It’s on!
Posted on Friday, September 21st, 2007 at 2:56 pm by Xteve
Mayor Greg Nickels Statement regarding Clay Bennett announcement
“Seattle and KeyArena have been home to the Sonics — and more recently the Storm — for 40 years. I want that tradition to continue.
I am outraged at today’s actions by Sonics’ owner Clay Bennett.
There have always been sensible options available to Mr. Bennett if he wanted to keep the Sonics and Storm at KeyArena. Today’s actions make it clear that has never been his intention.
My door has been open, is open and remains open to Mr. Bennett but he has refused to meet. Typically, people acting in good faith engage in a conversation before seeking arbitration.
My position remains the same: I will do everything in my power to enforce the contract keeping the Sonics and Storm where they belong –in Seattle and in KeyArena.”
September 21st, 2007 at 2:59 pm
Go Mayor Nickels! Here’s a cut and paste of our release.
Statement from Save Our Sonics & Storm
Sept 21, 2007
In response to Clayton Bennett’s demand for arbitration this morning in
an attempt to end the Sonic’s Premises Use & Occupancy Agreement at
KeyArena before 2010, Paul Schneiderman one of the legal advisor’s for
Save Our Sonics and Storm has this statement:
The Premises Use & Occupancy Agreement signed between the City of Seattle and SSI Sports, Inc. in 1994 does contain an arbitration clause on pages 54-55 of the lease. However, the agreement is very clear that only certain disputes between the City and the Supersonics are eligible to be decided by an arbitration panel.
XXV. Arbitration (reads in part)
A. Disputes To Be Resolved Through Arbitration: All claims,
disputes and other matters in question between the parties arising out of, or relating to provisions of this Agreement shall be decided by binding arbitration in accordance with the Commercial Arbitration Rules of the American Arbitration Association then in effect unless the parties mutually agree otherwise or unless the claim, dispute, or matter in question relates to the provisions of Article II (”Term, Use Period”), Article III (”Termination of Current Agreement Providing Seattle Center Space for Supersonics Home Games Use”), Article IV (”Coliseum Design and Construction”), Article V (”Coliseum Planning and Construction Schedule; SSI Opportunities to Void Agreement”), Subsection XVI.F (”Hazardous Substances”) or Article XIX (”Subcontracting and Transfer of Ownership).
[b]
Mr. Bennett and the Professional Basketball Club L.L.C. apparently desire to exit this Premises Use & Occupancy Agreement before the conclusion of this agreement in September 2010. Article II of this Agreement states that the Sonics are to play home games at the arena through September 2010. Article II is clearly not subject to arbitration in this agreement.
The City of Seattle has a strong Occupancy Agreement with an enforcement clause on page 59 of this agreement. The City is in a strong legal position to enforce the terms and conditions of this agreement through 2010. It is the goal and intention of Save Our Sonics and Storm to ensure that our franchises stay in the Seattle region through 2010 and beyond.
As part of the long term goal of ensuring that the Seattle SuperSonics and Storm stay in our region, Save Our Sonics and Storm will continue to engage and ensure that everything is legally done to make sure that the Sonics perform at KeyArena through the duration of this Agreement.
September 21st, 2007 at 3:08 pm
That seems like very strong favorable language. However, Nickel’s failure to address that matter in his statement is a bit of a concern.
September 21st, 2007 at 3:13 pm
Bennett still has never met with Nickels and is now trying arbitration to escape? Good luck with that Clay.
What an embarrassment this has to be for Stern.
September 21st, 2007 at 3:21 pm
What a shocker. This was coming from DAY ONE.
I can’t believe we were foolish enough for even a few minutes to think the other day that this snake would work out a plan locally.
IT IS SO ON!!!!
September 21st, 2007 at 3:21 pm
YEHAW!!! Bring it on Cletus, we’ve got more lawyers than you can shake a stick at!
September 21st, 2007 at 3:36 pm
Even though I knew this was coming, I am seriously mad right now. I don’t know what I’d do if I were to stumble across Clay F@#KING Bennett or that douche Aubrey McClendon right now. The audacity they have in flat up trying to bail like this without even pretending to work on something. I hope we kick their asses in this battle. If not, the NBA and David Stern can all go to hell for all I care.
September 21st, 2007 at 3:48 pm
Everyone should be writing David Stern and expressing his/her disgust with this whole situation:
Attention Commissioner Stern
NBA
Olympic Tower
645 Fifth Avenue
New York, New York 10022
September 21st, 2007 at 3:49 pm
I would not count this as part of the good faith effort he agreed to when he purchased the team less than 1 year ago.
It is true, once you take your customers to court it’s tough to go back to a good relationship.
It is true that a solution to the arena has to be in place in order for the Sonics to be here past 2010. The difference now, as of today, is the something acceptable to a new owner need to be in the works, but it does not have to be the palace Bennett was demanding. Bennett has taken himself out of the picture in Seattle past 2010 no matter what happens. It’s all or nothing for Bennett, he’s chosen nothing and is doing everything he can to leave nothing.
Don’t let him. Don’t let him stop people from imagining a new arena and a new Seattle Center, and the Seattle Supersonics here in 2010 and beyond.
Forget Bennett, think about your good future that you work toward.
September 21st, 2007 at 3:51 pm
Can somebody explain whats going to to Percy Allen via email so that he may have an article up in time for tomorrow.
Thanks.
September 21st, 2007 at 4:00 pm
I got this load of shite from the Sonics today…
“Dear Patrick,
Earlier today, the Professional Basketball Club announced it had filed papers seeking arbitration on the KeyArena lease.
This is an important step in providing guidance and clarity to our lease agreement. However, it does not change our commitment to finding a long-term solution nor does it change our excitement for the 2007-08 season.
The off-season has produced a number of key changes in our franchise, all with the goal of building long-term success. Our General Manager Sam Presti added five players to the roster, including two of the first five picks in the NBA Draft. P.J. Carlesimo was named head coach in July and assembled a coaching staff rich in NBA experience. Carlesimo’s commitment for developing a dynamic mix of young and veteran talent promises to create a new era in Sonics Basketball.
We appreciate your support. Season Ticket Holders like yourself are the foundation of our organization. We continue to invest in this relationship and explore new ways to deliver value. Please know that we are here to help you maximize your enjoyment of the NBA and Sonics Basketball. We look forward to seeing you at KeyArena on Oct. 20 for our first preseason home game and on Nov. 1 for Opening Night.
See you at the Key.
Sincerely,
Danny Barth
Interim President & CEO
Seattle Sonics & Storm”
September 21st, 2007 at 4:00 pm
Did not know until just now that Brad Keller is a local attorney. His selling out deserves more villification than Schultz, Walker, Licata, Van Dyk, and Chopp combined.
September 21st, 2007 at 4:13 pm
My response to the load of spin garbage sent to the Mayor, Licata, the Seattle Times and the Sonics.
Mr. Danny Barth, you should be ashamed of yourself for putting your name on the disgusting set of spin in the message below. Neither the Sonics and Storm organization nor the PBC care even the tiniest bit about the fans of these franchises other than hoping to keep a few of us in our season tickets for one more season. If anyone actually cared they would be working towards a solution instead of doing nothing and then trying to cut and run when you realize sneaking out of town wasn’t an option. Those happy and excited faces you use in your header are exactly the people who are being betrayed by your transparent actions.
It is your team and your business, but don’t insult me with tripe like this. I come to the games to support the players and the idea of professional basketball in Seattle. It is a shame that even a penny of that support goes into any of your pockets.
–
Patrick Sheehy
Season Ticket Holder Seattle Sonics
Season Ticket Holder Seattle Storm
September 21st, 2007 at 4:14 pm
Well the war is on!! We should not be shocked at any of this. This is another step in a long and ugly battle ahead. Bennett is back into a corner and this is his best option to try and win. What he wants and what we as fans want are different and each side will do whatever it takes to win. At the end of the day I think that we will win. It is important now to not get ugly with Bennett but to let him do his thing and be positive and supportive fans. Next year we need to support this team like no other by filling The Key and buying all the sonics gear we can. Lets show the world and the NBA that there are no fans like Sonic Fans. If we want to save our teams, the key now is don’t get upset but support, support, support, that is what will hurt Bennett at the end of the day. GO SONICS!!
September 21st, 2007 at 4:23 pm
Obviously it would be nice to see the list of clients Keller represents locally. Before and after this all came down with his name attached.
September 21st, 2007 at 4:42 pm
In Bennett’s own dialect: You just opened the can of whoopass boy!
September 21st, 2007 at 4:58 pm
Some of the sports broadcasters of KJR don’t even think that getting out of the lease is something that can really be arbitrated…at least by the way the paperwork of the lease is written. Is that true?
I think we’ve got Clay pretty well cornered. The message seems to be stay and negotiate or sell. And Clay’s response is “It’s time to engage…” according to Percy Allen. Like this is Battlestar Gallactica here.
Clay says nice things about the Muckleshoots. I won’t say anything more than that because it would be filled with freaking bleeps…and my mother always told me if you don’t have something nice to say better to say nothing at all. Nothing nice to say here.
September 21st, 2007 at 5:05 pm
I want to punch somebody in the face right now, I’m so aggravated. At this point, I don’t even care who. I’m at the point where I despise everything related with Oklahoma to the point where I wouldn’t be too sad if it was bombed by Mexico.
September 21st, 2007 at 5:09 pm
chncasper,
The email address of Brad Keller, the lawyer representing ClayClay is:
bkeller@byrneskeller.com
Tell him what you think of his traitorous action.
September 21st, 2007 at 5:14 pm
Patrick, everything that was said in that letter from the Sonics was contradicted by Bennett in his press conference today, at least according to the rundown I read on ESPN.com. That was an excellent rebuttal.
I’ll admit I was not only aggravated but a little worried by Bennett’s actions today. But after reading the wording in the lease regarding arbitration, he’s got no leg to stand on. Now I’m just mad again.
Oh, and look what I ran across today: Mr. Bennett has a myspace. Check it out: http://www.myspace.com/clayclayokc
September 21st, 2007 at 5:19 pm
I am just freaking stunned by that arbitration request. Is there supposed to be something relevant in it as a legal document. Talk about simply a gripe session.
September 21st, 2007 at 5:20 pm
I am so frustrated right now. Is there any recourse for a season ticket holder.
Part of me understands coming out and filling the key, but a big part of me says F U, and I want my money back.
I know there is almost no precedent for season ticket holders, but wondering about this situation.
One of the marketing ploys was to guarantee prices for the next 3 years if you were to buy season tickets this year… but if they are taking actions to not be here in the following 2 years, what recourse do I have as a consumer????
September 21st, 2007 at 5:21 pm
Funny, I would think he worshipped Satan.
September 21st, 2007 at 5:29 pm
Looking at their own list of representative cases Byrnes & Keller is mostly defense counsel to corporate interests accused of substantial wrongs.
http://www.byrneskeller.com/rep_cases/index.htm
Not surprising they’d take Bennett as a client.
The partners have 30-40 years of experience and given their firm orientation they might feel they can do this without much blowback.
September 21st, 2007 at 5:36 pm
Wow Crow. Byrnes & Keller appear to be, in my own personal opinion, a bunch of sleaze-bags.
Remember to write to Brad Keller bkeller@byrneskeller.com and let him know what you think of a Seattle attorney repping the OKC crew.
September 21st, 2007 at 5:40 pm
Wow. After reading the actual arbitration request filed by Bennett and his idiots, that letter that was sent out to season ticket holders is flat out insulting. Holy crap. The arbitration request itself is VERY combative towards the city and region, stating all the reasons why we don’t deserve the team. And then Barth sends that piece of trash out to current season ticket holders saying that the team is still trying to work on a long term solution, but just getting out of the key? Wow. Just wow. If I didn’t think that we as fans really need to prove to Stern and the league that we still care about this team, I’d be advocating each and every season ticket holder to dump their seats immediately. These guys have no shame in how dirty they play ball.
September 21st, 2007 at 5:42 pm
Alex…
Thanks for the address - I just finished my letter & will mail it tonight to NYC & Stern.
One thing I told him - If Seattle loses the Sonics to OKC - the NBA will NEVER be welcome here again. The trust will be broken. We cannot have any trading of teams. We want Kevin Durant and our Sonics here & if the NBA allows Bennett to move - Forget about moving a new team in in the future.
This is of course only my opinion - others may welcome a new NBA team later is the Sonics leave - but i am not one of them. If Bennett pulls this off - I am done with anything and everything about the NBA forever.
But > whatever any of you may feel about those longer term issues - writing Stern simply to ask him to use his influence to keep the Sonics here is a very good idea.
September 21st, 2007 at 5:44 pm
NBA.com also has a contact us link at the bottom of it’s site. Not sure if any of that ever gets to Stern, but it can’t hurt.
September 21st, 2007 at 5:47 pm
Really notable in his arbitration request is that there is not a single bit of case law, nor is there a single item in the lease cited. It is odd that they would find an attorney willing to put their name on this document.
Here is what I expect.
Sometime next week the city attorneys office will issue a response to the league, bennet, and probably the artbritration agency which will be short and sweet. It will state:
The city recognizes that Article XXV of the lease specifically excludes matters of lease termination from binding arbitration unless both parties agree as such. At this time it is the intent of the city to bind the team to their existing lease and per the terms of section XXV we decline arbitration as a solution to this matter.
My hunch is that the city document will cite specifici case law history as to why arbitration can be declined. You see unlike Bennett they actually have some type of legal fact and basis for their case.
Clay will then file suit to dispute this fact. This suit will take place in Washington Courts and I have no idea how long it will take. I am REALLY confident that the city is ready for this one.
September 21st, 2007 at 5:48 pm
Think a Washington state judge (who is subject to reelection) will side with Bennett? I like our chances…
September 21st, 2007 at 5:50 pm
Hey Brian, maybe you can help me on this one, it seems to me that you are the one that really seems to mention this point and everyone else seems to forget it. What I am talking about is everyone talks about coming up with a number for the Ownership to pay to get out of the lease. The problem is that how do you determine the loss that the businesses surrounding Key Arena would take if the Sonics leave before 2010. Why is no one making and issue out of that. Does the lease mention anything about this??? The city and Clay Bennett have to look at this and also the Arbitration committee that is formed. The city could be made whole by the Sonics but what about those business that probably have leases until 2010 that are consistent with the Sonics Lease being up in 2010???
