MajorMike
05-15-2008, 08:21 AM
By Lester Munson
ESPN.com
The legal battles in Seattle over the future of the SuperSonics are quickly becoming more complicated, more expensive and more unpredictable. Hard on the heels of a fight over an arena lease in Seattle and an attempt by former owner Howard Schultz to undo his sale to an Oklahoma City group in July 2006 comes the assertion late last week from Oklahoma City officials that they will expect more than $150 million in damages if the team does not move into their upgraded arena.
The Oklahoma City demands arrived in a nine-page, powerfully worded letter from an attorney for Oklahoma City's mayor and city council. According to the letter from city attorney Wiley L. Williams, current Sonics owner Clay Bennett has signed a series of interlocking contracts and leases with Oklahoma City that are legally binding and would result in enormous penalties if the team does not move.
The contracts and leases, the letter says, are "fully enforceable against the current and any future owners" of the team.
"We expect the agreements to survive regardless of the outcome" of the litigation in Seattle, according to Williams. A lawsuit seeking to enforce the Sonics' lease in Seattle is scheduled for trial on June 16. That case seeks to enforce a lease that Bennett inherited when he purchased the team from Schultz nearly two years ago.
If the team does not move to Oklahoma City, though, last week's letter strongly suggests the franchise will face another lawsuit on another lease, with Oklahoma City officials trying to do exactly what Seattle officials are trying to do now to keep the team in the Pacific Northwest.
The Oklahoma City assertions add to an already complex jumble of claims and lawsuits. The situation has begun to resemble an exam question that could baffle even the best students at the best law schools in the land.
The conflicting demands offer the possibility of an unprecedented scenario in which a judge in Seattle could order the team sold to an "honest owner," which is what Schultz is demanding in his lawsuit seeking to undo the 2006 sale to Bennett; and then, a judge in Oklahoma City could order the new "honest owner" from Seattle either to move the team to Oklahoma City or to pay the city $150 million in "liquidated damages."
The agreements between Bennett and Oklahoma City include powerful language requiring the team to move to Oklahoma City. If the move is not completed, the agreements allow city officials to seek an injunction -- a court order requiring the team to move. And, if the team does not move, the agreements also permit Oklahoma City to seek "liquidated damages" from whoever owns the team.
Although it is difficult to make a precise calculation of the "liquidated damages," the contracts and the arena lease indicate that the owner of the Sonics could owe Oklahoma City as much as $95 million for renovations of the Ford Center Arena in Oklahoma, another $30 million for a new practice facility and 15 years of rent for 41 home games at the Ford Center at a cost of $1.6 million each season. Also included in the mix of liquidated damages that OKC would claim is an annual naming rights fee of $409,000 that the team would be expected to pay the city each year.
It's a long way from a clause in a contract to the actual collection of liquidated damages, but it will be impossible for any new owner to ignore Oklahoma City's claims. Any new owner who keeps the team in Seattle would face immediate litigation in Oklahoma City, with the city demanding either a move or the liquidated damages.
The Oklahoma City letter suggests that the city and the team are "business partners" under the series of interlocking leases and agreements, and that "we expect that any owner would join hands with the city ... and honor the agreements ... as good corporate neighbors to make NBA basketball a success in Oklahoma City."
In his letter, attorney Williams makes it very clear that Mayor Mick Cornett and other Oklahoma City leaders will not hesitate to go to court to enforce what they believe to be binding agreements with the Sonics to move to Oklahoma City and play there for at least 15 years.
It is remarkably good politics on the part of the Oklahoma City officials. On March 4, nearly 62 percent of city voters approved a referendum to allow a sales-tax increase for arena improvements and a practice facility.
Lester Munson, a Chicago lawyer and journalist who reports on investigative and legal issues in the sports industry, is a senior writer for ESPN.com.
ESPN.com
The legal battles in Seattle over the future of the SuperSonics are quickly becoming more complicated, more expensive and more unpredictable. Hard on the heels of a fight over an arena lease in Seattle and an attempt by former owner Howard Schultz to undo his sale to an Oklahoma City group in July 2006 comes the assertion late last week from Oklahoma City officials that they will expect more than $150 million in damages if the team does not move into their upgraded arena.
The Oklahoma City demands arrived in a nine-page, powerfully worded letter from an attorney for Oklahoma City's mayor and city council. According to the letter from city attorney Wiley L. Williams, current Sonics owner Clay Bennett has signed a series of interlocking contracts and leases with Oklahoma City that are legally binding and would result in enormous penalties if the team does not move.
The contracts and leases, the letter says, are "fully enforceable against the current and any future owners" of the team.
"We expect the agreements to survive regardless of the outcome" of the litigation in Seattle, according to Williams. A lawsuit seeking to enforce the Sonics' lease in Seattle is scheduled for trial on June 16. That case seeks to enforce a lease that Bennett inherited when he purchased the team from Schultz nearly two years ago.
If the team does not move to Oklahoma City, though, last week's letter strongly suggests the franchise will face another lawsuit on another lease, with Oklahoma City officials trying to do exactly what Seattle officials are trying to do now to keep the team in the Pacific Northwest.
The Oklahoma City assertions add to an already complex jumble of claims and lawsuits. The situation has begun to resemble an exam question that could baffle even the best students at the best law schools in the land.
The conflicting demands offer the possibility of an unprecedented scenario in which a judge in Seattle could order the team sold to an "honest owner," which is what Schultz is demanding in his lawsuit seeking to undo the 2006 sale to Bennett; and then, a judge in Oklahoma City could order the new "honest owner" from Seattle either to move the team to Oklahoma City or to pay the city $150 million in "liquidated damages."
The agreements between Bennett and Oklahoma City include powerful language requiring the team to move to Oklahoma City. If the move is not completed, the agreements allow city officials to seek an injunction -- a court order requiring the team to move. And, if the team does not move, the agreements also permit Oklahoma City to seek "liquidated damages" from whoever owns the team.
Although it is difficult to make a precise calculation of the "liquidated damages," the contracts and the arena lease indicate that the owner of the Sonics could owe Oklahoma City as much as $95 million for renovations of the Ford Center Arena in Oklahoma, another $30 million for a new practice facility and 15 years of rent for 41 home games at the Ford Center at a cost of $1.6 million each season. Also included in the mix of liquidated damages that OKC would claim is an annual naming rights fee of $409,000 that the team would be expected to pay the city each year.
It's a long way from a clause in a contract to the actual collection of liquidated damages, but it will be impossible for any new owner to ignore Oklahoma City's claims. Any new owner who keeps the team in Seattle would face immediate litigation in Oklahoma City, with the city demanding either a move or the liquidated damages.
The Oklahoma City letter suggests that the city and the team are "business partners" under the series of interlocking leases and agreements, and that "we expect that any owner would join hands with the city ... and honor the agreements ... as good corporate neighbors to make NBA basketball a success in Oklahoma City."
In his letter, attorney Williams makes it very clear that Mayor Mick Cornett and other Oklahoma City leaders will not hesitate to go to court to enforce what they believe to be binding agreements with the Sonics to move to Oklahoma City and play there for at least 15 years.
It is remarkably good politics on the part of the Oklahoma City officials. On March 4, nearly 62 percent of city voters approved a referendum to allow a sales-tax increase for arena improvements and a practice facility.
Lester Munson, a Chicago lawyer and journalist who reports on investigative and legal issues in the sports industry, is a senior writer for ESPN.com.