HUGE NEWS! Clay Bennett & Co. buy Supersonics!

[BDP]

This says that the city would be guaranteed the money from the current agreement:

Sonics outline proposed deal with OKC | NewsOK.com

[metro]

This is posturing before the April BOG vote. We need to have something tentative in place then so it looks like OKC is doing everything right. The Seattle Times and the AP wire even agrees if you go over there and look. Basically Mayor Cornett, Bennett and OKC are doing everything right and Seattle has the appearance of doing everything wrong. Keep in mind Balmer (Microsoft CEO) is giving his group and Seattle until April 10th (before the BOG vote) to come up with a solution in Seattle. This is also posturing in their favor. Let's keep supporting our wonderful city and do everything right until the BOG vote! Remember the NBA officials will be here at the end of the month, we need to get some sort of organized welcome party together!

[metro]

Oklahoma City reaches preliminary lease agreement with Sonics
Associated Press - March 14, 2008 5:25 PM ET

OKLAHOMA CITY (AP) - The Seattle SuperSonics and Oklahoma City have reached a preliminary agreement on a lease at the Ford Center pending NBA approval of the team's relocation.

The deal calls for the SuperSonics to pay the city $1.6 million annually for use of the building and reimburse $409,000 per year to replace revenue from naming rights for the arena.

The agreement calls for a 15-year term but has an exit clause if attendance falls after the first two years.

The deal would not become official unless NBA team owners approve the Sonics relocation in a meeting next month and until the team can escape its lease in Seattle

[Pete]

Gee, you think there might have been on-going discussions for a while now??

This is all more good news. I suppose the next big step is the vote by the NBA board of governors but I'm not too worried about that.

It really comes down to breaking the lease in Seattle and that's merely a question of 'when'.

[Kerry]

I just read the entire lease and it looks pretty good to me. The city will make more than they already do with the Ford Center and the Sonics will keep everything else. Revenue fro the CHL, NCCA, AFL2, NBA All-start game will still go to the City. Rent on the practice facility is only $100,000 year but it will be available during the off-season to OKC Parks and Recreation Department. If the team leaves before the lease is up they have to buy the practice facility out-right. The only thing I don't like is that the lease will only be for 15 years. I guess that means we should be ready for a MAPS IV in about 12 years.

[Doug Loudenback]

This is posturing before the April BOG vote. We need to have something tentative in place then so it looks like OKC is doing everything right. The Seattle Times and the AP wire even agrees if you go over there and look. Basically Mayor Cornett, Bennett and OKC are doing everything right and Seattle has the appearance of doing everything wrong. Keep in mind Balmer (Microsoft CEO) is giving his group and Seattle until April 10th (before the BOG vote) to come up with a solution in Seattle. This is also posturing in their favor. Let's keep supporting our wonderful city and do everything right until the BOG vote! Remember the NBA officials will be here at the end of the month, we need to get some sort of organized welcome party together!

Should we meet 'em at the airport with some leis?

[metro]

Couldn't hurt Doug. Maybe you and I can go down there with our NBA loves OKC shirts and wait out front.

[Doug Loudenback]

Couldn't hurt Doug. Maybe you and I can go down there with our NBA loves OKC shirts and wait out front.

I'm good to go with that! Now .... where can we get some leis in OKC???

[kevinpate]

Probably the nearest Party Galaxy or similar shop

[BDP]

The more that comes out about it the better it sounds, imo. Giving up naming rights is a huge chunk of change, but given the fact that the city will retain what it was getting without a team and the team will get any value it adds, it seems pretty fair. I have no idea how the base rent compares to other markets, but sharing in the concessions and retaining revenue from other events outside of any sponsorships they bring, sounds like a fair trade.

Now, the only question really is sales tax. If they city can charge sales tax from ticket sales (and I don't know what anyone's position is on this), then no doubt having an NBA team will put a lot of cash in the coffers for city maintenance and civil projects and actually take pressure off a MAPS IV or further improvements to the school district.