September 21st, 2007 at 5:54 pm
That sounds about right Brian. Regardless what happens with this arbitration thing. If Clay doesn’t get the ruling he wants, he is going to sue. That is IMO pretty much a certainty as to where we are heading with this thing.
My only issue is this. I am fairly confident that the city can fend off Clay trying to break the lease and also that the NBA won’t support Clay trying to do so. But after 3 years, if Clay really is that determined, which I think he might be, what is to stop him then? I said it earlier, I have a bad feeling that Stern is in Bennett’s back pocket on this one. I think that he gave the Okies his blessing at the time of the sale. And that was why Aubrey was so cocky. Yeah, Stern fined him. But that may have just been for show and a little, “shut up. you’re making this harder than it needs to be” from Stern. I feel that Stern was so greatful to OKC for helping out with Katrina, that Stern is determined to get them a team. And right now, he doesn’t care if that means turning his back on 40 years of Sonics history. Maybe I’m just fearing the worst. But I have a bad feeling about Stern right now. He hasn’t helped us at all like he has tried to with Sacto and Orlando. He’s almost entirely turned a deaf ear on this issue.
September 21st, 2007 at 5:55 pm
Yeah. Good question from Sonicsman. I thought that the specific performance clause was the ace in the hole for us in this thing. Why isn’t it being talked about at all?
September 21st, 2007 at 5:59 pm
So what’s next?
Bennett has demanded arbitration to see if he can buy out the lease and leave town after next season.
The City believes the specific performance clause vs. buyout portion of the lease is not subject to arbitration. Therefore the City will not consent or submit to the demand for arbitration.
So the City attorneys will draft a reply to the arbitration demand saying that they are willing to negotiate on a Key Arena/Seattle Center upgrade or even a new Seattle arena deal - but per the Council’s recently passed ordinance, they intend to uphold the terms of the lease. Period.
In the background, the Muckleshoots and at least one other group - with help from Slade Gorton - will continue formulating a couple separate financing plans for new arenas.
October 31st comes, no arena deal appears imminent, Bennett either files for ReLo anyway - despite having previously said he would delay doing so - or he waits awhile and files, or he pleads his case to Stern, or he waits till just before Christmas to see if anyone else comes forward with a sweetheart arena financing deal.
The second Bennett files for ReLo or as soon as the local groups are ready to present their arena/funding packages - whichever comes first - the City will file an injunction against both Bennett and the League blocking them from leaving prior to 2010. The case will be made to Stern that local groups are willing and able to step up and build/fund a new arena - but only if Bennett sells the team.
Stern will tell Bennett to take the money and run, since this is the only way out without fighting a losing court battle. Bennett will get a promise from Stern that the next available franchise is OKC’s. Stern will take over the Seattle situation behind the scenes, and Bennett will exit stage right prior to next season.
At least that’s what the little voices in my head are telling me…
September 21st, 2007 at 6:03 pm
“I feel that Stern was so greatful to OKC for helping out with Katrina, that Stern is determined to get them a team. And right now, he doesn’t care if that means turning his back on 40 years of Sonics history.”
The link is posted somewhere on the discussion board but there is an interview that said several cities offered to host the Hornets after Katrina. Kansas City and Las Vegas being a couple of them. I don’t see where this makes OKC so unique. I’m sure the Hornets would have done just as well in the other two cities because of the novelty of it all.
September 21st, 2007 at 6:09 pm
You’re probably right Mark. Still doesn’t shake my dirty feelings that Stern is turning a blind eye to all of Bennett’s shady moves. Stern has been just so quiet on this issue ever since Bennett bought the team. Until I hear Stern speak out on the issue and give Seattle some credit in trying to save our team, I will continue to be worried about Clay and Stern being in somewhat kahoots.
I hope your plan works out courtsense. To me, it’s really the only possibility we can win.
September 21st, 2007 at 6:13 pm
One thing that makes me a bit more confident in our fight against Clay. I honestly don’t think Clay knows what he’s doing. And I don’t think any of his actions are ever planned out too far ahead.
For example. He threw out that ridiculous Oct 31 deadline only to say, “whoops. sorry. i didn’t know that was the day before the season starts. i don’t want to put a damper on the start of the season.” But now he has done 1,000 times worse by calling out the city in the arbitration request and saying that it’s a lost cause in this town.
Where is the “art and skill” that Aubrey was bragging about Clay having? Clay seems like he’s reacting to each thing the city does like a scared fool.
September 21st, 2007 at 6:13 pm
Wrote another e-mail to league office but not clear if it went thru given the error screen that came up. There was a suggestion at tacoma tribune blog for an easier way to hit Stern up with a large volume of e-mails. Instead of each person registering at nba.com and it going thru or not maybe the mass-mail feature on this site could be programmed to receive e-mail and then deliver them in a bundle (or route them thru a functioning member account at nba.com)?
September 21st, 2007 at 6:54 pm
No surprise at all people! I have written to David Stern about this already via snail mail. Time to show Clayfish that we won’t tolerat any of this crybaby behavior of his! Stick it to him, Nickels!
September 21st, 2007 at 7:17 pm
Paul Schneiderman (apologies if misspelled), lawyer for SOS will be on KJR shortly to talk about the arbitratin demand vs. what the lease says.
September 21st, 2007 at 7:17 pm
Paul Schneiderman (apologies if misspelled), lawyer for SOS will be on KJR shortly to talk about the arbitration demand vs. what the lease says.
September 21st, 2007 at 7:24 pm
Thank you very much Crow, he’s on right now!
September 21st, 2007 at 7:36 pm
If anyone wants to give David Stern a call his number is:
212-407-8300
no joke this is actually his number, give him a call
September 21st, 2007 at 7:55 pm
Hey lets all take a moment and bask in the day.
This guy got smoked out of his hidey hole by the fans actions. I think he really panicked in this one and the timing is 100% a reaction to the the impending reality that the city intends to enforce the lease.
This process is hard and the road is long, but Steve Kelley was just on the radio saying that he believes this was a reaction to all the positive momentum that we had gained on the street here. I’m going to take that compliment from Steve and feel like we helped get things get moving. The absolutely have to move after this year if they intend to move. 3 years is just brutal and it will get worse. It will get uglier and more embarassing for everyone involved on their end. This action, and the completely laughable text of their document really reak of desperation.
I have wondered for a long time what happens if they file for relocation while still bound by a lease. I now have my answer. They can’t make the filing until they get resolution and they need to find a way. They wont get it.
September 21st, 2007 at 8:17 pm
I agree that they appear somewhat desperate for a way to avoid serving the full lease and that is a good development.
Ian mentioned that Ricmond Public Relations is working for Bennett. Jason Hamilton color commentary analyst for the hometown UW Huskies men’s basktball games on kjr is Senior Vice President of Richmond. May or may not be circumstance beyond his control but he is caught up in this.
September 21st, 2007 at 8:23 pm
If this ends up in court the city should request the work timesheets of HOK to demonstrate how many hours they worked specifically on an arena for this market vs tweaking the surface appearance of work already done for others or done generically for any market (including the Orlando project they got somewhere along the line). I don’t I ever heard anything about them meeting with Rention planning officials in person. If they did, it probably wasn’t much for a $500 million project that was portrayed as vital to happen immediately.
September 21st, 2007 at 8:34 pm
EJ–
I think that writing to the league office listed on the nba.com site is effective. I actually did that when the Aubrey McClendon thing came up. I think if there is something newsworthy and the comment is written in an intelligent, diginified way, Stern will take notice.
The one good thing about all of this is Clay Bennett doesn’t seem to be nearly as smart as he might have seemed several months ago. He doesn’t seem to understand that he really can’t arbitrate his way out of a binding lease, and he’s not trying to hide his true intentions anymore…which seem more and more like he was tampering all along. If Stern hasn’t realized this yet, he will very soon.
Our job is to bring this to his attention…just like we did when the Aubrey McClendon issue was brought to the press. I still attribute that accomplishment to Brian and the guys at this site. We have the power to continue to make all of this stuff newsworthy.
September 21st, 2007 at 8:35 pm
Maloofs going back to the streets to try to rebuild their image. Always largely an act with a purpose but still something largely lacking here.
http://www.sacbee.com/100/story/387075.html
September 21st, 2007 at 8:39 pm
Orlando Magic and local cable company doing the money dance negotiation that affects whether fans have a higher level cable package to see the games. After local officials funded their arena plan. Gratitude.
September 21st, 2007 at 9:04 pm
The best thing about holding the team here until 2010:
What players are going to want to sign up or sign an extension if they are going to have to play in OKC?
Does anyone think Kevin Durant and Jeff Green would be more inclined to test free agency rather than have to continue their career in OKC?
Especially since players can potentially make a lot more money in larger cities.
If they do succeed in taking the team in 2010 at least they wont get KD.
September 21st, 2007 at 9:16 pm
I hope that there is a long and drawn out court battle and Bennett gets so frustrated he sells the team. He has done nothing but lie to us this whole time and I don’t think he has a single supporter left in this city. If Bennett wants a team in OKC, let him talk to his BFF Stern about an expansion.
September 21st, 2007 at 9:28 pm
Can anyone comment on the specific language ownership used in the arbitration demand?
“The Sonics seek a declaratory judgement under XXVI and XXVII of the agreement, specific performance is not available to force the Sonics to play the final 2 Seasons at Key Arena”
This seems to be the crux of their argument. Does anyone know what those sections say and can ownership really attempt to take the lease to arbitration given the working in these sections?
September 21st, 2007 at 9:34 pm
there are several out and out lies in this arbitration.
“city officials have repeatedly acknowledged that there will be little or no cultural or economic impact on the city if the sonics leave.” what?! when did they say this? i never heard of such things.
“a majority of the public has accepted the team’s imminent departure. the sentiment among many is who cares?” well the sentiment among all those on this website is “WE CARE!”
fuck Clayton Bennett.
September 21st, 2007 at 9:53 pm
Ok - - apologies in advance for a long set of posts. But, I hope you will find them worth reading. If not, just skip on:
Regarding the Arbitration Petition and related matters, a number of points, all in my opinion, of course:
1. Byrnes & Keller is an excellent litigation boutique firm here in Seattle. That is what they do. Litigation. Exclusively. It is extremely unlikely that they are regular counsel for the Basketball Club. Their appearance is an attempt at a message: No gloves.
They have styled themselves as “samurai litigators” in the past. I do not believe that they have changed their ethos.
2. They are very good. You can expect the best from them.
3. The Petition is not. As others (courtsense, Crow, drrew, Rock, some of whom I suspect of being lawyers) have noted, as things go, this petition is extraordinarily weak. Because Byrnes & Keller is so good, I have to believe that there isn’t much there for them to work with. Brian is right in his reaction to the petition. The City attorneys will tear into it.
September 21st, 2007 at 9:54 pm
4. In fact, the petition is so weak, that any good litigator who has been following the Sonics situation would be absolutely salivating at the prospect of deposing the Basketball Club and its owners / employees. Much of the “fact” base for the petition would appear to be unsubstantiable - - a critical flaw. And, there is absolutely no statement of basis for an arbitrator’s jurisdiction. Not at all a good sign. Byrnes & Keller know how weak their argument is….as will any arbitrator.
5. As a result, the intended “samurai” message will be lost. While it may make for good PR for a while (as most newspersons have no clue about law suits and what they mean), eventually one of the three major newspapers will have the sense to ask an experienced lawyer to look at the situation and then report on the results of the inquiry. After the laughter subsides, the reporter will (hopefully) explain to the public that this means one thing: desperation.
With this petition, Clay has bought himself an opportunity for an almost endless, lawyer-filled well to pour money into. And, it’s a dry hole. And, if he backs off from paying Byrnes & Keller to continue the battle, he will lose the only leverage he has left!
6. It appears that the Basketball Club has now realized that they can look forward to 3 more years in Seattle, and don’t like the prospect.
September 21st, 2007 at 9:55 pm
7. Last year they lost $17 million. They have, as others have noted, spent the off-season de-marketing the Sonics. Despite the great good fortune of their draft success, the Sonics have seemingly actively attempted to cause the fans to disengage even more actively than they already were after the discouraging performances of the last 2 years. Is this a work of genius to extort exorbitant benefits from gullible Seattlites? Or, is it just a really hopeless performance?
8. I have reserved judgment on the “smartest in the room” vs. “dumbest in the room” debate until now. This latest performance closes the matter for me, though. If this is the best they can do, using one of the finest litigation boutiques in the city, then they have grossly misjudged their investment.
I conclude this for the following reasons:
a. They, by all accounts, over paid for the franchise.
b. They have no hole card. They must have figured that the City would roll over and take a buy-out. But, why would you assume this with so much at stake. A prudent businessman would either (i) check that issue out first, or (ii) have an escape route. It would appear that neither pertains here.
c. They appear to have failed to check the history of attempted franchise swipings here in the Seattle area. While the Pilots were successfully swiped 3 decades ago (after one year in the market), more recent attempts on both the Mariners and the Seahawks were decisively rebuffed. And, in a way that failed to profit significantly the attempted swiper, and left them OUT of major league sports.
d. They also appear to have underestimated the potential year-to-year losses from club operations.
e. And, perhaps most catastrophically, they failed to appreciate the risk involved of depreciating the value of the franchise while fighting to get out of the lease. They are now faced with having actively created fan apathy.
f. In doing so, they can hardly have endeared themselves to the NBA decision makers upon whom they will rely in 2010 to get out of town. Nor are they likely to have created the good will that will enable them to make a persuasive case for their ability to manage a new franchise in an OK market that will be VERY challenging after the first few years’ novelty factor wears off and the demand for a fancy new stadium begins to wear on the local market.
Does this sound like smart strategy to anyone?
My opinion? EJ is right - - “I honestly don’t think Clay knows what he’s doing. And I don’t think any of his actions are ever planned out too far ahead.”
September 21st, 2007 at 9:55 pm
9. So, how does a group of putatively smart, well-to-do folks end up doing something so off-kilter?
I submit that JJ is correct. Misunderestimation, to quote a famous politician. And, I would submit that Brandon is also correct: Bennett is used to a press / opinion environment that isn’t as questioning as we have here. He doesn’t have an automatic, family owned apologist machine to rely on.
