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November 6, 2007
Being The NBA's Art Modell
The Sonics May Be On The Move

by Maury Brown

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(Correction: The Danny Barth who serves as the team president of the Seattle Sonics and the one who is the CFO of the Oklahoma Publishing Company are two different people. The latter has no standing with the Seattle SuperSonics. We apologize to both men for the error.--JSS.)

The Seattle SuperSonics played their home opener last Thursday night, a 106-99 loss to the Suns. Is it the last one?

After more than 40 years in Seattle, Sonics owner Clay Bennett released a statement on Friday outlining ownership's plans to request a relocation to Oklahoma City:

"As we stated on July 18, 2006, and have stated on many occasions thereafter, KeyArena is not a viable modern venue for the NBA and if a successor facility is not identified by October 31, 2007, we would evaluate our options, which would include relocation. Today we notified Commissioner Stern that we intend to relocate the Sonics to Oklahoma City if we succeed in the pending litigation with the City, or are able to negotiate an early lease termination, or at the end of the lease term."

In response, Seattle Mayor Greg Nickles said in a statement, "Seattle and Key Arena have been home to the Sonics--and more recently the [WNBA] Storm--for 41 years. I believe that tradition should continue. I will do everything in my power to enforce our lease and keep the Sonics and Storm where they belong--in Seattle through 2010 and beyond."

City Attorney Tom Carr called the announcement "a transparent attempt to alienate the Seattle fan base and follow through on his plan to move the team to Oklahoma City. The deadline for notifying the league of his intent to move is March 1. Making this move now continues the current ownership's insulting behavior toward the Sonics' dedicated fans and the citizens of the City of Seattle."

Seattle's oldest professional franchise could be packing its bags and changing its name. If so, it will be the third NBA franchise in the past decade to relocate, with the most recent being the Hornets' move from Charlotte to New Orleans in 2002. Prior to that, the Grizzlies moved from Vancouver, BC to Memphis in 2001.

The announcement was not unexpected, as Bennett and the City of Seattle have been locked in a bitter battle over the team. The city wants to keep the Sonics in Seattle, offering renovations to KeyArena as opposed to a new facility. Bennett has asked for no less than a new facility, or else the team relocates.

Bennett had set an October 31 deadline for a concrete plan for a new arena, or else the announcement to relocate at the end of the 2007-'08 season. Deciding that it would be poor form to upstage the Sonics' opening night festivities on November 1, he decided to play Grinch the day after, making the announcement of his intent to relocate on Friday the 2nd. Bennett and his group, made up of Oklahoma City businessmen, have been playing the win-win card: They either get a shiny new arena in Seattle at taxpayer expense, or they move the team to Oklahoma City, where they will be championed as the group that brought big-league sports to their city. Bennett may eventually be vilified in Seattle as the Art Modell of the NBA for packing up the team and moving, but at least his ownership group will be given a hero's welcome in Oklahoma City, giving the Ford Center a chief tenant.

What has transpired is a case of a city and state that has invested millions upon millions of dollars into stadiums for the Mariners and Seahawks not seeing the will to fork over more still for a new arena for the Sonics. Although there has not been any method outlined, the city has said that they're open to renovating KeyArena. Bennett initially said that there might be possibilities of playing in a renovated KeyArena, but only for a short period of time. On the week of the one-year anniversary of the purchase of the franchise this past July, Bennett laid it out on the table.

"I think KeyArena can be a fine building for certain events," he said, then added that the franchise would still not be profitable even with the $200 million expansion the previous Sonics ownership had requested. KeyArena was completely renovated in 1995 at a cost to the city of $74.5 million with ownership kicking in approximately $21 million.

The contentious atmosphere stems from the day that Bennett's Professional Basketball Club, LLC purchased the Sonics and WNBA Storm from Starbucks Coffee chairman Howard Schultz for $350 million, well above market value according to Forbes' valuation of $268 million. At the July 18, 2006 press conference following the purchase, Bennett said, "It is our desire to have the Sonics and Storm stay in Seattle," but added that the statement was contingent on getting a new arena built within 12 months. After that, all bets were off.

For Seattle's and the state of Washington's part, having a new owner immediately make threats regarding relocation did not sit well. In November of 2006, Initiative 91 was passed in Seattle by three-quarters of voters, limiting the amount of public subsidy that could be applied to a new Sonics arena.

"This vote reflected not just the will of the people of Seattle. It reflected sentiment statewide," said Chris Van Dyk, organizer for Citizens for More Important Things, a chief backer of the legislation at a press conference after I-91 passed.

The discontent spread to the state level, as well. Talk of building the arena in Renton and Bellevue stalled when discussion of up to $400 million in public subsidy was mentioned. For three years, legislation had been brought forth to the Washington Legislature, and for a third year, it failed. Bennett blew the relocation horn again through a statement.

