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Thursday, October 25, 2007
Handicapping the Oklahoma City Supersonics

We haven't blogged much about the lawsuit filed by the City of Seattle against the Oklahoma-based ownership of the Seattle Supersonics basketball team seeking to force the team to stay in Seattle. Mike had a few comments on the dispute here.

In any other setting, a commercial lease tenant should be able to break a lease, leave a space, and then pay damages, if any, to the landlord. But sports team leases are special -- particularly when local judges are involved in deciding a case. The Sonics decision may be shaped by the legacy of a Minnesota Twins relocation decision handed down a few years back by a state court judge (Metropolitan Sports Facilities Commission v. Minnesota Twins Partnership, 638 N.W. 2d 214 (Minn. App. 2002)).

In that case, the court ordered the Twins to play out the last year of their lease, scuttling MLB's plans to contract or relocate the team. The court's issuance of an "affirmative injunction" was purportedly based on the irreparable harm that would result to Minneapolis and St. Paul were the team to move or disappear. Two things should be noted about the decision: (1) It was handed down by a sentimental state court judge and (2) It was bad law. Even if one is happy that the Twins stayed put and MLB took the team out of its cross-hairs, it's hard to defend the court's ruling on a legal level. The fact is, the Twins would have been free to leave at the end of the year covered by the court's injunction -- the lease, at that point, would have expired and any specific performance clause would no longer be enforceable. The assertion that the Twins leaving a year early would cause harm that could not be repaired is a stretch given that nothing could have stopped them from leaving -- or stopped MLB from contracting the team -- a year later. For a great analysis of the Twins case, see Matt Mitten's article on the subject from the Iowa Law Review. Notably, the Sonics owners have volunteered to pay the rent for the remainder of the lease, so it would be hard to imagine a court issuing an order of specific performance unless it treads the same ground as the Minnesota court did a few years ago and takes into account the "positive externalties" that would be damaged were the team to decamp.

Still, it's easy to imagine a Washington state court being motivated to stop the Sonics owners relocation plans. Wisely, the Sonics have moved the case to federal court -- where one might expect a more disciplined consideration of the legal issues involved. Moreover, the owners of the Sonics are seeking to have the matter resolved by way of arbitration pursuant to an arbitration clause in the lease (a move the City, as indicated in its complaint, intends to fight). One wonders why MLB did not pursue these options -- assuming they were available -- in the Twins case. Overconfidence? Lack of diversity jurisdiction?

The City of Seattle's complaint itself can be downloaded or viewed in PDF form via a "related content" link here.

Will the two sides reach a deal before the October 31 NBA league meeting next week, when the Sonics will ask for permission to relocate the team (presumably to Oklahoma)? Maybe not. Acrimony has clearly developed in the Jet City. Two fans are even suing the Sonics for false advertising after the team invited fans to be part of a "New Era of Sonics Basketball."

Unless an agreement is reached, this is likely going to be the next great saga in American sports law. It seems -- based on the Twins case -- that cities now seek to delay relocation and contraction plans using litigation. That tends to muck up the best laid plans of commissioners and owners, and the result is a team tends to stay even though it could, subsequently, move without a problem. But maybe this group of owners is more determined (or more flush with cash).

For links to various articles on the Sonics dispute, see here.


Can anyone explain why the Sonics are so desperate to go to Oklahoma City? The place is half the population and I would have to imagine less wealthy than Seattle. I'm sure they want to extract a sweet deal on an arena, but that would seem to be a large windfall now that was acquired at the cost of poisoning the well in Seattle.

Anonymous Anonymous -- 10/25/2007 7:15 PM  

Anon, attendance hasn't been stellar in Seattle so issue #1 is ticket revenue. The lease is more expensive so that raises expenses. The arena is toward or at the bottom of the league in the "added value" seats that are sold at a big premium. There is stiff competition for sponsor dollars due to the wildly popular Seahawks and more popular than the Sonics Mariners along with the University of Washington.

Oklahoma City went nuts for the Hornets while they were there. They drew better in OKC than they did in New Orleans and the lease offered by OKC meant they made more per dollar of tickets sold.

There are six Fortune 500 companies based in Oklahoma, three in OKC and three about 90 minutes away in Tulsa. Washington has 15.

For business folks looking to entertain, college games can be problematic. You can end up offending a client by inviting the client to an OU game if the client is an Oklahoma State or Tulsa fan. A regionally supported pro team avoids that issue.

While OKC is only the 45th largest TV market, if you can bring Tulsa viewers along it climbs to 22nd.