10. Can Bennett save this situation? I think not. He has very aggressively burned any bridges that might have offered him a way out locally. This will haunt him.
Most importantly, if the concepts that Brian and Van Dyke have been working on can come to fruition, I cannot conceive of the NBA permitting a franchise transfer. So, he would be stuck here, with everyone (justifiably) hating him, and losing millions per year on an overpriced franchise, having to make annual (or more frequent) cash calls to increasingly disgruntled OK investors. Sound like fun?
11. Most importantly, the situation is strategically catastrophic from a re-sale standpoint. With the franchise mobility limited, and staggering annual losses, no local buyer will be motivated to exceed the original, excessive purchase price. Bennett and company may face the unattractive prospect a couple of years from now of re-selling the franchise locally for the original purchase price – arguably a financial and strategic catastrophe.
And, it would be a catastrophe that would break any hope of them putting together a successful bid for an OK franchise.
12. So, do you like the sound of that outcome? I would submit it is achievable. It depends, though, critically on the Robinson / van Dyke / Sims vision for the Seattle Center catching fire.
13. Last, in response to passingby’s comment “Lawyers are a hired gun..they have no obligation to not take the case..” I would say: true. But, they also have no obligation to take a case, especially a losing one….
Sorry for going on so long. I hope it was at least interesting.
September 21st, 2007 at 10:09 pm
Solid analysis guest.
They don’t a hole card but they are hoping that something lucky happens- whether it be region caving completely (won’t happen) or just enough to make it worthwhile (might happen but not sure they take it and keep it) or New Orleans situation breaks in a way that benefits their interests or league grants relocation or Stern gets so uncomfortable he grants expansion. They still could win despite poor play so far.
September 21st, 2007 at 10:13 pm
For them to win (in a fashion) we don’t absolutely have to lose or vice versa. Now isnt the right time to talk win-win outside of arena here probably but if Bennett ever asks about expansion I’d support it.
September 21st, 2007 at 10:17 pm
Oh - - right. I forgot one other key point. Who’s the real “smartest guy in the room” here.
No surprise….. its Howard Schultz.
He sold above market. He outsourced all the pain and cost of the arena fight. And, if things hold as I have predicted, the Sonics stay in town, and he’s not the villain.
A winning hand!
September 21st, 2007 at 10:17 pm
If he asks for relocation and is turned down or deferred, I assume he will refile, but might also request expansion. If he is rebuffed twice (in either manner of second request) I’d think he’d likely sell. I frankly don’t see how you can be that bullish on the NBA as a financial investment right now. I know the history but I don’t think the future will maintain that pattern.
September 21st, 2007 at 10:21 pm
True Howard may have bet that in the end Stern saves his reputation. A gutsy bet but a good point.
Solidarity. Taking care of family business.
September 21st, 2007 at 10:42 pm
Crow - -
I agree. Clay’s only hope is that Stern bails him out in 2010 (over local threats of continued litigation).
1. Can he (or, rather, his ownership group) withstand the pain until then? I doubt it. Counting the time value of money, they are looking at +$70 million in losses that will not be recoverable. Unless they are truly out of it, they will realize that there comes a time to cut their losses.
2. Will Clay have demonstrated (by 2010) to Stern and the NBA the sagacity that would cause them to support his request - - after 3 years of community missteps and catastrophic losses? Very doubtful.
He’d have to crawl in this community to repair the damage to his own interests that he has caused here. Clay doesn’t strike me as the crawlin’ type.
Some time real soon he, or one of the smarter guys in his ownership group, is going to realize that they have checkmated themselves and start looking for a $$$ saving way out.
This effort may actually be under way - - the Petition may be the opening gambit. If so, I hope that the City has the sense to recognize it and play hard, as our leverage only increases over the next 6 months.
And when Clay and company really do start looking for a way out, David Sabey, or some other shrewd, well-to-do, well-connected potential owner, who supports, and provides a template for a re-done Seattle Center, will emerge and put Clay and company out of their (and our) misery. I hope.
Really, the opportunity for someone like Sabey to become a civic hero is enormous. A smart developer, working with Sims and the City politicians to re-work the Center and save the Sonics would be lionized for decades - - kind of like Slade and the Mariners / Seahawks. I would think that would be pretty attractive to someone who has already made their nest egg….
September 21st, 2007 at 11:15 pm
Guest & Crow… Lots of good thoughts > A few more here:
The next pressure point…. And this could be the big one… If Gregoire & others can somehow bring together an new arena deal that is reasonable - in the next 3-9 months - ALL the pressure will be on Bennett.
A. If he says “NO - Not good enough for me” AND a local buyer says… “Well, If you sell me the team I’ll Take that arena deal & keep the Sonics here” Then I think it would be incredibly hard to Bennett to hang on and later try to move while crying Seattle won’t give him an arena deal. I think this scenario or something close to it has to happen - and very well could. There would be intense pressure by Bennett to get top dollar for the Sonics - but hopefully Stern & others would force bennett to sell even if he doesn’t get the price he wants.
B. If he says “Yes” - great - the Sonics stay. It is hard to determine if Bennett would want to still be the owner or if he would then want to sell - who knows what’s going on in his mind. Would the relief of seeing the Sonics stay & a new arena going up give Fans a forgiving spirit? Who knows. But this reality remains…
No New Arena Deal > Still no Sonics after the lease is up.
But I agree that I think Bennett will have an incredibly difficult time moving the Sonics before this current lease expires. He is indeed desperate. And I think in all this we should remember to move the team he would still need league approval > And Stern & the owners could be highly motivated to NOT approve a move after this year even if somehow Bennett gets some traction in this arbitration because to approve a move in the midst of all that has gone on they risk as a league…
> A Public Relations nightmare
> The threat of litigation hell & seriously exposed legal liability & risk for big $$$ for years from various Seattle interests (You don’t think there would not be plenty of eager lawyers lining up ready to sue the NBA & any NBA owner who voted to approve a move for who knows what kind of damages - and try to bleed them into costly settlements?)
Right now Bennett is in trouble. I think he is showing himself to be in over his head. I also agree with previous posts that he is completely out of his league in terms of media savy > he is in a national market without the soft/cushy favoritism he has grow comforatable with in OKC with his wife owning the only paper in town > He was and is completely clueless in terms of understanding media relations. He is a small time guy - who has some gifts to do well at a certain level - but he has now hit the big time as an NBA owner in seattle and he is simply in over his head - after buying a team with all kind of dreams while being enamoured with the glamor of it - but he simply did not do his “Due Diligence” very well at the point of purchease and he has also gone downhill from there managing his investment.
Other than all that - he’s a genious and everything is going great for CB.
September 21st, 2007 at 11:18 pm
Also… Once the season begins…
I’d be interested in anyone’s thoughts on this idea I’ve seen floated around:
One way to help save the Sonics & pressure Bennett is to get as many people into the Key as possible - buy tickets & go to the games - shows Stern & the national media Seattle wants the Soncis etc. >>> BUT >>> once inside the KEY boycott purchasing food and souvaniers etc.
I don’t know who gets the food money etc. - but could this hurt Bennett more in terms of bleedin him for money & maybe motivating him to sell as he losing more money and feels the protest of his teams fans toward him as an owner?
I don’t know - But I wonder if this would help or not.
September 21st, 2007 at 11:22 pm
“But, they also have no obligation to take a case, especially a losing one….”
Not true. Laywers get paid whether they win or lose. If I’m a law firm, I sign up for this engagement in a heartbeat, no matter what side it is. They’re looking at a lot money in time billings, whether this drags out one year, or more. Their pockets will be lined, and they’ll win regardless of the outcome. Our legal system at its finest.
September 21st, 2007 at 11:25 pm
Great insights and analysis, Guest.
The complete and obvious lack of a hole card - i.e., acumen - would be hilarious if it weren’t so pathetic. Buying out the lease and moving after this season was the only chance Bennett had. But that option is gone, long gone at this point. The document Bennett put forth today revealed nothing so much as the PBC’s utter incompetence. Either they have a solid case, but the brief was written by a 15-year old - or they have no case. So now we hear from Guest that the hired guns at the law firm are bigtime litigators. Presumably the firm didn’t substitute a 15-year old’s term paper for the real doc.
Conclusion: they have NO case. No arbitration case means no lease buyout means no escape route means no teams moving.
Bennett is done in Seattle. He has nowhere to turn, he does not have one single meaningful ally in this community. At this point, I’ve gotta think that the always cool/calculated/measured David Stern is watching all this stumbling and bumbling choreography and asking himself “are you kidding me?”
September 21st, 2007 at 11:25 pm
Oh, I forgot to include, great analysis, though. Bennet has painted himself and the ownership in a corner. Even if they’re forced to sell and are promised a franchise in OKC at a later date, they’re going to lose a ton of money on this deal when it’s all said and done. If Stern forces the Sonics to stay in Seattle, who would be willing to pay Bennet $350 million for the franchise. He’ll have zero leverage if he wants out. That will be the biggest F-you to Bennet and OKC. Cut your losses and run now, Clay. You’re fucked.
September 21st, 2007 at 11:54 pm
I’m a season ticket holder & here is part of an e-mail from the Sonics today they sent out…
“Earlier today, the Professional Basketball Club announced it had filed papers seeking arbitration on the KeyArena lease.
This is an important step in providing guidance and clarity to our lease agreement. However, it does not change our commitment to finding a long-term solution nor does it change our excitement for the 2007-08 season.”
This was followed by blah blah blah - we love your support - come to the Key etc.
I thought it was very telling they said they are looking for a “long-term solution” that has NO reference to Seattle or keeping the Sonics in Seattle.
I wrote them back & said Clay is a Liar & has earned his own reputation as likely the most unpopular owner in NBA history. I also let them know that if he’d like to get together & talk with me about it I’d be glad to connect.
September 22nd, 2007 at 12:33 am
1. Can he (or, rather, his ownership group) withstand the pain until then? I doubt it. Counting the time value of money, they are looking at +$70 million in losses that will not be recoverable. Unless they are truly out of it, they will realize that there comes a time to cut their losses.
- Another thing to remember is how much he paid extra for the team. If he does in fact move the team to OKC in 2010 he will have all the expenses he lost AND if he ever wanted to resell the team he’d still come out behind. Just a bad, bad investment on his part
September 22nd, 2007 at 12:40 am
Court,
October 31st comes, no arena deal appears imminent, Bennett either files for ReLo anyway - despite having previously said he would delay doing so - or he waits awhile and files, or he pleads his case to Stern, or he waits till just before Christmas to see if anyone else comes forward with a sweetheart arena financing deal.
- Based on past experience I think it is pretty obvious that Clay will apply for ReLo the second news about an Arena proposal (with financing numbers) being available for him to review…thats just how he rolls…
September 22nd, 2007 at 12:46 am
“I thought it was very telling they said they are looking for a “long-term solution” that has NO reference to Seattle or keeping the Sonics in Seattle.” - JJ
This was exactly my thought. Pure double talk from a douchebag.
September 22nd, 2007 at 12:50 am
- I’d like to stand up and give Guest a hand for a great piece of analysis…I agree with every single thing you said and could not have worded it better myself. Register for the site we could use your insight around here…
…well unless you are an Earl Watson fan
September 22nd, 2007 at 12:51 am
The funniest part about this is if Clay does sell there is no way he does not take a loss…talk about a failed business venture.
September 22nd, 2007 at 12:55 am
That number robswift posted for Stern seems legit. Flood his voicemail.
212-407-8300
September 22nd, 2007 at 12:55 am
That number robswift posted for Stern seems legit. Flood his voicemail.
212-407-8300
September 22nd, 2007 at 1:03 am
I have figured out how I am going to support the Supes this year and not Bennett. I will go to as many games as I can, but WILL NOT buy a ticket from the team. Yes, that means that I will be forced to buy from scalpers, something I hate to do normally. But not in this case. Think about it. The scalpers have already purchased their tickets. Whether or not I buy them or not has zero effect on Clay’s ticket sales. But I can still show my support for the team while not supporting Clay. I urge others to do the same if you don’t already have your tickets. And yeah. Don’t buy anything directly from the Sonics. Grab a burger at Dicks before the game and couple beers at Floyd’s. This is on my friends.
September 22nd, 2007 at 1:10 am
I think its time to start planning a world-wide boycott of the NBA. If Stern does not get his nose into this mess and keep the Sonics here lets hurt them all.
I agree with others on here that have said “if the Sonics go I’m done with the NBA”, however I’m going further. I’m taking people with me. Lets all give the big finger to the NBA for life. Lets gather worldwide support for boycotting games, TV, radio, merchandise, etc.
Of course, not everyone will go along but we can cost them money. All of them.
September 22nd, 2007 at 2:09 am
Seems to me that the prospects of losing a significant amount money every year by being forced to play in a substandard arena with the worst lease in the league would be grounds for a settlement. Apparently, i’m in the minority with that opinion.
September 22nd, 2007 at 7:46 am
D. Tate…
I think your premise here is accurate. TI think maybe the variable is the WILLINGNESS of either party to settle. For that to happen both need to want to settle for whatever reason - other wise someone settles it for them while they fight it out.
It is my hope that the Seattle Leaders are sincere in their stand that they will under no circumstances support a lease buy-out. If so, they won’t settle for any reason. This would force a judege somewhere in our legal system to eventually decide for or against Clay’s request.
I’m not a lawyer but I would assume if Clay get’s this to arbitration & wins - maybe the Sonics could still sue at that point to block a move. Hopefully the opinions above in this thread are accuarate that Clay has a very weak case & this is a desperation move.
September 22nd, 2007 at 7:58 am
My response to Dick Tate about the Sonics being forced to play with a bad lease would be to read my blog article which I give my opinion on how the lease is not the only problem in this mess!! The Ownership needs to put a good product on the floor that wins. Remember Berry Ackerley was making money in the mid 90’s under this same Lease because he had a winning team!!! Clay Bennett can’t blame the City and the lease on all the Sonics problems!!!
September 22nd, 2007 at 8:06 am
Follow-Up question for Guest & others….
