Bad News: Schultz to sue Bennett

[metro]

Tuesday, April 15, 2008
Reports: Schultz to claim Sonics owners breached terms of sale

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ESPN.com news services

The former owner of the Seattle SuperSonics plans to sue the current owners to get the team back, arguing they breached a condition of the sale to make a "good-faith effort" to keep Seattle's oldest pro sports franchise from leaving town, according to Seattle-area media reports.

Starbucks chairman and CEO Howard Schultz, who sold the Sonics to an Oklahoma City-based group led by Clay Bennett, will not seek monetary damages, but wants the team back, according to his attorney, Richard Yarmuth.

"It's not money damage. It's to have the team returned," Yarmuth said, according to The Seattle times. "The theory of the suit is that when the team was sold, the Basketball Club of Seattle, our team here, relied on promises made by Clay Bennett and his ownership that they desired to keep the team in Seattle and intended to make a good-faith effort to accomplish that."

The team's ownership group has sought NBA approval to move the team to Oklahoma City for next season. The city has taken the team to court to enforce its lease at Key Arena, which runs through September of 2010.

The lawsuit, expected to be filed in the next two weeks, comes after the city obtained and made public e-mails among members of the Sonics ownership group, in which they are seen privately discussing a move to Oklahoma City at the same time they were publicly pledging to continue "good-faith" efforts to remain in Seattle.

After purchasing the team and the WNBA's Seattle Storm from Schultz in July, 2006 for $350 Bennett promised to spend one full year after the purchase was approved to seek a viable home for the Sonics in Seattle. The NBA approved the sale of the Sonics in October 2006.


Bennett's trips to Washington state to lobby for a a proposed $500 million arena in suburban Renton and his hiring of a Seattle-based lobbyist and architectural firm have no bearing on the lawsuit, Yarmuth told the Times.


"We're talking about fraud at the time the contract was signed," Yarmuth said, according to the newspaper. "It's not merely what activities, good faith or otherwise, were engaged in after the contract was signed so far as lobbying for a new stadium."


Bennett and ownership partners Aubrey McClendon and Tom Ward exchanged e-mails in April 2007 in which they discussed whether there was any way to avoid further "lame duck" seasons in Seattle before the team could be relocated.


Bennett responded: "I am a man possessed! Will do everything we can. Thanks for hanging with me boys."


Four months later, after McClendon was quoted by an Oklahoma publication that "we didn't buy the team to keep it in Seattle; we hoped to come here," Bennett told NBA commissioner David Stern in an e-mail that the group had not discussed a move to Oklahoma City.

"I haven't studied them but my sense of it was that Clay, as the managing partner and the driving force of the group, was operating in good faith under the agreement that had been made with Howard Schultz," Stern said on a conference call Monday. "His straight and narrow path may not have been shared by all of his partners in their views, but Clay was the one that was making policy for the partnership."

The NBA's owners are expected to vote on the proposed Sonics move Friday. The league's relocation committee has already approved the move.

The Associated Press contributed to this report.

[Kerry]

Just more distraction. There is no way Schultz is going to get the team back. If he was going to file the suit he would need to have done it back during the first year. Otherwise, what would stop him from filing a lawsuit 25 years from now to get the team back? It just doesn't work that way.

[Dustbowl]

Just more distraction. There is no way Schultz is going to get the team back. If he was going to file the suit he would need to have done it back during the first year. Otherwise, what would stop him from filing a lawsuit 25 years from now to get the team back? It just doesn't work that way.

Have you ever heard of something called "statute of limitations"? Look it up.

[autoMATTic]

Specific performance of contract is extremely frowned upon nowadays. This applies to both Seattle's efforts to "make the team stay" and this news of Mr. Starbuck trying to "give the team back to the city." Ask any lawyer. This is a distraction and a way to save face for Schultz and the city. By not seeking monetary damages (Schultz) and not accepting monetary damages (the city), the plaintiffs have left a gaping hole. This is PR. Save this post. Both lawsuits will end in the same result.

