Bennett’s Got Game

Clay Bennett’s Sonics have the better lawyer. Seattle has the better
case.

Sonics trial 101: Oklahoma businessman Clay Bennett (along with a
few colleagues) bought the Seattle SuperSonics and Seattle Storm in
July 2006 for $350 million. After failing to get $400 million in public
assistance from the state legislature to build a new stadium in 2007,
Bennett won NBA approval this spring to move the team to Oklahoma City,
where voters had approved a $121 million stadium subsidy. But not so
fast. Seattle sued to force Bennett to honor the KeyArena lease that
the team signed in 1994, which mandates that the Sonics play at
KeyArena through September 2010, or for two more NBA seasons.

The KeyArena lease was the final product of a deal worked out
between the city and the Sonics (then owned by billboard mogul Barry
Ackerley) that reflected a plan to protect taxpayers: The city used its
good bond rating to cover the Sonics’ $74 million KeyArena makeover in
return for a 60 percent cut of Sonics’ suite revenues annually to pay
off the debt.

The deal worked well until 2000, when the Sonics’ revenues started
dwindling. The team’s once-unique luxury suites now had to compete with
suites at the new Safeco and Qwest stadiums, there was a recession, and
the team went from NBA playoff and champion contenders to league
scrubs.

The result? The team started racking up financial losses—$58
million between 2001 and 2005—and the city was forced to tap into
its general fund to pay the debt. The debt currently stands at about
$35 million.

Bennett tried to buy out the remainder of the lease for $26.5
million earlier this year. The city refused.

On the first day of the trial this week at the U.S. District Court
in downtown Seattle, Bennett’s lead attorney, Bradley Keller of
Seattle’s Byrnes & Keller, reframed the story of a tenant who
regrets signing a shortsighted lease into a dramatic tearjerker about a
marriage turned “frosty,” where his client is trapped in a
“dysfunctional economic relationship.”

Playing the role of marriage counselor, Keller stressed that neither
side is to blame. Rather, “the world changed… changes the contracting
partners didn’t envision,” alluding to new NBA standards that demand
arenas be high-end entertainment plazas.

While Keller acknowledged that the lease required the Sonics to play
in KeyArena through 2010, he said there was “an equally important
fundamental premise… to have a venue that was… economically
viable.”

Keller—silver hair, black glasses, trim, a sense of pacing and
drama—spent the day indicting an out-of-date arena for bringing
“economic hardship” to the Sonics: There are no convenient locations
for retail stores! No space for restaurants and clubs! No
press-conference room! The arena is less than the NBA-recommended
700,000 square feet! Those flaws, Keller concluded, have resulted in
revenues of about $6 million a year—a third of the NBA’s
league-wide average.

Keller’s engaging performance—he also hauled out a recent city
study showing how financially flawed the lease was and embarrassed
Mayor Greg Nickels by playing a videotape of Nickels’s deposition that
contradicted Nickels’s answers in court—totally upstaged the
city’s lawyers. The million-dollar team from the city lapsed into
silent stage fright when its exhibits were tossed, couldn’t identify
documents, couldn’t get an objection sustained, and even elicited an
incredulous “That’s your response to his objection?” at one point from
Judge Marsha Pechman.

But the showy Keller may have talked too much. “People say we
‘bought the problem,'” Keller said, addressing the fact that Bennett
knew about all the financial woes when he bought the team and inherited
the lease—”but we thought we had a solution.” That solution? “To
build a world-class sports facility.”

Unfortunately for Bennett, building a separate facility has very
little to do with fixing the Sonics’ flawed lease. To use Keller’s
metaphor, it’s like trying to save your marriage by going out and
looking for a hotter mate.

The real issue is the lease, and no matter how much Bennett tries to
make this about something other than the lease—new standards for
NBA arenas, luxury suites at Safeco, or declining revenues—his
debonair attorney can’t avoid the fact that the Sonics signed a lease
and that Bennett never tried to renegotiate it before trying to break
it.

Even the city’s underwhelming attorneys got this point. On day two,
when Bennett himself took the stand, one of the city’s attorney’s, Paul
Lawrence, asked him if he knew of “any provision in the lease that
allows you to leave early… under any circumstances.” Bennett
responded simply, “No.”

The trial continues for another week;
for daily updates, go to
www.thestranger
.com/blog.