If you think Clay & his Clay’s lawyers know their arbitration case is pathetic - What do you think is their game plan if they Lose arbitration? Just sue from that point? Is that why you believe they hired this particular law firm > to really manage an expected law suit following the expected loss of their arbitration case?
How might the time line for the legal moves & possibilities look in all this? Does Bennett have time to go throught his process?
September 22nd, 2007 at 8:09 am
I think BR is likely on target near the top of this interesting thread…
This arbitration filing reveals that Bennett knows he cannot petition NBA owners for a move approval without resolution on the lease. So this is the only card he can play - legal attack.
This is all impacted by the recent unification among Seattle political leaders to clearly say they will NOT negotiate a lease buyout. Getting such a buyout was probably Bennett’s agenda 6-8 weeks ago when he went public saying he wanted to gets some talks going with Nichols. So three cheers for everyone who participated in helping get Seattle political leadership on the same page regarding holding Clay to this lease.
Would not hurt for everyone to write Nichols & others to thank them & encourage them to stay strong in this. Nichols comments yesterday were IMO encouraging.
September 22nd, 2007 at 9:19 am
“Dick Tate Says:
September 22nd, 2007 at 2:09 am
Seems to me that the prospects of losing a significant amount money every year by being forced to play in a substandard arena with the worst lease in the league would be grounds for a settlement. Apparently, i’m in the minority with that opinion.”
Dick, I can see why you might think that. But the first 3 questions Bennett would get in court would be:
1. were you not aware the lease was part of the purchase package when you bought the team?
2. did you not read the lease before you purchased the team?
3. did you not know the lease had 4 (now 3) years remaining, and that you would be obligated to fulfill the terms of the lease, including the specific performance clause, before negotiating a deal for a new arena and a new lease?
How is it the City’s problem if Bennett cannot make a sufficient profit from the existing lease? How is it the City’s problem if Bennett thinks the Key is not a viable building? How is the city legally culpable fo Bennett’s perceived problems in those cases?
If the roles were reversed, and the City decided - with a full 3 years remaining on the lease - that the lease was “the worst in the league” and they were not making enough money, could they just stop fulfilling their end of the deal and renegotiate a new deal that was more profitable to their side?
Of course not. A Deal Is A Deal indeed…
The other thing is that the so-called “losses” claimed by both Schultz and Bennett are a crock. The NBA has franchise bylaws that specifically allow new ownership groups to “cook the books” for the first 5 years of the new ownership period and essentially turns losses into “virtual losses” - where the paper losses flow through as write-offs and the actual losses virtually disappear.
It was all detailed in a Seattle Times article when Schultz sold to Bennett last year…check it out.
September 22nd, 2007 at 10:03 am
Would this work?
No one attend any home games but have people outside the arena carrying picket signs that read:
“We love the NBA but we are boycotting Clay Bennett”
I would just love to have a way to bleed those OKC’ers as much as possible.
September 22nd, 2007 at 10:11 am
JJ says - - “If you think Clay & his Clay’s lawyers know their arbitration case is pathetic - What do you think is their game plan if they Lose arbitration?”
Apologies for another long set of posts - - ignore if this is getting boring. Again, all of the following is just my opinion from what I read in the papers- - no inside knowledge:
Since I don’t know Clay’s real preference function, this is very hard to estimate. And, to me, since it appears from the outside that Clay and his team have not been behaving as a completely rational maximizers, it is even harder. But, here goes:
Step 1. Arbitration panel declines jurisdiction. The first step is that Seattle submits a brief to the arbitration panel asking the panel to deny jurisdiction - - that is, to determine that the lease does not provide for arbitration on the specific performance issue. From what I can see, Seattle should win this one hands down.
Note: another alternative would be to take the issue to court for a ruling on the panel’s jurisdiction. Without reading the lease, I can’t really tell which is the proper venue. Either way, I’d be very surprised if Seattle doesn’t end up with a determination that this is not an arbitrable issue. If I were the City, I’d probably file a motion in both places - - with the Arbitrator and in Court.
Time horizon - - 2-3 months. This is not a particularly complex issue. So, the time horizon Clay mentioned in his press conference is not unreasonable.
September 22nd, 2007 at 10:12 am
Step 2. Court determines not arbitrable. If the Arbitration panel declines jurisdiction, the Basketball Club will likely appeal to court - - here in King County. As you all know, King County judges are ELECTED. They (generally) don’t want to return to private practice. I have noticed that when big, political issues like this show up in their courtrooms, they seem, sometimes, to lean a bit in the direction of the “home town squad”. This concern has not been lost on Byrnes & Keller. This is why the Basketball Club will want very badly to have the specific performance clause determined by an arbitrator.
And, on a question like the arbitrability of this dispute, where the best interpretation of the lease probably lies in the City’s favor, the judge is unlikely to waver. The Basketball Club loses.
Time horizon: Another 2-3 months. Could be longer. Again, the arbitrability issue is not particularly complex, and could be handled in motions practice fairly quickly.
September 22nd, 2007 at 10:12 am
Step 3. Court determines that specific performance clause is binding. The Basketball Club’s next step is to ask the court to determine whether the specific performance clause can be enforced. As others have stated, specific performance is generally viewed by courts as an extraordinary remedy - - one which is rarely granted. Sounds bad, right?
September 22nd, 2007 at 10:13 am
Except:
When it is a remedy that was specifically bargained for, and represents a material form of consideration that was integral to the basic deal, the courts will enforce the specific performance provision.
So, this is the real battle. And here, it appears to me that Seattle holds the real upper hand as well. It seems to me that the City, as the guardian of its citizens’ interests, has lots of ways in which to explain to the court why the specific performance was integral to the basic deal. Most of these grounds have been thoroughly discussed on this board: the dependence of local businesses on the revenue stream from the Key; the impact on the financial stability of the Center from losing not just the $$ from the lease, but the spill-over $$ from all those customers coming onto the Center grounds; and many other good reasons.
This could easily take a year or more to resolve. Both parties will want to take multiple depositions (especially the City, whose attorneys will be loving every moment of unveiling the Basketball Club’s public duplicity). All documents ever produced related to the negotiation, and re-negotiation, of the lease will be looted through, looking for any scrap of evidence that might help to tip the balance. An absolute wealth of e-mail will be dredged up.
Imagine all the things that the Basketball Club’s staff, employees, and owners will have been saying to each other in e-mail about Seattle, the prospects of moving to Oklahoma, the City and state governmental leaders, local activists, and the local citizenry generally. Their PR firm’s e-mail will likely be a particularly great source of damning information. All of that will come out. And find its way into the court’s files….
Wonder why they want to be in arbitration, where the files are not open to public scrutiny?
September 22nd, 2007 at 10:13 am
Now, a couple of interesting questions arise:
Question 1. Does the City want to get a quick resolution here? Or will they try to play out the clock while bleeding the Basketball Club through the lawyers and working to put together an arena deal and a buy-out package?
My guess is that the City will want to take a “bleed them” strategy. The City likely has the strong upper hand on the specific performance issue. The City’s attorneys can likely destroy the Basketball Club’s public reputation through discovery of those damaging e-mails that you KNOW are out there. Thereby they will greatly weaken the Basketball Club’s ability to generate NBA support for a move after the lease expires. And, it gives the City time to develop the new Center plan. All told, my guess is the City takes it excruciatingly slow. It would be the smart strategy. And, the Slade / K&L Gates team is smart on this sort of thing. Very smart.
So, time horizon - - 1 year to 18 months. Think about how long the work out between the Times and the PI took. This is a comparable situation.
September 22nd, 2007 at 10:14 am
Question 2. Did the Basketball Club think this thing through? First, understand that representing the Basketball Club in challenging the lease would be viewed by any attorney as a super-plum, high-visibility assignment. Any good litigator would want it. So Byrnes & Keller would never want to tell the Basketball Club not to embark on this course of action. And, it probably isn’t their job to figure out the best business strategy for the Basketball Club. They are litigators. Their job is to put on the best case they can, and win (if possible).
But, where is the Basketball Club’s general counsel? This is folly! Inevitably, whether in arbitration or in litigation, the bad facts of the Basketball Club’s duplicity will come out. And, when it does, it kills their chance of success, both short-term and long-term, both in Seattle and with the NBA. Their ownership group starts to realize, if they don’t already, that Clay doesn’t know what he is doing, and is in over his head.
The general counsel had to have told these guys - - don’t do it! I can’t believe that he missed the implications of embarking on this course of action.
So they don’t embark on this course of action unless one of two things are true:
1. They are really at the end of their rope. Thus my earlier comment: desperation. Or,
2. They are really short-sighted. Which is very possible, given what we have seen from them so far.
September 22nd, 2007 at 10:15 am
So, what is their game plan? Well, if I were in their boots and cowboy hat, I’d be looking for an exit strategy real fast. Here’s my accounting of their peril:
1. They bought the Club for $350 mil.
2. Its now valued at $250 mil (if I’m remembering correctly). We’re down $100 mil. Not so good.
3. Investors typically want a 10% return on investment. But, lets say this is a “charitable” investment for the good of the community (note: which community?). So, the investors would want only a 5% return. That’s a $17 mil return each year, either in cash paid, or value appreciation. A pretty steep climb if we are already down $100 mil. With no sign of price appreciation, we are down the $17 mil appreciation for 2006-07.
4. Then, we actually lost $17 mil cash last year, and had to make a capital call to the investors. Not a good sign. So far, by my reckoning, we have lost $135 mil.
5. Now, it looks like we are stuck in this pit of liberal, anti-sports vipers for another 3 years, with no prospect of ancillary real estate development to recoup our losses or produce substitute income. Losing both $17 mil in capital appreciation and suffering a minimum of $17 mil in cash out of pocket losses for each of those 3 years because we have actively fomented fan apathy and antipathy. Kiss another $105 mil good-by.
6. At this point, I’m looking at $240 mil in losses to stick this out until the end of the lease. How much of the $350 mil purchase price was capital, and how much was borrowed? Is all my capital gone?
7. I’m also looking at re-location fees and costs - - others know better than I how much that is… $30 mil? 50 mil? And I don’t know for sure what OK City will actually do for me (or at least so I say. Will the e-mails bear this out?). And, I still have to figure out who is going to build and pay for the new arena in OK City, and how to avoid more bleeding while I wait for the fancy-pants arena.
8. And, I don’t know that I can even get Stern to support re-location, let alone get the owners to vote in favor.
9. At this point, the $2 mil I’m going to spend on Byrnes & Keller is the least of my worries.
10. Last, and perhaps most galling, everyone in Seattle, and now in OK City is reading my e-mail where I called Greg Nickels a fat ______, and I made extremely unprofessional comments about his son’s legal troubles. My reputation is in the toilet both in Seattle and at home. The country club is becoming a very uncomfortable place to hang out. All my friends (the investors) are shunning me.
What would you do?
I guess I would be looking for an exit strategy. Real fast. Before I can harm myself even further. At some point, and I would think real soon, David Sabey (or his equivalent) might suddenly become my new best friend.
As they say, professional sports, and big city politics, is a contact sport.
September 22nd, 2007 at 10:23 am
Guest, some of what you said about the specific performance clause is right. The Supreme Court of Washington recently outlined the factors Washington courts should examine when determining whether to enforce a specific performance clause in Crafts v. Pitts, 161 Wn.2d 16 (2007)
“In other words, a right to specific performance (or any other equitable remedy) will not be discharged if
money damages will not remedy the breach as much as specific performance.” Id. at 23.
“When determining whether damages would provide adequate compensation, courts inquire as to (i) the
difficulty of proving damages with reasonable certainty, (ii) the difficulty of procuring a suitable substitute, and (iii) the likelihood that an award of damages could not be collected.” Id. at 24.
September 22nd, 2007 at 10:35 am
More interesting language from Crafts v. Pitts,
“Furthermore, because specific performance is uniquely a contract remedy, a trial court may order specific performance only if there is a valid binding contract; a party has committed or is threatening to commit a breach of its contractual duty; the contract has definite and certain terms; and the contract is free from unfairness, fraud, and overreaching. Lastly, a court should ensure enforcement will not be oppressive, unconscionable, or result in undue hardship to any party involved.” Id at 24 (internal citations omitted).
September 22nd, 2007 at 10:59 am
[...] rpose than to piss off the people of Washington and make sure that we want no part of him. The reaction of the city? “I am outraged at today’s actions by Sonics owne [...]
September 22nd, 2007 at 11:01 am
Nice comments guest. Enjoy reading your posts.
Wanted to comment on this comment from courtsense:
“The other thing is that the so-called “losses” claimed by both Schultz and Bennett are a crock. The NBA has franchise bylaws that specifically allow new ownership groups to “cook the books” for the first 5 years of the new ownership period and essentially turns losses into “virtual losses” - where the paper losses flow through as write-offs and the actual losses virtually disappear.”
One thing I’ve always heard is that when sports teams claim these huge “losses”, it can be a bit of a load of crap due to reasons in the above post. I’ve also heard in the past that for this very reason these sports teams would never want to open their books to the public (cough*Howard Schultz*cough). So with Clay making the bitch fit that he has, that becomes very interesting. This fact could show that Clay doesn’t expect to win this request as he doesn’t intend to prove his losses by fully opening his books. If that’s the case, to me that means that this stupid arbitration request is nothing more than a needed step to suing the city, his pretty much last resort in this battle.
September 22nd, 2007 at 11:05 am
I had a earlier post that got lost in moderation this morning, so I am going to restate it.
I have decided how I am going to show my support for the Sonics this year, but not Clay Bennett. I will go to the games, but I will not buy a ticket from Bennett. That means I gotta go the scalper route, something I am not too fond of usually. But think about it. The scalpers have already purchased their tickets. If I buy from them on the day of the game, that benefits Bennett zero. And I won’t spend a dime in the arena either. Pregame burgers at Dick’s and drinks at Floyds’. It’s very important that we still go to the games and show our support for the team that we’ve loved for 40 years. We can do that while still stick it to Bennett.
September 22nd, 2007 at 11:08 am
Here’s my thinking about Clay EVER getting a court to rule in his favor regarding “undue hardships”. Any judge who would ever be ruling on this has got to be aware of the lack of good faith that Clay has shown in trying to keep the team here. They have to know what his true goals are. Maybe it’s not perfect law, but to me it means that his whining about the lease is motivated otherwise and not truly because of it’s unfairness.