[OKCMallen]

Save this post. Both lawsuits will end in the same result.

I don't know- the lease suit is legit. This just seems ridiculous. He made like $150mil on the sale, didn't he? He wants to disgorge that??

[OKCTalker]

Be careful what you wish for, Mr. Schultz. Even though it ain't gonna happen, getting the team back in Seattle would be your worst nightmare.

[soonerfever]

Would this even have happened if Schultz wasn't back as CEO of Starbucks? Now he is going to turn Starbucks around and save the Sonics for Seattle.

[BDP]

Have you ever heard of something called "statute of limitations"?

Usually 6 years for contracts of sales, possibly 10 years for recovery of property.

The real question is whether discussing a move amongst themselves constitutes a breach under the good faith clause. I would think that would be pretty hard considering how much they did do to attempt to actually keep the team there. It can be a pretty subjective thing and they will have to show that he concretely undermined the process or never had any intention of honoring any aspect of their terms proposed during negotiations. Since they did negotiate with the state and the city and the state and the city basically refused to negotiate with them, how can it be proven that they negotiated in bad faith?

I think this is really another stall to try and find another way to keep the team there. I doubt that Schultz will get the team back based on any good faith violation, but it may serve to delay any ruling on the lease suit beyond this year.

[jbrown84]

I would think that would be pretty hard considering how much they did do to attempt to actually keep the team there. It can be a pretty subjective thing and they will have to show that he concretely undermined the process or never had any intention of honoring any aspect of their terms proposed during negotiations.

That was exactly my thinking.

[Kerry]

Dustbowl - Stautes of Limitations on a side letter that was not part of the sale? Schultz might have a case if the good faith clause was part of the sales contract but it wasn't.

The Schultz group had 57 people in it. If this was even remotely probable don't you think one those other owners would have tried this by now. This is the Seattle version of a hail mary. Chances are it will fall to the ground at about the 20 yard line. DB, I know you are self hating Oklahoma but this lawsuit won't help you relieve any guilt.

[Drake]

Be careful you guys. You are just asking for a possible ass kicking at the Iron Star around noon time.

[CrimsonOberon]

Be careful you guys. You are just asking for a possible ass kicking at the Iron Star around noon time.

[solitude]

Has the exact wording of the side agreement between Bennett and Mr. Schultz ever been made public?

By the way, this is now on the front page of MSNBC. It links to this story:
Report: Ex-Sonics owner will sue to regain team - NBA - MSNBC.com

[metro]

I agree that the whole Schultz lawsuit might not have a chance, but if nothing else, all new developments (emails, Schultz, and others yet to come) are definitely making us wait longer to get a team rather than sooner.

[venture]

This is why you don't put anything in writing in emails unless you are okay with it eventually going public. Had Clay and the boys kept their feelings to themselves our out of writing, this would be all for nothing right now. If anything this will now be tied up in the courts until the lease is up.

The damage to the public reputation to OKC is definitely not helping. Say what you will...but people read headlines without investigating them more. So far OKC has been seen as the bad guy coming in and trying to steal a storied team from one of the country's great cities.

Yes OKC would love to have an NBA team here, but at the cost of our image and character...is it worth it? There will be those that are blinded by the situation and say "hell yes" and "screw what they say, we deserve it".

Our arena will be around what...$200M in total cost once the renovations are done? They were demanding $500M from Seattle? I don't really think the cost of doing business is inflated that much. Common sense would dictate that Bennett and Co purchased the team to move and wanted the bar set high, that if they reached it, they would be forced to stay.

The whole deal is shaddy...and that includes EVERYONE involved. From Schultz to Bennett to Stern. Unfortunately if this does go the wrong way for OKC, we are forever going to have the black stamp on us about how we will do whatever we can to get a team - honest or not.

[OKCMallen]

Our arena will be around what...$200M in total cost once the renovations are done? They were demanding $500M from Seattle? I don't really think the cost of doing business is inflated that much. Common sense would dictate that Bennett and Co purchased the team to move and wanted the bar set high, that if they reached it, they would be forced to stay.