Any NBA owners thinking of relocating a franchise or looking for the bonus that the possibility of relocation can add to their sale price if they want to get rid of their franchise would quickly vote for this shift because it means Las Vegas remains open and Seattle potentially could enter the fray to compete for a team.

Blogger Mark -- 10/26/2007 12:50 AM  

The NBA vs The NHL... who will win the battle of THE THIRD BEST SPORT?

LaBron wearing a Yankees cap is more intriguing than this stuff... here is the take of a regular fan (also known as the Sports Jedi)...

If a city has to beg and fight for their team to stay it is pathetic. Forget the legal issues here... where is Seattle's pride? If the Sonics want to leave so be it people... they obviously don't think you are good enough fans to stay.


And NBA if you keep this up the NHL might just slip by and take over third place... then you will have to fight David Beckham... oooh things could get nasty!

Blogger The Sports Jedi -- 10/26/2007 4:38 AM  

I've posted the lease as text on my blog here:

Evereything is open to Arbitration, then it states that leaving early isn't.

Slade Gorden was there then, he's here now, that's not the only history repeating itsself.

Bennett also has a side letter with the prior ownership group to give a good faith effort for one full year.
Slowly the Sonics are becoming the Seattle Pilots, MLB paid legal fees and gave an expansion franchise to Seattle, the Mariners.

Would a new owner want to pay 250 million for an expansion franchise in Seattle, or 350 million for a team that plays like an expansion franchise?

Blogger Supersonicsfan -- 10/26/2007 2:54 PM  

mark, if they don't move then all of the wonderful things you've said about OKC are still open and the option could be between Vegas and OKC. The argument works both ways or it doesn't work at all.

The revenue in the lux box seats was split between the city of seattle and the team, 40/60.
Had the city given that up when Howard Schultz asked we wouldn't be having this conversation.

The potential revenue is higher in Seattle, I'm glad OKC has 6 Fortune 500 companies, but there are more owners of Fortune 500 Companies at Sonics games on any given night right now.

Blogger Supersonicsfan -- 10/26/2007 3:21 PM  

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Blogger Marco -- 10/26/2007 6:53 PM  

Clay Bennett makes his position clear

Anonymous GP -- 10/28/2007 3:22 PM  

Everytime I read something on this subject, it seems people completely underestimate Oklahoma City.

Consider this, Raleigh, North Carolina, has less than 200,000 more people than OKC, and it plays host to an NFL team, which requires way more ticket venue than a NBA franchise.

When you add in Tulsa, which is less than an hour away, you have a top 25 market with over 2 million people.

Both years that the Hornets were here, we had higher average attendance than half the other teams in the NBA, including Seattle.

Oklahoma is a huge sports state. We have two major college teams that are heavily supported, we have the most famous high school rivalry in the nation, and we have no pro team. This means a NBA team here would receive a ton of focus and support.

OKC is one of the fastest growing cities in both population and average income.

Add all this up, and I think we are a pretty attractive place to bring a team.

Anonymous Chris -- 11/02/2007 9:35 AM  

OKC can have the Supersonics! They are in the infancy stage of what will become a bad marriage and inevitably end up in a bitter divorce looking elsewhere for exactly the same things they are looking now. It has already become clear that Clay isn't even interested in the WNBA side of his purchase stating that the Storm may not even make the trip to OKC. Hmmm, we all new it was only a matter of time that the WNBA flopped. Apparently Seattle's Key Arena is "A World Class Facility" for the womens basketball, just not for men. That is exactly the thought process coming out of OKC and why this whole venture will fail. Take the Sonics, do what you will with the Storm, just remember to hide your women and children in Oklahoma!

Anonymous Anonymous -- 11/05/2007 12:45 AM  

Uh, Chris . . . I thought the most famous high school rivalry was in . . . . . . Ohio?

Seriously, has anyone noticed that arenas are being "tossed away" at much younger ages--in some cases (Kingdome, the Omni [Atlanta], McNichols Arena [Denver], Reunion Arena [Dallas], Silverdome [Pontiac], Texas Stadium in '09 [Dallas], Miami Arena, the Meadowlands Arena, etc.) before there is even one renovation, in others less than 25 years since opening? These aren't exactly cheap to replace; and wouldn't it make some sense to have one arena for both basketball and hockey, and one for football and baseball (or football and soccer), especially with arenas costing upwards of $400-500 million or more?

Anonymous Anonymous -- 11/06/2007 11:42 AM  

Hi, you see sports of all types very important, shame they can't focus on all sports over here in the UK. Graham from

Blogger Graham -- 1/27/2008 10:36 AM  

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