At this point, it really does seem like Bennett's group is negotiating from the stand point of they get any revenue from the value they add to the arena and the city retains the revenue streams it already had in place. It would be hard to characterize that as a total sweet heart deal or as taking advantage of the city.

[bornhere]

Right now, no sales tax is charged on NBA tickets and only the legislature can change that.

One thing I see that concerns me is section D:

"The Arena will continue to be owned by the City and managed by the Operator or another professional arena management entity that is acceptable to both the City and the Company.

"...the Arena Lease will set forth performance standards, opportunities for the Company to request corrections of deficiencies and procedures whereby management may be replaced by a new Operator is such deficiencies are not corrected."

That reads to me like the setup for tossing SMG out in favor of Dorchester Arena Management, LLC or something similar.

[BDP]

Right now, no sales tax is charged on NBA tickets and only the legislature can change that.

Right and, imo, it should be changed.

That reads to me like the setup for tossing SMG out in favor of Dorchester Arena Management, LLC or something similar.

It reads to me like they would be the de facto manager of the arena whether it's called SMG or DAM, LLC. They'd be calling the shots either way.

[windowphobe]

It reads to me that if SMG is replaced, the replacement must be acceptable to the team - and nothing more than that. There's no reason to think that SMG-managed arenas are somehow inimical to the NBA.

[SouthsideSooner]

I've got a friend that works for SMG and the way she explained it to me was, SMG will still manage the Cox Center and will work with the Sonics mgmt in managing the Ford Center.

[Saberman]

The way it reads to me is that SMG continues to manage the arena, and if there is a problem with their management ( example: repairs are not made in a timely fashion), they can ask that they be replaced. When replacing them as management, they want a say in who replaces them.

That doesn't seem to be any more then any other major tenet would ask to be done. The city would also be involved in the process.

[andy157]

Definitely a good point and sure the basis for the request. The flip side would be that they would have no place to play without the facility. I think they are certainly entitled to some of it, but being required to terminate the current agreement and forgo any and all arena sponsorships and the revenue they generate just seemed a bit stiff. Maybe the city should at least retain the initial value of the naming rights and maybe double that due to the improvements of the arena.

I realize this is just a deal memo. I'm just saying that I'd like the city to try and retain at least some of the revenue, due to the fact it owns the arena entirely. Of course, they'll ask for everything and the city should probably counter by doing the same, then they can meet in the middle somewhere.

If this statement by Couch holds true then I would bet there will be no further negotiations regarding the lease agreement between the parties. When he said;"The city seldom, if ever, reaps a large monetary benefit from a redeveloper or its tenants in the form of direct payments by the redeveloper or the tenants to the city,” Couch wrote.

[Doug Loudenback]

For those interested, I've OCR'ed the Letter of Intent PDF file to make it easier to read. You'll find it in a link at this location: Doug Dawgz Blog

[metro]

Sonics owners announce intent to move team to OKC
Journal Record
March 17, 2008

OKLAHOMA CITY – The owners of the SuperSonics have submitted to the Oklahoma City Council a letter of intent to relocate the professional basketball team from Seattle so they can begin negotiations on arena and practice facility use.

The letter, signed by Clay Bennett of the Professional Basketball Club LLC owners, outlines four main areas for agreement: arena upgrades and construction of a new practice facility via a recently passed sales tax; food and beverage services at the arena; the arena use license; and the practice facility lease.

The issue was put on the agenda for consideration at the City Council’s next regularly scheduled meeting Tuesday morning and is set to be acted on March 25. Although officials would not discuss the item ahead of the meeting, the proposal is expected to be accepted; Mayor Mick Cornett has been the lead proponent of the “Big League City” campaign to pass a sales tax to fund the upgrades, and none of the eight City Council members have voiced strong opposition to the matter.“I’m very pleased with the deal,” City Manager Jim Couch said Friday. “I believe this is the right decision for the city to go forward with this deal.”

Bennett’s ownership group has asked the NBA board of governors to let the team cut ties with Seattle and relocate to Oklahoma City. An NBA relocation committee is expected to visit the metro area March 25 to review the arena and discuss plans with city leaders before the board’s final decision April 17.

