- Lester Munson, Legal Analyst
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With the NBA expected to approve the Seattle SuperSonics' relocation to Oklahoma City on Friday, former Sonics owner Howard Schultz thinks he can rescue the team for Seattle with a lawsuit. When he sold the team for $350 million in 2006, Schultz thought the new owners would work to keep the team in Seattle. Recently disclosed e-mails sent by the new owners now indicate that the new owners had no plans to keep the team in Seattle and were hoping for a quick move.
Schultz and his attorneys think that's enough to convince a judge in Seattle that the new owners are guilty of bad faith and fraud and should be required to return the team to him. Schultz is not asking for money. The situation raises a number of questions about Schultz, the Seattle market for big league sports, the new owners, their contacts with each other and their motivation. Here are some of the questions and their answers:
Would Schultz succeed in undoing the sale he made in July 2006 and force the new owners to return the team to him?
It is unlikely. Schultz and his attorneys must convince a judge that Clay Bennett, the new owner, was guilty of fraud at the time of the sale. To do so, they must produce witnesses, e-mails or other evidence showing Bennett knew at the time of the sale that he would move the team. It is a daunting, and perhaps impossible, task. The first piece of evidence surely would be the comment last fall by Sonics minority owner Aubrey McClendon, who said: "We didn't buy the team to keep it in Seattle, we hoped to come here [Oklahoma City]." The comment earned him a $250,000 fine by the NBA. Equally embarrassing for Bennett and his partners is a recently disclosed series of e-mails. Bennett's crew talked in their e-mails about "lame duck" seasons in Seattle, indicating they were seeking to make a quick exit from Seattle. Even with this evidence, Schultz might not have enough to meet the stiff legal requirements of proof of fraud. Bennett will counterattack with his hiring of an architect and a lobbyist and the efforts he made to obtain financing for a new arena. Courts demand strict proof whenever fraud is claimed in a sale. Unless Schultz can somehow find more powerful evidence that Bennett never intended to stay, he will be unsuccessful in his efforts to take back the team.
Are there other legal theories or claims available to Schultz?
Schultz's attorney, Richard Yarmuth, asserts that Bennett was required in a "side letter" that was part of the sale to keep the team in Seattle until the end of the KeyArena lease (two more seasons) and to make a "good faith" attempt to find a way to stay indefinitely. Although Yarmuth has not disclosed the exact language of the side letter, it might give Schultz another avenue of attack. But Schultz and Yarmuth must be able to prove that Bennett failed to meet a standard known as "best efforts." Like proof of fraud, it will not be easy. Bennett will respond with a showing of his attempts to obtain taxpayer money for a new arena and the unwillingness of Washington politicians to offer anything to the Sonics.
Why would Schultz try something that is so unlikely to succeed?
Ever since he sold the team, Schultz, the founder and CEO of Starbucks, has been reviled in Seattle. Fans view him with scorn and contempt, incensed that he was willing to sell their team to outsiders, opening the possibility that the team would leave. NBA officials are watching closely, and a spokesman said the league views Schultz's threatened lawsuit as a "PR move" and "grandstanding," an attempt "to regain some popularity for himself and his company." But, even if it is a grandstand move, it might be a good one. The e-mails are not good for Bennett and his partners. They likely wish they had never sent them. If Schultz succeeds in recapturing the team, he would be a hero. If he succeeds in only delaying a move to Oklahoma City, he helps himself and his company.
What about the NBA? Why would commissioner David Stern and the owners allow Seattle to move from the 14th-largest market to the 45th-largest market?
Trying to explain the probable move, Stern suggests that Seattle has shown it is not interested in an NBA team. The people of Seattle and the state of Washington helped the owners of the Seahawks (NFL) and the Mariners (MLB) with new stadiums, but they have refused to do anything for the Sonics. Bennett worked hard on a proposal for a $500 million arena in suburban Renton, but could not find public support. In addition to his publicly stated reasons, Stern knows that NBA owners are free agents and can move when they want. If the NBA tried to stop a move, the owner would file an antitrust action against the NBA, and the owner would win. The NBA is a monopoly and is vulnerable to antitrust actions from owners who want to move their teams, according to Stephen F. Ross, a law professor at Penn State who has written the definitive text on antitrust law and sports. That's how Al Davis moved his Raiders many years ago (he won a lawsuit to do it), and that's how the late Georgia Frontiere forced the NFL to permit her to leave Los Angeles and to move the Rams to St. Louis. Commissioners don't like to admit it, but owners are free agents and can move when and where they wish.
Does the NBA gain anything if the Sonics move to Oklahoma City?
It is hard to see what the NBA gains, but there are a couple of intriguing possibilities. Some conspiracy theorists suggest that a move out of Seattle would help other teams obtain public money for new arenas. If, for example, Sacramento wanted tax dollars for a new venue, it could use Seattle as an example of what happens when local leaders ignore the pleas from team owners for public funds. Another theory is that the NBA is clearing out the Northwest for Paul Allen and his Trail Blazers. With the Grizzlies in Memphis and the Sonics in Oklahoma, Allen would enjoy a huge market. The problem with the help-Paul-Allen theory is that Allen also owns the Seahawks and wants to remain at least somewhat popular in Seattle.
What is the best hope for Sonics fans in Seattle?
The best hope is Seattle's effort in a lawsuit to enforce the terms of the Sonics' lease of KeyArena. Although Bennett has offered $26 million to buy out of the lease, city officials insist that the team play the next two seasons in Seattle as required in the lease. The city has taken the team to court to enforce the lease, and a trial is scheduled for June 16. The city likely will win. Bennett could then offer more money to buy his way out. If the city refuses Bennett's buyout offer, the team would play two more seasons. During those two seasons, Microsoft's Steve Ballmer or other Seattle business moguls would have a chance to save the team for Seattle.
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.
3dSteve Ilardi and Jeremias Engelmann