September 22nd, 2007 at 11:12 am
Seems to me that the prospects of losing a significant amount money every year by being forced to play in a substandard arena with the worst lease in the league would be grounds for a settlement. Apparently, i’m in the minority with that opinion.
- I’m confused about this statement. If I lease a space at the local strip mall for 10 years and open a business. Why should the person who hold the lease be allowed to let me leave because the business model of my business is not working any more? Doesn’t that mean that any lease can be broken if you are not making money??
September 22nd, 2007 at 11:17 am
Lastly, a court should ensure enforcement will not be oppressive, unconscionable, or result in undue hardship to any party involved.” Id at 24
That’ll likely be the sticking point when this heads to court.
September 22nd, 2007 at 11:25 am
The fact that Clay willingly bought into the lease is a big sticking point as far as I’m concerned. If the lease was SO unfair and harsh, why did Howard Schultz sell then? Couldn’t he have just done what Clay’s trying to do? No, because he wasn’t trying to leave town.
September 22nd, 2007 at 11:30 am
Understand that i’m just playing devil’s advocate here…
Doesn’t that mean that any lease can be broken if you are not making money??
Bennett has repeatedly said he won’t break the lease. He’s merely looking for a fair settlement.
If the lease was SO unfair and harsh, why did Howard Schultz sell then? Couldn’t he have just done what Clay’s trying to do?
If Schultz still owned the team, it very likely would’ve come to that. Selling was probably his only other option.
September 22nd, 2007 at 11:46 am
My take
Mr Coffee was salivating at the fact that a rich hick was interested in overpaying. Hook, line and sinker baby!
Jed Clampett Basketball Club is in a world of hurt. They’ll need to stumble onto another oil well or 2 to get outta this one. I hope they just pack up and move to Beverly Hills. The Clips might be had for a oil well or 2.
September 22nd, 2007 at 11:47 am
Dick Tate Says:
September 22nd, 2007 at 11:17 am
“That’ll likely be the sticking point when this heads to court. ”
Turning a profit in 2005 under the oppressive lease might be an unsticking point. Put a loser on the court = lose money, put a winner on the court = make money (even with the worst lease in the NBA). It isn’t likely that they make money, not impossible, not absolute.
From day 1 until yesterday, Wednesday, July 19, 2006, they had agreed to honor the terms of the lease. They knew the terms going in, they knew what they were buying and that there could be losses through 2010.
Investor G. Edward Evans, top negotiator for the new owners, said they intend to honor the current KeyArena lease, which requires the Sonics to play there until 2010. Evans said the group is willing to lose money for a “period of time” while negotiations for a new arena occur. Evans said the investment bank handling the Sonics deal approached his group six to eight weeks ago about possibly buying the team.
In order to break the lease, the new owners would have to pay off the lease, which includes about $1 million in rent, plus unspecified damages. City officials declined to estimate what that might cost, but said it could include millions in lost revenue and additional debt costs. The city gets a share of Sonics concessions, luxury suites and other revenue as well as ancillary income, such as parking. In addition, the lease requires smaller fees, such as per-game costs.
“The lease is ironclad through 2010,” Deputy Mayor Tim Ceis said. “If they want to negotiate a way out, that could happen. … It would have to be on really great terms for us. But, absent that, they have to play here through the end of the 2010 season.”
http://seattlepi.nwsource.com/local/278072_sonics19.html
They are burning the bridge with a non-starter arbiration demand, this is politics, not business, because if this is how they do business then they are not likely to last very long even if they stayed. Maybe that’s the case, maybe they are just dumb and are now figuring out they they can’t just pickup and leave for vegas (Stern says no) or OKC, or at all just because they own the franchise. They didn’t act like the league had a say-so all of last year (dumb).
If they have to be here past 2010 with something less than the Renton palace then they can not maxinmize a poorly planned investment (payed too much), and they are burning the bridge to force the league to force them to sell, saving some busisness face for a group that looks inept to anybody looking closely.
So, what do we need to really keep an eye on now?
It is true that a solution to the arena has to be in place in order for the Sonics to be here past 2010. The difference now, as of today, is that something acceptable to a new owner needs to be in the works, but it does not have to be the palace Bennett was demanding. Bennett has taken himself out of the picture in Seattle past 2010 no matter what happens.
It’s all or nothing for Bennett, he’s chosen nothing and is doing everything he can to leave nothing.
Don’t let him. Don’t let him stop people from imagining a new arena and a new Seattle Center, and the Seattle Supersonics here in 2010 and beyond.
http://theseattlesupersonics.blogspot.com/2007/09/pitchforks-and-torches_21.html
September 22nd, 2007 at 11:49 am
courtsense if you have that seattle times cite on treatment of losses I’d like to read it. I don’t recall a lot of detail about this point before and it is something I have been very curious about. I have wondered if the treatment of losses is close to fraudulent, given the contrast of income in Forbes and overall legue financials and the continuing strea of new owners taking over franchises claiming losses.
Not coincidental Schultz sells out after 5 years if this loss treatement is time limited, I bet.
September 22nd, 2007 at 11:51 am
To say that Clay Bennett is a smart and calculating businees man is to say the same about Jed Clampett.
September 22nd, 2007 at 11:55 am
Guest i was doing a similar running total of “losses” in my head. But after tax treatment might well look a lot more bearable. How different affects the level of desperation and the strategy and outcome. If he plans to own 10+ years he could right the balance sheet. And they may not care as much on this pool of money which is probably less than 10% of assets for the principals as with other investments, some or all of which are rolling fine at big returns.
September 22nd, 2007 at 12:05 pm
I somewhat misstated the exact nature of the NBA bylaws - but not much - regarding the first 5 years of ownership pertaining to the treatment of “losses.”
Here’s a portion of the article from the Seattle Times, describing the economic realities of the sale by Schultz’s ownership group:
“And one expert said the $60 million in losses claimed by the Sonics were almost certainly softened by large tax write-offs available to sports-franchise owners.
‘The tax write-off stems from a rule that allows team owners to write off the value of player contracts for the first several years after they purchase a team,’ said Rodney Fort, a professor of sports economics at Washington State University.
Basically, owners get to treat player contracts like new cars — which lose value as soon as they leave the lot. Teams get to claim that decrease in value as an expense even though it doesn’t cost them money.
In the Sonics’ case, team financial statements reported losses of $183 million for tax purposes over the last five years. That’s three times the $60 million in cash losses taken by the team. Because the ownership group is organized as a limited-liability company, profits and losses flow through to the individual members, as do any taxes. That means Schultz and the other owners can use their share of the $183 million in losses to erase taxes on profits from other business investments.
When you combine the tax write-off with the enormous increase in the Sonics’ value, Fort said it is hard to feel sorry for Schultz’s ownership group.
‘I’ve got to suspect this is a fabulous rate of return even for someone used to getting a high rate of return,’ he said.
The Seattle Times estimated their internal rate of return — a key measurement often used to evaluate investment opportunities — at 10.6 percent.”
Also - in response to Guest’s question about the nature of the PBC’s investment, here’s that info, also from the Seattle Times:
“The Times has learned that the PBC assumed $81 million in debt from the former ownership group and will settle the remainder of the $350 million balance with a cash payment of $250 million and $19 million borrowed from the NBA.
According to league documents, the PBC is an Oklahoma City-based consortium that consists of four primary owners, four minority owners and a total of 12 investors.
Bennett, the PBC chairman and controlling owner, joins Aubrey McClendon, Tom Ward and Jeffrey Records, who represents the family-controlled Huntington group, as the four with largest ownership stakes. Each paid $50 million for a 20 percent share. Records’ investment is $27.1 million and the families of his sisters Kathryn Ryan and Martha Records each paid $11.45 million.
The minority ownership, which was added 10 days ago, includes William Cameron and Lynda Cameron, who paid $20 million for an 8 percent share. Everett Dobson and Bob Howard invested $10 million each (4 percent), as did husband/wife Domer (”Jay”) and Janis Scaramucci.”
Hope that helps clarify things a bit, and I apologize for the earlier mis-characterization of the write-offs and losses.
September 22nd, 2007 at 12:07 pm
I googled and found that article.
Wow.
http://seattletimes.nwsource.com/html/localnews/2002911235_ownertaxes05m.html
“But in 2004, Congress changed the tax rules in a way that could make the Sonics even more valuable if the team is sold.
The new rules allow future buyers of sports franchises to write off 100 percent of a team’s purchase price over 15 years. “
September 22nd, 2007 at 12:10 pm
If you make enough other income that you can fully use your sport team losses to offset tax that otherwise would have to be paid it appears you have no sport team loss exposure. A toy at no real risk?
Tax code manipulation for the rich and super-rich always angers me.
September 22nd, 2007 at 12:12 pm
Buying the Sonics and Storm: $350 million.
Stated first year losses: $17 million.
Trying to steal the team while begging for a $500 million arena while writing off losses while laughing all the way to the bank:
PRICELESS!
September 22nd, 2007 at 12:17 pm
I never want to hear any sports team owner complain about operating losses again. Never was a fair whine with appreciation and tax writeoffs but now with detail about the writeoffs and the new writeoff it is crystal clear this is a phony whine by Bennett as a new owner who can reap the new writeoff’s full measure.
September 22nd, 2007 at 12:23 pm
Wow Crow. That’s crazy. Makes me hate Bennett even more. I didn’t think that was possible. And somehow I’m sure he’ll make me continue to hate him more in the coming months. What a douche.
September 22nd, 2007 at 12:23 pm
“Tax code manipulation for the rich and super-rich always angers me.”
Why? The rich and “super-rich” keep this country moving.
September 22nd, 2007 at 12:29 pm
Guest said, “Bennett and company may face the unattractive prospect a couple of years from now of re-selling the franchise locally for the original purchase price – arguably a financial and strategic catastrophe.
So, do you like the sound of that outcome? I would submit it is achievable. It depends, though, critically on the Robinson / van Dyke / Sims vision for the Seattle Center catching fire.”
First, thanks for the analysis, Guest. I thought from the beginning of this arena discussion that the City Council was shooting itself in the foot by effectively taking Seattle Center/Key Arena out of the equation. The rhetoric from Nick Licata and CFMIT was such that it appeared the City was holding the door open for the team to leave, hoping that the team would leave the region altogether. The worst-case outcome for the City and Seattle Center would seem to be having a new venue open in the suburbs that would compete with the suddenly white-elephant Key. This point has been made many times before, but it seems now, several years later, that folks are suddenly finding religion wrt the Key and Seattle Center. I remember Nick Licata pointing to a feasability/financial analysis of the Key stating that it would be ok without the Sonics, even with a competing arena, but I’ve always been skeptical of that idea given how well financial projections for the Key and the Center have held up in the past.
In the mean time, Seattle passed I-91. I haven’t heard anyone mention this with respect to new plans for the Center and the Key. Am I missing something? How would any new plan for redevelopment meet the requirements of I-91?
I think the Center needs the Sonics/Storm at the Key, given the investment sunk there so far. I also think the City needs the Sonics more than the Sonics need the City. The center clearly needs redevelopment as well, and as noted there are several efforts moving in that direction. Why has it taken so long for the City to get serious about this? Part of the blame has to be put on Schultz (and Walker), who did a terrible job of planning, presenting, and selling a vision for a new arena. Part of the blame goes to the City for having such a dismissive attitude toward the Sonics and a passive role wrt to the Key. Yes, a few redevelopment/remodel proposals were submitted by the City, but both Schultz and (of course) Bennet have stated categorically that a remodel of the Key would not fly. No one with the City (or the Sonics, for that matter) ever came forward with a plan to comprehensively address the shortcomings of the Key and tie it in with Seattle Center redevelopment. Now those ideas are finally being floated, and getting some tentative support. My fear is that it is too little, too late. Adopting a billion-dollar redevelopment will take years, especially given the Seattle process. The Sonics would probably have to spend a couple of years in the Tacoma Dome as well. I still see the most realistic option for the team being a suburban site. Tell me why this is not the case.
At the very least, team supporters cannot put all our eggs in the none-too-sturdy basket of the City of Seattle and Seattle Center. Pursue all options.
September 22nd, 2007 at 12:34 pm
“Why? The rich and “super-rich” keep this country moving.”
I highly disagree with this. The way the “super rich” do business ing general, benefiting themselves and continually screwing the poor, is one of this country’s biggest problems IMO.
September 22nd, 2007 at 12:37 pm
It amazes me that all you guys talk about is anything and everything except the one thing that will keep the team in Seattle and that is building a publicly funded arena and giving the Sonics a sweetheart deal on the lease.
Why would the owners want to spend thier own money on an arena when they can move the team and get the deal they want?
Thinking that these owners will sell the teams is a pipe dream. Their worst case scenerio is having to stay in Seattle two years longer than they want to. A lease buyout would likely cost them more than they would lose in that time period.
The idea of a local guy saving the team has come and gone. His name was Schultz and he sold the team because he couldn’t get an acceptable deal done. The NBA approved the sale with these owners with the full understanding that if the Sonics didn’t have a new arena deal by Oct 31, they would move the team.
Do you really think that Stern or the BOG will force the team to stay in a money losing and hostile situation. I believe that they will make an example of Seattle by showing other citys that if you don’t maintain facilitys that are up to current NBA standards, losing thier team is a very real possibility.
The big hammer will be the owners signing a lease with OKC that begins when thjer current lease ends. This will allow OKC to begin the remodel of the Ford Center and construction of a training complex. Plans for a new state of the art arena will also begin.
This will completely change the dynamic of lease buyouy talks, when there is no longer any chance of the Sonics staying in Seattle past 2010.
September 22nd, 2007 at 12:41 pm
Thru the tax writeoffs a large share of the”burden” of owning a professional sports team is shifting from the owners on to taxpayers. it is pretty close to 100% public supported.
Alex I don’t feel like debating my comment or your reaction here on a sport forum in detail. There is plenty that can be fairly said on both sides but I am not changing the comment. I will say the rich and super rich would still be keeping the country moving and still be rich and super-rich without some of the inefficent or even non productivity impacting and overly generous tax writeoffs.