Apples and oranges dude. The Ford Center was built WITH IMPROVEMENTS INTENDED. That's why it's so much cheaper. We have a bigger footprint than KeyArena, as well. KeyArena is old, with a smaller footprint, which makes it more costly to bring it up to date. Think about what you're saying before you imply that Bennett & Co. was shady about the amount needed to make KeyArena suitable for now and the future, because you're slinging mud but your implication relies on a fault assumption (i.e.- the cost of fixing up the Ford and Key should be approximately the same).

Besides, do you think Bennett got out his sliderule and some graph paper to design it himself and came up with this number. Probably scores of people had to do with designs and estimates, and you'd be pleased to know, that the company he hired to do it was independent from himself.

[venture]

Apples and oranges dude. The Ford Center was built WITH IMPROVEMENTS INTENDED. That's why it's so much cheaper. We have a bigger footprint than KeyArena, as well. KeyArena is old, with a smaller footprint, which makes it more costly to bring it up to date. Think about what you're saying before you imply that Bennett & Co. was shady about the amount needed to make KeyArena suitable for now and the future, because you're slinging mud but your implication relies on a fault assumption (i.e.- the cost of fixing up the Ford and Key should be approximately the same).

Besides, do you think Bennett got out his sliderule and some graph paper to design it himself and came up with this number. Probably scores of people had to do with designs and estimates, and you'd be pleased to know, that the company he hired to do it was independent from himself.

Wow people don't read. The $500 million for Seattle was for a NEW arena. So i'm comparing our relatively NEW arena to the new facility they wanted in Seattle. I doubt the costs have risen to much to where if there Ford Center was build today, that it would cost $500 million. That's what i'm comparing to, not an upgraded Key Arena. Eeesh.

[sgt. pepper]

I would think that would be pretty hard considering how much they did do to attempt to actually keep the team there.

I was thinking this too. All this is crazy, Shultz just dose not want to be one of the "bad guys" in the eyse of the Seattle fans. Bennett has made many attempts to stay in Seattle hasn't he? Bennett and his group are business people. They are not going to spend millions of dollars on a team and take them some where just to lose all of that money just because they want a NBA team in OKC, They believe in OKC. They believe there is a market here or they would not have persude it. Who wants to own a NBA team where they are not wanted? Seattle fans and Schultz should blame thier own legislators and THEMSELVES if they don't like what is happening to the Sonics, NOT Bennett. Seattle has the third lowest NBA attendance in the league...behind New Orleans ESPN - NBA Attendance - National Basketball Association. Seattle fans should just shut up and face the fact that they thenselves kicked the Sonics out of town and quit bashing OKC!.....imo

[betts]

Not to mention, giving up the lawsuit and selling the team is not going to change national perception. It's too late for that. Those people who think negatively about us already do, based on what's happened over the last two years. I seriously doubt anything that happens now will change much. I suspect if you were to stand on streetcorners around the country, you'd find most people don't even know about this, of the ones who do most would prefer the Sonics stay in Seattle but they don't care that much. Most of the people who are truly agitated about this either live in Seattle and are Sonics fans (not everyone in Seattle by a long shot) or they're from Seattle and they're Sonics' fans. If the team moves here, this will be brought up by sports journalists every once in a while, and as far as negativity goes, it's certainly no worse than what happened in Baltimore when the Colts left. That gets Indianapolis a negative comment or two during significant games when the announcers are looking to fill space.

Remember as well that the Muckleshoot Indians also hired someone to look at possible arena costs, and they were very close to Clay Bennett's figures. The Orlando arena will cost $450 million, and the Brooklyn arena is up close to $600 million. A house in Seattle costs three times what a comparable house in Oklahoma City costs, so there are obviously differences in construction costs, whether they be land costs, permit costs or labor costs.