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

Matters have grown continually worse through 2007.

In August, minority owner Aubrey McClendon made comments in the press that threw fuel on the fire. McClendon was hit with a $250,000 fine by the NBA, two weeks after comments in The Journal Record in Oklahoma. McClendon couldn't seem to help but say what has really been known all along: The Sonics were purchased by the Professional Basketball Club LLC, which is led by Bennett, with the clear intent of moving the team to Oklahoma City.

"[We] didn't buy the team to keep it in Seattle; we hoped to come here," McClendon, chief executive of Chesapeake Energy, was quoted as saying. "We know it's a little more difficult financially here in Oklahoma City, but we think it's great for the community and if we could break even, we'd be thrilled."

Matters then made their way into the legal realm. Looking to exit Seattle before the September 2010 end of their lease at KeyArena, the Sonics argued that an arbitration panel should decide if they were bound by the lease agreement to stay in Seattle. The city countered by suing the Sonics, saying that the franchise should be made to honor the lease agreement and play until 2010. The binding aspect was part of the lease when the $74 million in renovations were made to KeyArena in the '90s.

On October 29, Judge Ricardo S. Martinez ruled that the courts, not an arbitration panel, would decide whether the Sonics would remain in Seattle through 2010. The Sonics argued that Article II of the lease agreement stipulated that all disputes were to be resolved by arbitration, not through the court system.

"The Court finds that the underlying dispute between the parties relates to whether the Sonics are compelled to play all regular seasons home games in KeyArena until September 30, 2010. This dispute therefore relates to Article II of the Premises Use & Occupancy Agreement. The Court additionally finds that disputes relating to Article II are excluded from arbitration," read part of the conclusion of the ruling. (Read the entire ruling here.) Judge Martinez also said that the team's interpretation of the lease was "as errant as a typical Shaquille O'Neal free throw." Seattle Mayor Greg Nickles replied that the ruling "goes a long way to ensuring Seattle taxpayers will get what they paid for when they rebuilt KeyArena."

That leads us to back to Friday. Shortly before Bennett released his statement announcing his intent to file for relocation, former Sonics minority owner Dennis Daugs announced that he had formed a group of local investors willing to purchase the team and keep them in Seattle, where they would continue to play in KeyArena.

"We want to recapture the spirit and love of basketball in Seattle by bringing the Sonics and Storm back to local ownership," said Daugs.

Unfortunately for Seattle area Sonics fans, the offer seems to have fallen on deaf ears. A statement through a spokesperson said Bennett has no interest in selling.

What options are in front of Sonics and the city of Seattle? The City of Seattle can stick to guns and see where the court battle lands. If they are successful and win the case, the Sonics would play out the remainder of the lease. What then? Ever since Bennett purchased the team, it's been obvious that his intent has been to relocate the franchise--his entire ownership group is comprised of Oklahoma City business partners! To reach their goals, there will surely be a price tag associated with it. Seattle will ask, and most assuredly get, some form of compensation for the lost revenues that the city would have received with the Sonics and Storm still rooted in "Emerald City." Those costs may be hard to define.

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

On Bennett's side of the ledger, "substantial financial damages" are a relative term.

Bennett has said that the Sonics lost $17 million in the first year of his ownership playing at KeyArena, the NBA's smallest facility. Former owner Howard Schultz claims to have lost $60 million during the five years he was owner of the Sonics. Would a payoff by Bennett's group be that big a blow if it meant he were able to relocate to Oklahoma City?

There's little doubt that Oklahoma City would provide large crowds for more than a season or two. After that, the market is considerably smaller than Seattle, but then, OKC doesn't have multiple professional sports franchises. Also, the ownership group stands to make revenues beyond just the NBA team.. Bennett's wife Louise Gaylord Bennett is the daughter of Edward L. Gaylord, the Oklahoma City media mogul that owned The Oklahoman, the Nashville Network TV Channel, Oklahoma Publishing Company, and the Country Music Television Channel (CMT). Team President Danny Barth is the CFO of the Oklahoma Publishing Company. It stands to reason, given with the makeup of the rest of the ownership group, that by bringing an NBA team to their city they will benefit financially in ways beyond basketball revenues.

What could Seattle do? Well, they could possibly play the part of Charlotte when the Hornets left. Looking to regain its NBA heritage, the city could find a way to fund a new arena and wait for expansion or another team up for relocation.

In the end, it all rings hollow. Watching an ownership group purchase a team with the transparent means of hijacking them to another city, or using relocation as an extortion ploy to get a new arena, is enough to make any fan nauseous. Maybe Clay Bennett really is the Art Modell of the NBA.

--

Maury Brown is a contributor to Basketball Prospectus. He can be reached here.

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