September 22nd, 2007 at 12:56 pm
Remember: losses are losses. They may be partially offset by making other income tax-free, But remember, (1) you actually have to have other income to offset, and (2) having actual income, rather than losses, is always better.
Note that the 10% annual return for the previous ownership is hardly spectacular, or raking it in, for big-ticket, wealthy investors. That is what is expected for ordinary investments. Its dangerously low for highly risky investments.
Which would be a good way to characterize owning a sports team.
Actually, a better way to characterize owning a sports team would be as a BAD investment.
If, after 4 years of ownership, they are down $250 mil, its going to take some pretty spectacular appreciation to catch up to a 10%, or even a 5% per year gain, by the end of 10 years.
Does that happen in OK City? Or anywhere in professional sports?
September 22nd, 2007 at 1:09 pm
True “actual income, rather than losses, is always better” but losses aren’t fully what they seem if they create a tax writeoff.
His financial exposure is real on the Sonics itself. It is less worrsiome over his entire portofolio.
You are right Bennett might have to own 15-20 years to right the financial ship-if appreciation doesn’t return soon and strong. I should have used a longer period but if he got a new arena in OKC for next to nothing and strong support he might be whole on Sonics alone within 10 years.
September 22nd, 2007 at 1:19 pm
The different perspectives / accounts are affected by the baseline. If you assume a 10% return on that money based on what it could earn elsewhere that is different than a more static model.
Clay and most of the partners (and most owners) are probably thinking the former. Aubrey may have been thinking more the later at least implicitly when he spoke previously about breaking even the way he did.
September 22nd, 2007 at 1:47 pm
As I read everyone’s thoughts & think about this arbitration move by Bennett - I just wonder if he is just trying to move everything along faster at this point to provoke a potential sale so he can get out of the whole thing.
It would seem that he is screwed legally - he will have to honor the lease. He is screwed finacially - he’s going to lose tons of money. He’s screwed PR wise - everyone hates him. He owns a team and I’m guessing 99% of the fans can’t stand the guy. He dream to move the team to OKC is distant and shaky.
Who knows - just a theory. If I were him I might want to just cash out ASAP at this point & maybe this move yesterday is an effort to accelerate everything so that can happen.
Or maybe he figures Seattle leadership is not capable of getting a decent arena deal together & he is putting down steps to just move in 3 years. If no new arena is happening in 3 years I think he will be able to move.
Again - who knows what CB is thinking. Just rambling ideas here on CB’s plans.
September 22nd, 2007 at 2:11 pm
If Bennett’s crew can somehow survive the current and future storms of ownership, and no arena deal gets done, then he will absolutely move - with David Stern’s full support. And why not?
The problem is, an arena deal is eventually going to get done - but Bennett likely won’t last long enough to enjoy it. Perhaps it comes down to Stern and the NBA choosing between a deal for a new arena in Seattle - but no Bennett, or Bennett/the Sonics in OKC - but no Seattle.
Given factors such as the NBA’s longterm vision of growth into Asia, I’d say that’s the definition of a no-brainer. But that’s pure speculation on my part.
Much more imminent are the any of the various scenarios painted above by Guest, where Bennett is forced to cut his losses and bail out of ownership before 2010.
September 22nd, 2007 at 2:13 pm
I think he rides it at least until next fall- to see what hapopens with New Orleans, to give the local and state official one more cycle to make an offer, to try his lawsuit to break the lease, to see the Board of Governors treatment of his relocation case, to see more from Durant, Green, Presti, PJ etc.
His wife’s family’s company was in the NBA game with the Spurs for awhile. They sold out- whether it was just a corporate re-structuring decision, or they didnt want to participate in the uncertainty of the arena bid there or any payment toward it or they just didnt like being a minority owner I don’t know how it all played into it. Biut I can’t see Clay getting out of the NBA game this quickly. Maybe 18 months from now if nothing positive happens.
September 22nd, 2007 at 2:16 pm
I agree with Casual Fan that a Seattle Center redevelopment has always made the most sense as far as having an NBA team in Seattle. I also agree that the plan will take too long and be too late to save the Sonics. I think the writing is on the wall for their departure at some point during the next three years. Bennett won’t sell. This team is being built for the future and I believe Bennett is in it for the long haul. I don’t see any reason why he’d agree to swap for an expansion team when that would set back his championship contending aspirations by about a dozen years or more. The Seattle Center revamp, however, still is the best plan for landing a team in the future.
I also agree with Casual Fan that the suburbs are the most realistic option for keeping the Sonics now. This has to happen immediately! I believe Bennett has always been serious about his October 31st deadline. I think his actions yesterday were a warning shot that if we want to get something done, we better do it now. He is still giving us this one last chance. Come November 1st, that option is off the table. We need to come to grips with that.
There’s still time for the White Knight, get a plan together that has significant private financing, get the emergency session together to get the rest done. I was bitterly disappointed to read that Gregoire and the Sabey trio only met once. It seems like she’s just sitting back and taking a wait & see approach. Her inaction has been pathetic.
September 22nd, 2007 at 2:19 pm
I am encouraged by the lawyer-speak seemingly in our favor and the interesting comments by everyone on this subject. Checking the local news sites, however, it seems like our voice isn’t as outspoken as it should be. I think it would be a smart if we flooded the comment and message sections of these sites with our opinions and let the general public see that we’re out here. Here’s one for king5 and a recent Clay Bennett story: http://blogs.king5.com/upfront/archives/2007/09/clay_bennett_we.html Let’s add more links and keep up the barrage. I get really upset when I see locals acting like dicks towards the Sonics and I know we can counter all that BS.
September 22nd, 2007 at 2:20 pm
If they fashion a new arena deal I think it should be paid for in an efficient manner. Two sets of loans as required under the previous financial plan (one for the bonds and one to pay back the bonds until the easy taxes become available) was not the right way. Maybe the taxbase should be broader than Seattle. I’d like to see King County involved. Some use of state sales tax credit for economic development projects is acceptable as done with Everett Events Center and the new Kent arena.
Governor Gregoire continues to say the absolute minimum. Don’t know how Rossi will play this issue next year (he has been invisible on it to date) but her lack of leadership on it may cut negatively with some voters I imagine.
September 22nd, 2007 at 2:21 pm
http://www.kirotv.com/forums/index.html?q=http%3A//forums.ibsys.com/viewmessages.cfm%3Fsitekey%3Dsea%26Forum%3D670%26Topic%3D10987
Here’s another one.
September 22nd, 2007 at 2:24 pm
The Hornets’ lease with the New Orleans Arenas runs until 2012. What appears to be at the center of the “dispute” in New Orleans is whether Shinn will receive a state-of-the-art training facility. The cost of such a facility is estimated to be over $20 million. The city of New Orleans has set aside over six million for the project; this week, the Louisiana Bond Commission approved $14.5 million in financing for the facility. Shinn seems to be getting what he wants from city and state officials. http://sports.espn.go.com/nba/news/story?id=3029552&campaign=rss&source=NBAHeadlines
September 22nd, 2007 at 2:27 pm
I would support a suburban plan but I am not sure there is a strong in all respects site out there beyond the Seattle/Tukwila parcel. Bellevue showed minimal interest and the land parcel they looked at was difficult. I have a hard time believing that was the best or only viable site as I’ve mentioned cuttijg a parcel out of Bridal Trails Park. But nobody is taling Bellevue. Renton may be out. Auburn seems too far to me to win the day.
I think I-91 could be amended or overturned by the right plan with the right political support base.
September 22nd, 2007 at 2:30 pm
As bad as it would be for the NBA’s PR to leave Seattle, I think future expansion into an unproven market such as Oklahoma City without contraction of another market would be disastrous for the association’s product. Expansion would only exacerbate the problem the league faces with talent dilution. As a NBA fan, I would be vehemently against Oklahoma City getting a franchise if Clay loses his battle with Seattle.
September 22nd, 2007 at 2:31 pm
The next 90 days are crunch time for political players & business people to get something solid on the table in terms of a vision for a new arena & plan for how to finance it.
I agree with you courtsense - no new arena & Bennett can & will easily be gone in 3 years. But a new arena deal must happen now to give time to build it etc. by the end of the current lease.
Lot’s of variables - but I think the political leaders - especially Gov. - need to be hustling hard NOW for this. If we don’t have anything solid in a year for a new arena - good bye sonics. Holding Bennett to the current lease is a vital part of the process - encouraging right now - but now comes the main step. Will our leaders step up & get a new arena deal done?
Anywhere in the Seattle region is OK with me.
September 22nd, 2007 at 2:32 pm
They are making progress there, but until Shinn signs a lease extension the Hornets are not out of the overall picture.
Expansion with roster reductions could be financially viable and I continue to support that.
September 22nd, 2007 at 2:53 pm
Shinn was also able to persuade a local investor to purchase minority shares in the team. The Hornets’ deal with New Orleans Arena has been referred to as “a sweetheart deal.” Shinn has conceded that the Hornets were able to operate without significant fiscal losses before the storm, despite having the lowest attendance figures in the league. Considering the money that the city and state have already poured into the practice facility he so desires, Shinn seems to have an even weaker argument than Clayton should he attempt to break his lease prior to 2012.
September 22nd, 2007 at 3:29 pm
I agree. I don’t think the NBA will let him break the lease.
Theoretically they could let him relocate in 2012 if he (and they) felt required to by then if financial results are too poor. I think he stays though. He bought long enough ago that he is probably able to. He could adjust team player payroll or support personnel payroll or ask for even more subsidies.
September 22nd, 2007 at 4:32 pm
Based on the article’s description of player depreciation, with it being limited to players who were on team when it was purchased, trading Gary Payton cost Schultz some tax writeoff. The overall team turnover meant that Rashard Lewis was the only remaining tax writeoff. It is possible to overblow this facet of the “game” but I believe it was part of the equation, the all to much money driven equation of someone who self-proclaimed himself in a community trustee role. But I guess I should let him go…
September 22nd, 2007 at 4:37 pm
Speaking of letting go, while checking the 2001-2 roster I noticed Olumide Oyedeji’s name and clicked it and found that he is 26 now. Should be entering his prime if he had or could have acquired more basketball knowledge or delivered on it. Long gone though because he didnt.
How will Sene do this season?
A similar or different fate?
It happens alot. McCoy, Rich King, etc.
September 22nd, 2007 at 4:47 pm
Remember when Paul Westphal started Lazaro Borell against the Utah Jazz in the 2000 playoffs? Legend has it that Olumide Oyedeji could not beat Frank Hughes in a one-on-one game during his stint in Seattle. Sene’s two extra inches and longer wingspan will likely keep him in the NBA at least for two more years after the team hopefully declines the option on him after this season.
September 22nd, 2007 at 4:54 pm
Sene management is a test for Presti’s research, instincts and GM skills.
Sene could work out a moderate defensive center success. Or not.
Which is he Sam keeper or not?
September 22nd, 2007 at 5:04 pm
“Tax code manipulation for the rich and super-rich always angers me.”
Why? The rich and “super-rich” keep this country moving. -Alex Chan
Moving which way? That is a terrible interpretation of whats happening in this country. This country is headed in the wrong direction. Now more than ever.THE SUPER RICH ARE AT FAULT. WADR, that cment makes my blood boil.
Clay Bennett and Aubry Mclendon encompass all that is wrong in this country! I am just about out of here because of the rich and the super rich building insurmountable walls between the classes. Australia is looking better by the minute. I have a brother there that loves it. The midle clas is alive and well.He is so happy to be away from the Bennetts and the Bush’s and the Pfizers and the Lilly’s of this country.
PURE ABUSE OF POWER AND WEALTH = USA
September 22nd, 2007 at 5:22 pm
Is it the middle class guy that comes in and buys a multimillion $ business and trys to take advantage of I-91? Just like big America, the rich buyout anything in their way and trample the middle class.. But the middle class guy’s support is so essential and expected for the billionaire idiots club to thrive. How f^cking naive is that anyway?
September 22nd, 2007 at 5:26 pm
My only response to your diatribe is to enjoy the basketball in Australia.
September 22nd, 2007 at 5:27 pm
Sorry…havent had my meds today. I love this country for the most part.
September 22nd, 2007 at 5:37 pm
“My only response to your diatribe is to enjoy the basketball in Australia.” - A. Chan
I was raised in a beach city so their are plenty of recreational options for me. Besides what good is the NBA if they let these idiots take control?
September 22nd, 2007 at 5:38 pm
You think I would support a league that Clay Bennet is part of?
September 22nd, 2007 at 5:59 pm
Lots of great points here. Glad to see the community coming together like this. Calabro, you can make your points without going politically nuts!
September 22nd, 2007 at 7:48 pm
I don’t know why I am so reluctant to join the hype that the arbitration cannot be “won” by Bennet’s team.
It might be because Stern seems completely on his side with regard to the “fairness” of the current lease in the context of the NBA business model (which is skewed; the problem).
I can see an arbitrator siding with the city in the case of city vs. Sonics ownership, but again, what keeps them from leaving in 3 years?
Stern seems to feel that Seattle should pony up the cost since other cities are willing to. Will Seattle do it?
Will Seattle get the next expansion team?
Will they be called the Sonics??????
If someone can talk me from the ledge here I am willing to listen
September 22nd, 2007 at 8:01 pm
Hard to predict outcome.
I have suggestd that moving to a smaller might have financial impact and cause strn or othe rowners not to allow it but the impact might not be that much and might not stop them. I think if they stop it, it will be to avoid a p.r. hit and possibly an impact on future arena negotiations, a toughening of other cities, a more adversial climate. You could argue that a city losing a team sends the message do it my way or the highway but I don’t think the message goes down that way. I think it is more likely to generate more the hell with the NBA attitude.
September 22nd, 2007 at 8:35 pm
Go ahead and jump.
But only if you think you can land on Bennett.
September 22nd, 2007 at 9:10 pm
I still want to know one thing. If they are really losing $17 millon a year, then why the heck would they go out and bring in Kurt Thomas for another $ 8 million when you have tons of big men on the roster.
This question should be asked all over the place. Media to Bennett, talk show caller to talk show host and so on. Bringing on an extra $ 8million in salary when you are claiming to lose money is hypocritical at best.
September 22nd, 2007 at 9:56 pm
sonics made money in 2005, that can’t help the arbitration case.