[adaniel]

What legal merit does Howard Shultz have in suing Bennet? This isn't elementary school bro, no doevers or makeups. I seriously don't know that much about law, but there was nothing in the contract between Shultz and Bennet that said plans couldn't be made if the negotiations wouldn't work out. And I'm pretty sure that relocation was brought by Bennet on numerous occasions when negotations repeatedly stalled. Last time I checked Starbucks stock was down 40 percent. Maybe he should focus on that.

For what its worth, I see a lot of people worried about how the nastiness of this whole thing is affecting OKC's image. Kelly Ogle gave a "My Two Cents" piece a few days back, and I almost barfed on myself for agreeing with Kelly Ogle on anything. He said that people in Seattle are more offended by the fact that their team is being taken away by a bunch of "stupid Okies" more than the fact that they are being taken away at all. They have a massive superiority complex up there and are now being outdone by someone in "flyover country". Who cares what people in Seattle think? I know thats a blunt assesment, but seriously. Another poster in a thread said that OKC is often too timid to take things on, and I would tend to agree with that assesment. I seriously doubt that people in Houston were worried about image when Ananadarko came up and bought Kerr McGee. Nor do I believe that leaders in Dallas and other cities who saw Oklahoma's college grads move into their cities to start their careers say, "bad deal, we shouldn't be taking their graduates." So why do we as citizens and leaders have to be all touchy-feely when we're trying to seize upon an opportunity for ourselves?

[OKCMallen]

Agreed betts, and to reiterate what I said above, the projects aren't even the SAME project, so you can't expect the costs to stay proportional to the cost of living/building discrepancies.

[MikeLucky]

I agree with the above posters about this being a PR stunt...

Ballmer didn't even really want this team.... he has enough money to buy the team for twice what Bennett did, build his own $500 million dollar arena and not even register a blip on his bottom line.... but he didn't. So he comes in at the last hour with a "proposal" that hinges on the state doing something it was never going to do anyway AND puts a deadline on it..... and now he is perceived as a hero trying to save the day when in reality he was never in jeopardy of ever having to spend a penny....

This attempt by Schultz is pretty much the same thing.... he's trying to save face and keep selling coffee to Seattleites....

[sethsrott]

I agree with the above posters about this being a PR stunt...

Ballmer didn't even really want this team.... he has enough money to buy the team for twice what Bennett did, build his own $500 million dollar arena and not even register a blip on his bottom line.... but he didn't.

$350,000,000.00
+ $500,000,000.00
_________________
$850,000,000.00

That (^^) is close to 1 billion ($1,000,000,000.00) and for a guy that has a net worth of 15 billion, that will register a 'blip' on his bottom line. Look at the numbers before you start saying mindless stuff like that. He might have wanted it but it wouldn't make business sense to sink $500,000,000.00 in a private arena just for the Sonics, you don't know what Ballmer does and doesn't want and for you to assume so is arrogant.

[MikeLucky]

$350,000,000.00
+ $500,000,000.00
_________________
$850,000,000.00

That (^^) is close to 1 billion ($1,000,000,000.00) and for a guy that has a net worth of 15 billion, that will register a 'blip' on his bottom line. Look at the numbers before you start saying mindless stuff like that. He might have wanted it but it wouldn't make business sense to sink $500,000,000.00 in a private arena just for the Sonics, you don't know what Ballmer does and doesn't want and for you to assume so is arrogant.

While I was presenting the most extreme possible solution, even it is VERY attainable for Ballmer. He has enough money to make this entire situation go away..... but yet he doesn't do it. He leveraged his proposal against the state legislature coming up with $75 million..... and, big surprise, they didn't budge an inch....

But, Ballmer is still a hero and he didn't have to spend a penny. That makes him VERY smart.... but I fail to see how realizing this makes ME arrogant.....

[sroberts24]

this is pathetic and almost funny!!! clay bennett and the boys have spent more time and money to try to keep the team there than he has in his lifetime, now this garbage!!!! its just a PR stunt so he can be back in good standing with the people of seatle.... and he is making it harder for seatle to ever get a team again!!