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July 03, 2008
Seattle suit settled; Sonics heading for OKC
The city of Seattle unexpectedly threw in the towel in its suit to keep the Seattle Sonics in town for another two years yesterday (apparently its expert testimony wasn't doing much good), announcing a settlement deal in which owner Clay Bennett will pay $45 million for the right to immediately terminate his lease and move the team to Oklahoma City.
Bennett also agreed to pay Seattle an additional $30 million in 2013 if the city has been unable to land another NBA team - but only if the state legislature has by then agreed to spend $75 million toward a $300 million renovation of KeyArena.
Whether or not you consider this a proper ransom for a 41-year-old NBA franchise, the extra $30 million payment does make for some interesting incentives going forward. First off, it makes the prospect of taxpayers fronting half the money for a renovation go down a bit easier, if the public could get an extra $30 million to defray its costs. (Would this count as a return on public investment, as required by Seattle law?) Bennett, meanwhile, suddenly has an incentive to push the NBA to put a team in Seattle if the arena reno plan goes through - though it's hard to picture the NBA ignoring that market with a publicly renovated arena, David Stern's bluster notwithstanding. As 2013 nears, we could even see a kind of arena arbitrage, with the state trying to time arena funding to meet the deadline without giving the NBA enough time to find a replacement franchise by the cutoff, thus getting its $30 million and the prospect of a replacement Sonics, too - though that's probably more forethought than is reasonable to expect from elected officials.
As for the Sonics, they will now become the Oklahoma City Something-or-Others; the Oklahoman newspaper, throwing all pretense of objectivity out the window, put a photo of a basketball surrounded by champagne glasses on their website's front page to mark the occasion. The only possible stumbling block: Former Sonics owner Howard Schultz is still moving forward with his lawsuit to nullify the team's sale on the ground that the new owners didn't make a good-faith effort to keep the team in Seattle, as required by the sale agreement. Given that the talk of boycotting Schultz' Starbucks Coffee has already begun, you can see why he wouldn't want to back down - especially given that alienating his hometown customers is the last thing Schultz needs right now.
This was my comment on the article the Sacramento Bee published:
"They passed I-91, which forced builders of large venues (not just for sports) to repay loans fully, plus interest. That's a very simple requirement: Large, publicly-funded venues must repay their loans. Tell me what's wrong with that. When the Sonics then asked for more public money, not at all long after their local government already paid around $100 million to renovate Key Arena, the Sonics wanted more. The Council said no; the State said no; the voters said no. Democracy won. People need to stop treating sports teams as though they're somehow different from other businesses; that it's okay to subsidize them. It's not. I would love to see California pass its own version of Seattle's I-91. As for Cal Expo, I am afraid I'm confident this idea won't even get out of the accounting department. Using "profits" from other development at the fairgrounds to fund an arena? That's still a subsidy, you know. I mean, IF it works at all, which it probably can't. Bad idea so far. You'll see."
Posted by MikeM on July 3, 2008 12:48 PM