- Lester Munson, Legal Analyst
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Just hours before a federal judge was to decide whether a lease would require the SuperSonics to play two more seasons in Seattle, the city agreed to let the team immediately move to Oklahoma City, Okla., in return for $45 million and Seattle's retention of the team's name, logos, colors and history.
The settlement resolved a contentious legal dispute that included six days of trial. However, it also raises a number of legal questions. The following is an analysis of what the agreement means:
Q: What is the significance of the team's departure from Seattle? Does it mean that NBA teams now enjoy a form of free agency?
A: Other than the move to Oklahoma City, the settlement in Seattle has no permanent effect on the NBA or on its teams. A ruling from U.S. District Judge Marsha Pechman on the team's lease of KeyArena could have had some impact on other disputes involving teams trying to leave home for a better market. A ruling would have had some impact as a legal precedent, although it would have been limited. But the settlement resolves only the dispute between the city of Seattle and the team and has no effect on, say, an attempt by another professional sports team to move to a new city.
Q: Is it now over? Are the Sonics now certain to make the move to Oklahoma City?
A: No. It is far from over. Howard Schultz, the Starbucks CEO who sold the Sonics to the Oklahoma City group in July 2006, is still trying to stop the move in a lawsuit he filed against Clay Bennett and his Professional Basketball Club LLC. Schultz and his attorney, Richard Yarmuth, charge that Bennett "fraudulently induced" the sale with dishonest promises to try to keep the team in Seattle. They want a court order that would undo the sale and allow a sale to an "honest buyer" who would keep the team in Seattle.
It's an unusual legal action, but it may work. Even though Schultz and Yarmuth deliberately stayed out of the settlement discussions, the possibility of their success is important enough that it is described on the first page of the five-page settlement agreement between the city and Bennett.
The agreement makes specific provisions for what would happen if Schultz succeeds. It provides that if Schultz forces a sale that would return the team to Seattle, Bennett would be entitled to a refund of $22.5 million for each season should his investment group lose the pending lawsuit. Under such a scenario, the city must pay Bennett, the agreement provides, within five days of the "first home game played in Key Arena."
Schultz's lawsuit and the settlement offer the possible scenario of the Sonics playing a season in Oklahoma City and then, as the result of a court action, returning to Seattle for the 2009-10 season.
Q: Why would Seattle settle? Why wouldn't the city wait for the judge's decision, hoping to keep the team for two years?
A: Before the six-day trial, Bennett was willing to pay $26 million to buy his way out of the lease. After the six-day trial, he increased his offer to $45 million. It could go up another $30 million in five years if the state of Washington authorizes at least $75 million in public funding to renovate KeyArena but Seattle is unable to obtain an NBA franchise of its own. Bennett increased his offer by nearly $20 million after watching both the city's lawyers and his lawyers score some points in the trial.
Bennett clearly thought there was a chance that he would be forced to stay in Seattle and was willing to pay a high price in settlement.
Although they had a powerful legal position in the language of the arena lease, mayor Greg Nickels and Seattle's city council somehow reached the conclusion that $45 million was preferable to two years of lame-duck NBA basketball and $11 million in rent from Bennett. Most legal experts predicted that the city would have prevailed and could have held the team in Seattle for two years.
Nickels and the city hope that Seattle will somehow qualify for another NBA franchise. But, after arguing that no sum of money could replace two years of Sonics basketball, they gave away their team for a modest sum of money. It will become more of a political issue than a legal issue as Nickels and the council members face re-election.
Q: What's next? What should Seattle fans watch for?
A: Bennett and his group will prepare to move as Schultz and Yarmuth continue to dig for evidence that will bolster their case. They will have the benefit of reviewing all the testimony, documents, e-mails and other evidence presented in the six-day trial between the Sonics and the city, even though the case was settled out of court. That will be a significant advantage for Schultz and Yarmuth, who will now be preparing for a trial that will probably come in the spring of 2009.
They have decided not to seek a court order that would stop the move to Oklahoma City for the season that begins in a few months. Instead of presenting their evidence in an emergency setting, they will try the case after thorough investigation. It makes sense. Even if they were successful and obtained an emergency injunction that would stop the move, the lease of the KeyArena was voided in the settlement agreement, leaving the team homeless in Seattle.
As the owners of the arena, the mayor and the city council decided the money was more important than the team. The Schulz lawsuit may yet save the team for Seattle. It will examine every detail of Bennett's purchase and what Schultz contends are a series of false and fraudulent promises. The Schultz case offers Seattle fans more hope than any statements from Mayor Nickels and NBA commissioner David Stern about another team for Seattle.
Q: The settlement agreement includes a "negotiated statement" from NBA commissioner David Stern on "the future of professional basketball in Seattle." What, if anything, does this mean?
A: If the choices are "meaningful" or "meaningless," the Stern statement is meaningless.
Mayor Nickels and the city council needed something to try to show that their betrayal of Sonics fans was not a total betrayal. They needed something reassuring and hopeful in the face of what many fans thought was a disaster. The NBA was already involved in the discussions, assisting and advising Bennett on his exit from Seattle -- given that, it was easy to ask Stern to say something for the fans in Seattle.
The result is a "negotiated statement" issued moments after the announcement of the settlement. It's a carefully worded, lawyerly document. It promises very little and avoids any real commitment from the NBA.
The statement reiterates the position the NBA has argued since the controversy began. Seattle is, of course, a "first-class NBA city," Stern said. It is so fine a city that its team is leaving for Oklahoma City.
Stern also repeated his demand for a $300 million renovation of KeyArena before the NBA will consider a return to Seattle. And he added that it must be funded in the next 18 months. Then, and only then, Stern says, the NBA will keep Seattle "informed" if there is a sale of a team, a relocation of a team or an expansion team.
Mayor Nickels will use the statement to defend his settlement, but that will be its only meaningful use.
ESPN.com's Lester Munson is a Chicago lawyer and journalist who has been reporting on investigative and legal issues in the sports industry for 18 years.
8hSteve Ilardi and Jeremias Engelmann