September 23rd, 2007 at 9:03 am
Trueblood it is a good question but let’s see if Thomas stays here the whole season. Those draft picks will be used to fill future roster spots at prices below market rate for equal talent- hopefully- so they may think they recover much of this year’s investment in Thomas in surplus value on the draft picks over the 4-5 years of those contracts.
Presti may be trying to cushion this year’s Win-Loss record for PJ, himself and Bennett. I don’t think Thomas will change things much on that but we’ll see. Will he have a positive impact on the young bigs? Probably but a significant career altering one? I doubt it.
September 23rd, 2007 at 9:06 am
Yeah Mr Baker and if you drew a chart of team win-loss and profit and loss back 20 years they’d probably have profit in most years with a record over .500.
September 23rd, 2007 at 10:31 am
Crow,
“Tax code manipulation for the rich and super-rich always angers me. “
If your wife operates a hair salon and loses a lot of money the tax laws allow you to offset your income as a fork lift driver with the loss. It is the same tax law for everyone regardless of income. There is no need to demonize those that have figured out that operating a business is far better than working for a wage. The rich certainly donate more to charity than the poor do. Why is it we always seem to stereotype the successful as greedy? I don’t see a lot of low income people giving ANY of their income away or investing in things that don’t have a return on investment. Rather, the poor seem to be most interested in figuring out how to become wealthier and if they can’t do it by working for it they want to take it from someone else who has.
Trueblood,
You and a lot of others obviously do not understand the NBA Collective Bargaining Agreement. Each team is required to keep a minimum number of players and must have a minimum team salary ($55 million). You cannot dump salary because the union rules require in a trade the team must take back current year salary about equal to want they send out. Hence, early expiring contracts like Thomas are valuable. In order to reduce team payroll a player’s contract must expire. The Sonics will be able to cut Thomas next year and save $8 million in 2008-2009.
The most annoying thing about this situation is that it is not the lease or Key Arena that is the problem but rather the NBA Collective Bargaining Agreement. The player’s union contract requires players to be paid well beyond their value. The excessive salaries leave no room for building rent expense in the team’s budget. If they cut player salaries in half the teams would all make money and the cities would not need to do sweetheart arena deals to keep their franchise. It is a broken economic model that is dependent on government handouts.
September 23rd, 2007 at 11:01 am
SportsFan-
Good post - I tend to agree with most of what you posted. We are entering the realm of politics/tax-philosophy. Avoiding a lengthy post on such a topic, I will just say there is a happy medium somewhere where the rich and super-rich aren’t killed on taxes (thus dampening their economic investments) while also not allowing them to avoid their fair share of taxes (they tend to manipulate the tax-code as much as possible - not that most of us wouldn’t do the same in their position). With his brief statement, Alex seems like he believes in an extreme version (they drive the economy, so we can’t complain or even argue about what their fair share is). Alex - I may be wrong, in which case I apologize in advance, but that is honestly how you come off.
September 23rd, 2007 at 11:23 am
Kivman,
‘there is a happy medium somewhere where the rich and super-rich aren’t killed on taxes (thus dampening their economic investments) while also not allowing them to avoid their fair share of taxes’
I believe that was the intent of the Alternative Minimum Tax (AMT). Unfortuantely that now applies to 30% of all taxpayers and is increasing each year.
September 23rd, 2007 at 11:38 am
I agree. Too bad they didn’t index it - what were they thinking? Pretty stupid if you ask me. Typical politicians. Wow - this has totally morphed into a non-Sonics topic.
September 23rd, 2007 at 12:37 pm
Sports fan i didnt demonize successful, I criticize certain tax breaks. Big difference.
And while the rich on average certainly donate more to charity than the poor do in dollar outlays, I believe I have seen studies that show that the middle class and / or working poor may give as much or more as a % of income (primarily to and thru churches) than the rich or at least good portions of the rich and super-rich. Looking at several recent articles of NBA players and their charity many of these charities have given a very small % of the athletes income. I’ll check briefly to see if I can find.
But you are wrong when you said this:
“Trueblood,
You and a lot of others obviously do not understand the NBA Collective Bargaining Agreement. Each team is required to keep a minimum number of players and must have a minimum team salary ($55 million)”
The miniimum team salary is 75% of slaray cap.
http://members.cox.net/lmcoon/salarycap.htm#10
September 23rd, 2007 at 12:52 pm
Sportsfan I agree the NBA model in bad from a fan/taxpayer perspective because the system ever craves more revnue and they have left financing of the arena where they conduct business as much off their balancesheet as possible. They should only pay a fair pro-rata share of the building time and cost with other users but I don’t most of them are or even close.
If player salaries were more under control (but still tremendous) there would be more room to pay fair rent.
Expansion with roster reduction or roster reduction by itself would help. Yes the union would oppose but on this I would oppose them.
I don’t want to go too far on political / economic debate but I will say I agree there is “a happy medium somewhere where the rich and super-rich aren’t killed on taxes (thus dampening their economic investments) while also not allowing them to avoid their fair share of taxes” and that is all I seek.
“I believe that was the intent of the Alternative Minimum Tax (AMT).” Yes it was.
“Unfortuantely that now applies to 30% of all taxpayers and is increasing each year.
Sportsfan
“I agree. Too bad they didn’t index it - what were they thinking? Pretty stupid if you ask me. Typical politicians.”
Kivman
It is unfoirtunate but it was necessary at the time to try to put a future patch on the dangerous huge deficit- especially after the Reagan and Bush tax cuts- and they couldnt agree how else to do it. Effectively they punted with a poorly understood AMT, leaving it to growth hopes or future lawmakers to figure it out.
And figure it out we will have to. The deificit has been pushed to the absolute limit without breaking the economy for everyone and we have to take steps back from that disaster. By fair taxes on everyone, probably stable or up for every class not down for any. By cutting spending many places including the military but p also entitlements to some or all.
September 23rd, 2007 at 1:05 pm
I found one study that suggests for those earning more than $1 million a year the rate of charitable giving was between 3-6%.
September 23rd, 2007 at 1:14 pm
The studies of charitable giving and income are numerous and complex. Brief points I see are that a lower % of low income household contribute anything but of those that do they give more as a % of income than middle class but those over $100,000 tend to have highest participation and higher % of income contributed. But the differences on contribution as % of income is on a scale of about 2, not a huge multiple, not near the difference in income.
September 23rd, 2007 at 1:32 pm
Anyone and almost everyone will make mistakes with the complicated CBA. I have too. Mr. Baker is right that in general we should focus on pointing out the solution- the facts as we know them. I probably could have phrased my find gentler but it is easy to jump on a post phrased a certain way and after a quick read. I was involved in an exchange on another site and that may have made me sharper than necessary.
September 23rd, 2007 at 1:51 pm
Sorry guys that I took so long to get back into this thread. I went to Wal-Mart for my daily hand full of rice.
I would still go to the games if Kevin Durant were paid a max contract of $250,000 and he would still play the game for that. The WNBA does not make the kind of money the men make. These salaries are ridiculous. Congress ought to mandate that no professional sports league (including NASCAR) can pay its team members more than 30% of average league revenues if they utilize any taxpayer financed facilities. The owners would make money and would have a hard time asking for subsidies.
September 23rd, 2007 at 1:57 pm
There is a place for business loss writeoffs and depreciation schedules but you can ask that they be real or judged acceptable. Player depreciation seems a stretch to me but the IRS and Congress have allowed it. My understanding is now that the latest change with respect to the pro teams was making their tax treatment more similar to enjoyed by other investments. They had previously been more favorably treated than other investments then a change had made them a bit less so. But it still seems quite generous towards business, compared to other parts of the tax code and how they hit lower income people (like the payroll tax). There is a purpose behind it but it can be tweaked especially in the face of the large, long-standing imbalance of revenues and expenses.
September 23rd, 2007 at 2:13 pm
If player max salary was $8 million I’d support that. Or less.
Looking at Forbes data the owners made about 6% net income on revenue. 2% net income on equity and about 2.4% capital gain year to previous year. With tax benefits their net total return goes up further. But still on average they arent doing outrageous in last year. The biggest windfalls went to owners who bought before Magic/Bird/Jordan/explosion of hype and saw the value of their asset change dramatically.
It is mainly the payroll that leads to the ticketprices.
September 23rd, 2007 at 2:20 pm
The bling of NBA salaries has been used to market the game though. Money gives the stars cultural status. Star status fuels tv network and viewer interest. Stern agreed to the CBA he did for a reason and is wasnt generousity. It was for maximize longterm returns and eliminating competiton for players or revenues (the threat of a player’s organized league has never materialized because the gravy train is so good and the league dese3rves credit for their successful management / marketing contribution).
September 23rd, 2007 at 3:45 pm
The commissioner and owners are powerless to stop the continual increase in player salaries. They do not want a strike. So they agree and raise ticket prices each time. Then they whine to the cities that they need a sweet deal or they are leaving. You are barking up the wrong tree by blaming the owners. The CBA just went up to 57% or revenues which must be paid to the players. There is nothing left for rent expense.
http://www.nba.com/news/cba_050621.html
September 23rd, 2007 at 3:59 pm
I am not barking up the wrong tree by blaming the owners. I was pursuing information incrementally and tried to show a balanced approach by looking at the seemingly modest owner returns after criticizing their tax benefits and conceded that changes the overall appearance somewhat.
The owners and commissioner agreed to the CBA and the business model demanding cheap rent. Ideally they should change the model. They didnt change enough this last negotiation session but perhaps more will come next time.
September 23rd, 2007 at 4:07 pm
The cheap rent part of the model won’t change except to the degree that cities force it to.
If they succeed then I think the owners will force the players to concede some ground.
There are many points were we agree.
I’ll try to leave it there, at least for now.
September 23rd, 2007 at 5:07 pm
Thanks for the replies but just an FYI, I am pretty well in the know when it comes to the collective bargaining agreement. I’ve actually contributed to the agreement of ‘99 and made suggestions for the last one. I have been an unofficial capologist of sorts on the espn message boards as well as Hornetsreport.com.
As someone else pointed out, a team only needs to be at 75% of the salary cap, meaning that the Sonics only need a payroll of just over $40 million in order to cover that. They were already there by a lot before the Thomas trade, a trade they made due to getting a trade exception from the Lewis sign and trade. They didn’t need to match salaries due to this exception. Hence, Thomas’ expiring deal was useless.
If player salaries are as easy as a write offs like some are mentioning then these owners are even more full of crap then I originally thought. Player salaries make up the majority of costs needed to operate a franchise so it’s pretty tough for these guys to really lose money, at least not to the tune of $17 million.
September 23rd, 2007 at 5:47 pm
Also, I agree with Crow on this issue. Yes, player salaries are high but in every collective bargaining agreement, they have had to make concessions.
In ‘95, they agreed to a maximum of 7 years on contracts and the rookie contract as well. Increases on the base salary were originally set at 30% and it dropped to 20%.
In ‘99, owners got the rookie contracts extended to 4 years with a 5th year right of first refusal. Increases dropped to 12.5% if you stay with your team and 10% if you switch via free agency. Also, 10% of the player salaries were put in an escrow fund. If salaries exceeded 57%, then that 10% goes back to the owners.
In ‘05, length of contracts were dropped to 6 and 5 with increases dropping to less 10.5 and 8%. Rookies are now only guaranteed 2 years as opposed to 3.
As far as where the salary cap is set, it’s based on league revenue. Stern is not being held hostage by the players. 57% is a very reasonable number considering only 15 players can make a roster in a sport that is played world wide. It’s not an easy gig to get.
Because the cap is determined by league revenue, all you need is a decent lease in order to make money. The Spurs and Pistons won championships despite being right at the cap level and nowhere near the lux tax limit. Owners who max out Vin Baker are the one’s who wind up crying but nobody held a gun at their head and said they had to max out a guy coming off a sub par season.
Here’s a breakdown of revenue vs. operating costs….
The owners get the national tv money which this year comes out to 32 million.
You get ticket sales revenue. The average team sells about 17,000 a game x 42 games at an average of $50 per ticket, give or take. That gives you $35.7 million assuming you don’t make the playoffs, which the majority of teams do.
You have local tv, cable and radio broadcast rights. The average mid market team gets a combination that gets near $20 million for all 3. The Sonics only get $10 million from Fox and I’m unsure what their radio deal is. Regardless, $10 million is low for the Seattle market. Utah gets $14 and New Orleans for cryin’ out loud gets $8 million from COX. This is problem #1 for the Sonics.
Most teams have a good amount of luxury suites. The average NBA suite is leased out at around $150,000 and multiplied by 50, you have another 7.5 million. Again, Key has less suites and from what I understand, only half of them are leased out. Also, a lot of that suite revenue goes back to the city so you have another problem here.
Corporate sponsorship is big also. I’ll again be liberal and say that teams get between $5 to $10 million but that’s based on small market New Orleans. Seattle should be getting more but from what I hear, that is happening either.
For teams under the luxury tax, you get the lux tax reward paid by the teams above the tax. With the Knicks and Mavs out of the stratosphere, that number has been around $7 million the last couple of years.
That gives you revenue at around $105 million for your average NBA team. Forbes shows the smallest teams at around $80 million while the Lakers and Knicks are considerably higher than $105.
Now you have operation costs. Again, player contracts are the big one. A team must be at the minimum of $42. The cap is $55 and the lux tax threshold is $67 million. The Sonics were at $55 million before the Thomas deal.
Throw in arena rent, travel and lodging, insurance and health care expenses, coaches, front office personnel and the 100 or so employees in the $30 to $40,000 range as well as all the advertising money and you have a team that is in the $80-$85 million range, assuming they stay a good $5 million below the tax threshold. That’s a profit of at least $20 million. Forbes puts the number in the $5 to $10 range but the owners are in good with the Forbes people and always have been. Trust me, those numbers are skewed.
The problem we have here in Seattle is that the team is not getting the same treatment from the city and corporate community that you have in the rest of league, a league whose revenue dictates the financial terms of the salary cap.
First off, I mentioned that $10 million is low for cable rights. Secondly, the team has the worst lease in the league and the smallest arena. If you have the smallest arena, you should be getting as much revenue as possible but the team has to give a large chunk of it’s revenue stream from suite and ticket sales back to the city due to the horrible lease that Ackerley signed. That just isn’t right and blaming player salaries is short sighted on this one.
