purchase at least a minority controlling interest in the New Orleans/Oklahoma City Hornets until July 2006 (from George Shinn), however that ended when the NBA made it clear to Shinn the Hornets were heading back to New Orleans by the start of the 2007-08 NBA season. Bennett then made his next move heading a group known as The Professional Basketball Club LLC (TPBC) that purchased the Seattle Supersonics and the Seattle Storm for $350 million from Schultz on July 26, 2006.

The NBA approved the sale of the Sonics from Schultz to Bennett a week before the start of the 2006-07 season. David Stern made special mention of Bennett’s purchase late last October in his pre-season press conference.

“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.

Both Bennett and Stern were saying what needed to be said, but actions speak louder than words. Last November when a proposal to build a new arena in Sacramento for the Maloof brothers and their Sacramento Kings was roundly defeated Stern sent former NBA vice-president John Moag to Sacramento with the goal of brokering an arena deal. A year later Moag, who founded Baltimore based Moag & Co., an investment bank for the sports, media, and entertainment industries is still working hard at finding solutions to the Kings issues in Sacramento. Stern hasn’t sent anyone to Seattle to attempt to broker a franchise saving deal between Bennett and the City of Seattle.

Stern tried his best to compare both where the two franchises where at February’s All-Star Weekend in Las Vegas.

“No, I think that two different things. First of all, in California it's really hard to get anything passed, because the citizens have spoken.

“I think that Seattle is a much more mature situation. The new ownership has done so much, beyond what we could have hoped. They were very poorly treated at first. Everyone thought they were simply going to go in and wanted to move the team to Oklahoma City again. And they were disbelieved when they said they would like to keep it there.

“They've spent enormous sums of money and time and the like to come up with a plan, a funding plan. They've laid it out. They've got a site selected, et cetera. And it will either happen or it won't. We've been around this track a long time and I hope it happens because Seattle has been a very good city for the NBA and the Clay Bennett Group, I think, would be great, great, and will continue to be great owners for the Sonics. I don't see a role for me at this point.” Stern said Saturday.

Thursday, Stern echoed similar comments to The Seattle Times relating to how the NBA feels about the Sonics insistence a new arena (largely publicly funded) be built in the immediate future. Its clear, David Stern has all but washed his hands of any future involvement in the Seattle arena debate.

"I'm not intimately involved" with the latest news in Seattle, Stern said. "Our office is keeping on top of it. I've been extensively involved with the All-Star [preparations]. I haven't had a chance to review it, except on a top-line basis.

"But, obviously, the ownership group is working very hard to get something done and spending an enormous amount of time, effort and money on putting together the best possible proposal and building."

Bennett made it clear in February what he wanted (expected) if the franchise was going to stay in Seattle, a $500 million taxpayer built facility. On February 13, 2007 Bennett visited the Washington (State) House, asking for $300 million in state funding, and $100 million from the City of Renton. Bennett is ready to kick-in $100 million. However, Bennett intends to retain all of the funding the arena will generate. Given the Sonics can expect between $150 million and $200 million in naming rights for the proposed arena, not only will Bennett not pay a dime if his wish is granted, but he’ll actually make a profit.

According to The Seattle Times, here is the proposal Bennett made to Washington’s (State) politicians last Tuesday: Sonics funding plan

Senate Bill 5986 would extend several taxes paying off existing sports stadiums to fund a new arena, arts groups and stadium maintenance.

Sales taxes: A 0.017 percent sales tax for Safeco Field debt would be extended by 17 years, to 2029, and a separate 0.016 percent sales tax for Qwest Field debt would be extended by eight years, to 2029. $227 million

Restaurant tax: A 0.5 percent tax on restaurant meals and drinks to pay off Safeco Field debt would remain until 2015, three years longer than previously projected. $75 million

Car rental taxes: A 2 percent car-rental tax for Safeco Field debt would be extended until 2015. Another 0.75 percent car-rental tax for Kingdome debt also would continue. $40 million

Hotel/motel tax: After the Qwest Field debt is paid off in 2021, a 2 percent tax on hotel- and motel-room rentals would be split between the new arena and arts groups. $81 million

Total financed: $423 million

On Monday, April 16, 2007 Washington State politicians faced two choices – commit political suicide and give into Bennett’s blackmail or reject Clay Bennett’s demands. Sports welfare isn’t what it once was – Bennett’s demands were soundly rejected.

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."

And David Stern – what did the Commissioner have to say about the plight of the NBA franchise that has called Seattle home since 1962? (the sounds of silence are all that could be heard at the time).

And what will be the future for the NBA franchise owned by Clay Bennett and the NBA in Seattle?

David Stern continues on message. He continues (for what its worth) to say the right things the Sonics will stay where they are, but he’ll allow the process to play itself out in Seattle.

At the same time Stern will not get in the way if Bennett’s wants to try and move the franchise to Oklahoma City. David Stern is too smart a man to not realize Oklahoma City proved during the two years they where home to the Hornets the city has earned the chance to have their own NBA team.

The NBA isn’t necessarily done with Seattle. For the NBA history might be about to repeat itself.

Robert Johnson paid a $300 million expansion fee when the Charlotte Bobcats became the 30th NBA franchise on December 18, 2002. The NBA originally expanded to Charlotte in 1987, with the Charlotte Hornets (and the Miami Heat) joining the NBA in time for the 1988-89 season. The NBA awarded the expansion franchise to George Shinn. The Hornets moved into the 24,000 seat Charlotte Coliseum. Shinn became embroiled in an alleged rape case.

Shinn and then partner Ray Wooldridge moved the team to New Orleans after failing to get the public financing for a new arena. Long gone where the days of 21,000 season ticket holders, but the NBA believed in the Charlotte market. Stern and company understood it wasn’t the Charlotte market but the owners of the team in that market. Its well worth noting as soon as George Shinn left town voters supported a new arena for an NBA franchise, Bobcats Arena that opened last year.

That will allow the final piece of this puzzle to fall into place. David Stern will suggest Seattle is a good NBA market, but the current ‘political climate’ isn’t going to allow a new arena to be built. If a new arena is built, David Stern will all but guarantee the good citizens of Seattle – they’ll get an NBA expansion franchise.

Under this scenario everyone wins. Bennett move to a market where he was born and raised – he’ll be seen as the Local Hero, and at the same time the Stern will leave the door open for the NBA’s return to Seattle once the city works out its arena issues. But the first parts done – the Sonics are heading to Oklahoma City, next year.

For SportsBusinessNews this is Howard Bloom

Labels: , , , , ,