Oklahoma City voters recently approved a 1-percent sales tax to raise about $120 million over 15 months, beginning next year. If NBA executives do not approve the relocation, the sales tax will be cut back to 12 months to raise about $100 million; in that case, the arena will still be renovated, but a practice facility will not be built.

Team owners outline in the letter to Cornett about 15 pages of expectations for the arena’s operation and revenues. In an overview of the text, Couch said the team will pay a total of $1.64 million in annual rent – “It’s a complicated model,” he said. A breakdown of that total and other details of the letter include:

• The arena lease will have an initial term of 15 years, beginning in the 2008-09 or 2010-11 NBA seasons, depending on pending court cases. The team will have the right to terminate the lease after six years if ticket revenues fall below 85 percent of average sales set in the first two seasons.

• The Sonics will pay arena rent of $40,000 per game.

• The Sonics will receive about 40 percent of gross revenues from concessions at the arena for team events, 10 percent from clubs and restaurants and 15 percent from bars.

• The team will pay the city $100,000 per year to rent the practice facility.

• The team will pay the city $409,000 annually to approximate the income expected from current arena naming rights with Ford Motor Co., but the Sonics will be allowed to capture any additional revenues from new naming rights contracts.

• The city’s Central Oklahoma Transportation and Parking Authority will guarantee up to 1,400 parking spaces at set prices for premium seating patrons, 125 parking spaces daily at set prices for team employees, and an indeterminate amount of spaces free of charge for players, coaches, personnel and media vehicles.

[BDP]

It reads to me that if SMG is replaced, the replacement must be acceptable to the team - and nothing more than that. There's no reason to think that SMG-managed arenas are somehow inimical to the NBA.

Well, the effect is that Bennett has control. They have the authority to force any changes they want by forcing a replacement if what they want is not done. If a replacement is ordered they have to approve it. Therefore, they are the de facto boss.

It's just like your boss tells you what to do, but if his boss doesn't like what he is telling you to do then his boss can replace your boss, making his boss the one that's really in charge.

[metro]

I could of swore I heard something on CNN or ESPN over the weekend stating that Stern said the Sonics can remain in name only in Seattle, and that the franchise would be a "new" franchise in OKC. I couldn't find anything on ESPN's website, anyone else hear anything like this?

[wsucougz]

Nuggets set franchise record for points in regulation with 168:

ESPN - Seattle vs. Denver - Recap - March 16, 2008

D-FENCE!

[MikeLucky]

I could of swore I heard something on CNN or ESPN over the weekend stating that Stern said the Sonics can remain in name only in Seattle, and that the franchise would be a "new" franchise in OKC. I couldn't find anything on ESPN's website, anyone else hear anything like this?

You know Mark Rodgers was saying something about this last night on Sports Xtra but he was speaking so fast and fumbling around so I didn't quite understand what he was saying...... So I am wondering what the details on that are as well.

If it stays in name only that would mean the records and history would follow to Oklahoma.... if it's a "new" franchise in OKC then it would mean the history and records would stay in Seattle.... so I don't know what the scoop is.

[metro]

Personally, I'd rather the history and records stay in Seattle, let our own records speak for themselves.

[JWil]

I just read the entire lease and it looks pretty good to me. The city will make more than they already do with the Ford Center and the Sonics will keep everything else. Revenue fro the CHL, NCCA, AFL2, NBA All-start game will still go to the City. Rent on the practice facility is only $100,000 year but it will be available during the off-season to OKC Parks and Recreation Department. If the team leaves before the lease is up they have to buy the practice facility out-right. The only thing I don't like is that the lease will only be for 15 years. I guess that means we should be ready for a MAPS IV in about 12 years.

But I believe the lease also allows for a series of FIVE three-year lease extensions, making for 30 years total, or almost as long as this years-old thread. (Why isn't this LOI deal a new thread anyway?)

[Watson410]

what happened to the "NBA Megathread"?