The solution, beyond getting a local owner who cares, is reworking the Key lease. With the price being so low to build the place, the Sonics should be getting 100% of suite and tickets sales and then paying a rent percentage based on how much they sold. The average number around the league is around $3 million. That would definitely work for this team and would make the Key a viable option.
Preferably, a new arena would be in the works but if the city were willing to budge a bit on the lease, afterall, it only costed $75 million to build the joint and they’ve been paying it off for 12 years now, then again, Key would be viable. Whatever debt is left on the arena could easily be paid off by my hypothetical rent # of $3 million or less due to having a small revenue generating building. That’s a good trade off for not asking for a new building.
Blame Howie for selling to out of towners who seem to have no intention of staying.
And lastly, nobody is losing $17 million right now. And if you are, then I harken to my original post. Why bring in Kurt Thomas for $8 million. Sorry but those late 1st round Phoenix picks won’t do any good. If you get the pick that Phoenix has coming from Atlanta then it’s one thing. That would be justifiable since Clay helped save them $16 million (Thomas’ deal x lux tax, dollar for dollar) but they aren’t even getting that.
Sorry but there must be some legal angle that Clay is aiming for. Maybe Thomas’ deal really does put him in the red and he can get out of the lease easier or something. Does anyone know? Regardless, the Thomas trade makes no sense if you are all about making money and being financially viable.
September 23rd, 2007 at 6:04 pm
“One way to help save the Sonics & pressure Bennett is to get as many people into the Key as possible - buy tickets & go to the games - shows Stern & the national media Seattle wants the Soncis etc. >>> BUT >>> once inside the KEY boycott purchasing food and souvaniers etc.
I don’t know who gets the food money etc. - but could this hurt Bennett more in terms of bleedin him for money & maybe motivating him to sell as he losing more money and feels the protest of his teams fans toward him as an owner?”
The Sonics don’t get the food money. The vendors and the City do.
The best way to do what you’re saying is to watch all the games on TV but don’t buy tickets.
September 23rd, 2007 at 6:28 pm
I don’t know where you learned your finance but if you borrow $75 million at 5% interest and pay it back over 20 years the payment is $6 million per year. If you borrow $300 million at 5% the payment is $24 million per year. This is rather easy to compute in any pocket business calculator. In addition the city has maintenance on the building.
“The city of Seattle estimates that in recent years they have received between $8 and $11 million annually from Sonic and Storm games.”
http://seattletimes.nwsource.com/html/localnews/2003855006_sonicslease27m.html
This does not sound like an onerous lease to me. It is about what ought to be standard for all teams provided the city has such a small debt service. Most cities own more on their building.
Any city that is offering a new arena is getting screwed because in most cases the rental from the team is no where near the debt service plus maintenance. The owners clearly have no incentive to not give in the the players. They would lose too much in a strike. So they plead poverty to the city and theaten to leave unless the city rents the building for cheap. It is obvious from the Forbes.com data that the teams are not paying a fair rental for their arenas. The rental in most cases should be $20 - $30 million per year given that most teams are playing in new buildings.
September 23rd, 2007 at 7:36 pm
Safeco Field cost $542 million. The M’s pay about $800,000 per year in rent. The state loses $12 million per year on the facility which is covered by the hotel / motel tax.
http://www.ballpark.org/pdf/annual_report.pdf
Qwest Field including the Exhibition Hall and garage cost $430 million. The Seahawks pay about $1.1 million per year in rent. Paul Allen paid 30% of the construction cost of the stadium (about $130 million). The Seahawks are responsible for the maintenance costs.
http://en.wikipedia.org/wiki/Qwest_Field
http://www.stadium.org/default.asp
http://www.stadium.org/meetFAQ.asp
With these two competitors getting sweetheart deals from the state is it any wonder that Clay Bennett would expect one as well.
September 23rd, 2007 at 7:41 pm
Calabro, Alex: From someone who lives here in Oz, don’t worry, we’re just a few years behind you. It does happen here, but it falls mostly to the Australian Rules Football teams.
Basketball has been happily exempt. Season’s just starting up here, too.
September 23rd, 2007 at 8:38 pm
Good debate on this and other points by many in the threads.
Trueblood thanks for the comprehensive rundown, it fits with what I’ve pieced together over time but it is useful to share what you did. Thanks also for clarifying your experience and level of knowledge. Appreciate the posts.
Sportsfan I think trueblood’s $3 million in rent was a going forward from here rent proposal aimed at keeping team (and past city offers on new rent were in this lower ballpark) not a pay off the amount needed to fully pay off the bonds. You are right about that being a larger amount that Ackerly agreed to get the renovation- and sell based on that upgrade and avoid paying much of that cost himself. Schultz bought into that obligation as did Bennett. I’d prefer that they pay the fuller rent but with the market operating the way it is I might accept the lower amount. There are plenty of other issues like level of private contribution towards construction and who gets how much of non-basketball event revenue where I’d support the city being tougher.
Given the point you make about owners not risking strikes, etc. the only way the system changes is be city action or- I forgot this earlier- by fan action. Consumer behavior might over time have an impact. For the last 25 years fans have been bullish on the product and taken the league on its terms for the most part. Maybe that will change more some day. Right now it mainly happens with losing teams as the Sonics have been.
September 23rd, 2007 at 8:45 pm
Sportsfan I believe the Mariners ended up paying $150-200 million toward the final construction costs after overruns. So their light rent can be taken a bit different in that context.
Most Sonics fans would support a Sonics deal that was comparable to Seahawks and Mariners. Hopefully enough politicians and non-Sonic constituents will too but that has been tough. Only a “fair” deal (loaded term that will vary person to person) has any chance here. If Bennett will firmly and finally refuse a fair deal or a fair process toward a deal then a deal with him will never work out here. That is probably the case.
September 23rd, 2007 at 8:49 pm
Tolerably fair and truly and fully fair are different things. I’ve given up on a truly fair economic deal on an arena right now. To insist on a truly fair deal will probably mean no arena deal under any owner here. I am not there but that might end being the effective response of the public officials.
September 23rd, 2007 at 9:15 pm
Good takes Crow and yes, my rent proposal was pretty much what you outlined. The owner isn’t responsible for the arena debt or the interest payments but rather just a percentage of basketball related income. That’s how it is in GS and New Orleans. The New Orleans situation is quite simple. If they average more than 10,000 fans, they pay $2 million in rent. If they average less, they pay $1 million.
Sportsfan, yes, I do realize that the city needs to maintain the arena. That’s why I propose rent based on percentage of revenue streams. Plus, as was pointed out in another post, the city gets concessions and parking receipts. That also allows them to pay off the debt on the arena that includes the interest payments that you bring up.
September 23rd, 2007 at 9:21 pm
Trueblood one other rationale for signing Thomas was Bennett needed to convince Presti to come here and part of sealing that deal was saying I’ll spend enough to accomplish the plan and Presti apparently thinks the Thomas move helps in some set of ways and Bennett is giving him some latitude. Now I don’t know if Bennett has set conditions (or plans to raise questions later) about trying to move Thomas before deadline or moving somebody else- I guess we will see what happens.
September 23rd, 2007 at 9:37 pm
So, read the dirty details from trublood (thanks for being brief) and replace $50 per ticket for average with $29 per (a forms 2006 Hornets calculation number) becease that’s the market facing Bennett at the Ford Center.
The Ford Center is viable because it is cheap, we match that cheap and work our way up from there, much less than the Renton Palace .
September 23rd, 2007 at 9:47 pm
Trueblood (or can I call you Max?), since you are here, what odds do you give Shinn and the Hornets for staying put? Do you expect it to work out? Do you think he locks into a new lease anytime soon or waits til 2010 or all the way to 2012?
September 23rd, 2007 at 9:51 pm
Any early favs in the 08 draft?
September 23rd, 2007 at 10:42 pm
Thanks Crow, Max works for me.
As for the draft, I think the Sonics may need to upgrade at point. They’ve got 2 spots covered for sure in Green and Durant. From what I hear, Swift is on the verge of breaking out and seems to be the C of the future. That leaves PG and PF, assuming Durant works out at the 2 spot. Luckily for them, the draft is deep in point guards and PF’s. I’ve never seen Michael Beasley play but have seen a lot of Arthur from Kansas and he is a decent player in the event that the team doesn’t see Wilcox as the long term solution.
A better option would probably be for the Sonics to go for a PG like Mayo or Rose. They would have to trade Ridnour or Watson with the incumbent being the starter initially until Rose or Mayo was ready to take over full time.
As for New Orleans, it’s too early to tell. The season ticket number is low for a team that appears on the verge of the playoffs, especially given the ASG enticement. OTOH, they may be waiting for proof that the team is a winner and will show up when they are assured that the team is good. Either way, it’s too early to tell but I am looking forward to seeing how things turn out.
Regardless, I am and have always been a huge fan of the city and will continue to be so even if the team winds up leaving. What matters most is whether or not having an NBA presence is good for the city and a legitimate cure for the pain that still exists post Katrina. If nobody shows up to the games and the region doesn’t care for the team, than I don’t see the point in them staying and being a money loser for George Shinn. In that event, my preference is that they go where they will be appreciated and if the Sonics aren’t in OKC than the Hornets would work and would probably be a better fit due to the city already having proved that it could support them once before.
That being said, New Orleans is getting a chance to prove that it can support the team and that’s all that they ever asked for. But no excuses this time.
September 23rd, 2007 at 10:49 pm
OJ Mayo is 6′5, 210 lbs; having a point guard that was physically superior to his opponent would be a nice contrast to what the Sonics have had at that position post-Payton. However, I’ve never seen Mayo or Rose play in a competitive game; I don’t consider Youtube clips or anecdotes about how they played in high school as strong evidence of their capability to be stars in the association.
September 23rd, 2007 at 10:53 pm
I suppose Mayo would be my pick if the Sonics had a choice between him and Rose in the 2008 draft. I don’t believe too much credence should be given to the stories about Mayo’s alleged selfishness in high school; his detractors seem to forget that people grow as people and basketball players (e.g. Caron Butler).
September 23rd, 2007 at 10:59 pm
Also, let’s not start worrying about a strike. There are 4 or 5 years left on the collective bargaining agreement and the players never strike anyways. The owners have locked out the players twice and came close in ‘05 but the players never strike. It’s not something that I would lose sleep over.
September 23rd, 2007 at 11:04 pm
Alex, you are right in that we shouldn’t jump to conclusions regarding Mayo’s past. My only problem is that he seems to be more of a scoring PG whereas everything that I’ve heard about Rose is that he is a great setup guy. With Durant being someone who is going to need a lot of touches to take advantage of his vast scoring potential. For now, Rose and Durant seem like a better fit than Mayo but again, I need to see these guys play against college competition before making too many conclusions.
September 23rd, 2007 at 11:09 pm
Agreed Trueblood, we’ll probably have to wait for their college careers to commence before we can get a true evaluation of the two youngsters. Right now, Youtube clips and high school anecdotes are the only sources that people are using to compare the basketball abilities and personalities of Rose and Mayo.
September 23rd, 2007 at 11:12 pm
Perhaps if Ridnour shows dramatic improvement next season, the Sonics should go for a SG in the draft so Durant will be able to move back to his natural position at SF. Eric Gordon could be that guy if he declares for next year’s draft, if the high school anecdotes are accurate in their praise for his shooting ability.
September 23rd, 2007 at 11:32 pm
I suppose Mayo would be my pick if the Sonics had a choice between him and Rose in the 2008 draft. I don’t believe too much credence should be given to the stories about Mayo’s alleged selfishness in high school; his detractors seem to forget that people grow as people and basketball players (e.g. Caron Butler).
- I agree that we should wait until they play a college game to judge them…on the otherhand…lets just say I’m not so impressed with the idea of drafting a guy who thought it was a good thing to dunk the ball and rip off his jersey and throw it in the stands as a way to commerate his final HS game…
September 24th, 2007 at 7:28 am
Thanks Max.
I agree that Sonics will probably look mainly at PG and PF in first round and could get both with their likely fairly high pick and low pick (but which Presti wants more will be a drama- especially if he trades one), though I agree with Alex that SG is the outside dark horse.
I guess DeAndre Jordan has to be watched some too. I read he is raw but a year from now he might be the talk. Maybe as a pro PF, at least for awhile.
September 24th, 2007 at 7:56 am
My preference for PG would be Derrick Rose. From what I hear he is the fastest, most athletic guy to come into the league in years and a true PG while Mayo may be more of a SG. If true, i would compare Rose to Gus Williams. Gus made the championship team go. He penatrated to the hoop and dished off as Tony Parker does. We need someone that can defend guys like Tony Parker. We can get outside shooting elsewhere.
For SG i would look at Josh Carter from Texas AM. He may be available later in the draft. At PF there are alot of choices but no sure things. I would like to see the Sonics acquire Spencer Hawes for the PF position. He reminds me of Sikma.
September 24th, 2007 at 8:52 am
“If true, i would compare Rose to Gus Williams. Gus made the championship team go.”
Great first hand scouting report. Seriously, if you’ve never seen the player play how in the hell do you start comparing him to anyone. Wait till he plays a couple games on National TV, then start the hype machine.
September 24th, 2007 at 9:15 am
Josh Carter does seem interesting, might rise on draft board.
Using player comparisons is dangerous in that you might end up confirming your comparison with your eye but still trying to get a handle on player type is worthwhile to me and stats and scouting reports can contribute a lot toward that, though I agree with Scott you definitely need to see a player with your eyes a lot too. It is better to see him with your eyes first before making comparisons but that isnt the way the information flows on college freshman unless you are local or watch a lot of utube or all-star games.
September 24th, 2007 at 10:07 am
CLay Clay has never negotiated in good faith. May he go to hell.
September 24th, 2007 at 12:34 pm
That sound you just heard was the HAMMER dropping on Clay.
October 21st, 2007 at 2:15 pm
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I don\’t understand it.
November 7th, 2007 at 12:52 am
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December 2nd, 2007 at 7:34 am
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December 29th, 2007 at 7:17 pm
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March 26th, 2008 at 8:01 pm
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Good post!
April 18th, 2008 at 12:54 pm
FUCK CLAYTON BENNETT!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!