Thursday, July 03, 2008

Selling out the Sonics

The rising hopes in Seattle that yesterday evening's court decision might allow the Sonics to stay in town were quenched by a sudden downpour: a metaphorical one as the city inexplicably reversed course and allowed the team to buy its way out of the lease only an hour before Judge Marsha Pechman's decision came down, followed by a an actual downpour later in the evening as the weather rose to the occasion and provided the proper mood for the occasion.

This is quite the change in tactics for the city. Prior to this, their entire case had been about how no amount of money could replace the Sonics. Former Seattle Center director Virginia Anderson testified about the team's importance to the city as a cultural instution to the city, local writer Sherman Alexie spoke about what the team means to the fans and a horde of economists on both sides discussed the intangible benefits the team provides (to varying degrees of success). The arguments, the evidence and the witnesses all focused on one thing: no amount of money would replace the Sonics.

The city's position had always been that they were only interested in specific performance and didn't care about the money, which is why they rejected Clay Bennett's $26.5 million offer back in February. At that time, city attorney Tom Carr (one of the principals in this new settlement) told The Seattle Times, "The city's intent is to hold them to the lease." Well, when it looked like the city had a good chance of doing just that, they folded faster than a collapsing deck chair or a poker player holding a 2-7 offsuit.

A key culprit here is Seattle Mayor Greg Nickels, who made perhaps the boldest reversal. As he revealed in his own testimony, when his staff were approached by PBC in July 2007, he said, "My instructions [to the staff] were that we were not interested in the buyout of the lease." My, how his tune has changed.

The most bizarre thing about this is the timing. If the city had perhaps waited an hour for Judge Pechman's decision, they may very well have found out that they won specific performance. That would have left them in a much stronger position to either hold the team to their lease or unequivocally demand a rock-solid guarantee of a replacement team before letting the Sonics leave. Even more importantly, it would have meant that Howard Schultz's lawsuit for all the marbles (to overturn his sale to Bennett based on violation of the "good-faith" clause) would have been in pretty good shape, as the case will be heard before the same judge and focuses on many of the same issues and much of the same evidence.

If Judge Pechman had ruled in favour of the city on this case, there would have been a strong chance that she might have ruled in favour of Schultz on the next one. That's not a guarantee, but keeping the team here for two more seasons would have helped with the timing of Schultz's lawsuit (it takes away the need for a restraining order), and even if Schultz's effort had failed, it would have brought even more of Bennett's dirty laundry out of his closet, er, his e-mail inbox and led to more negative publicity for both him and the NBA, perhaps increasing the pressure on him to sell to local ownership. Enforcing the lease for two years also would have allowed for more time to secure a KeyArena renovation, which would have taken away one of Bennett and the NBA's main cards to play in calling for a franchise relocation.

Even a loss in this case wouldn't necessarily have been the end of the road: the city certainly still would have received considerable financial reparations if PBC was allowed to break the lease, Schultz still would have had a strong case, and there still would have been the potential for a reversal upon appeal. Instead, Mayor Nickels, who proclaimed on the stand, "The longer that this team is here, the more possibilities might open up to keep this team here for the long term," decided to cut that term far shorter than it might have been in favour of some quick cash and a vague promise from the NBA that they'll let Seattle know when a team becomes available. That and $5 might get you a cup of coffee at Schultz's Starbucks, especially considering that there will be plenty of interest in any team that comes up. It's ludicrously stupid to abandon a case where you probably have a better-than-even chance of winning outright and keeping your team in favour of a settlement that only guarantees you a few lousy millions in cash, allows the buccaneers to walk off with your beloved franchise, and perhaps affords a 15-20 per cent chance at best of ever getting another franchise (note: percentages given are based solely on my analysis of the situation).

There are still a couple rays of hope that glimmer, but they're faint. The only way this decision isn't moronic is if you read between the lines of its wording, which referred to a statement by NBA commissioner David Stern as a prior condition for the memorandum of understanding drafted in the settlement case. Stern's statement basically says that the NBA is happy to see the case settled and would consider allowing a new franchise to play in KeyArena if it was renovated quickly according to the Steve Ballmer/Matt Griffin group's plans.

Yes, that doesn't mean much on the face of it, but it's a considerable turnaround from Stern's comments the last time that plan was brought up in March, when he shot down any renovation scheme. We all know Stern is slippery, and that change of proposal may not mean too much in the long run, but it also may be significant. In fact, there's a good chance it offers substantial insight into what actually went down here.

Here's my construction of how this settlement came about, based solely on educated guesswork building off some of the facts:

Facts: The team and the city were at absolute loggerheads to this point. They pulled out all sort of evidence attacking each other in the trial and fought a dirtier battle than most mud-wrestling championship matches. They refused all previous settlement proposals, and were ridiculously far apart on a potential end-game scenario: the Sonics proposed paying $10 million, while the city was determined to stick to specific performance.

Guesswork
: There's nothing in there to suggest a settlement was coming any time soon, especially at this late hour. Thus, the key question to ask is "what changed?" As I see it, there are only two potential options.

First, David Stern decided that he was sick of all the negative publicity around this case and especially didn't want to see the battle go on any longer. In this scenario, he phones up the city and PBC, essentially promises the city a replacement team if they agree to settle and go away and if they're able to get the requisite funding for a new arena. For some reason, this assurance cannot be specifically put into the memorandum of understanding, but it can be hinted at. Possible reasons for that could include Stern not being willing to commit to anything until the arena financing comes through (anything but a certainty, given Seattle voters' current aversion to publicly funding stadiums), Stern being his usual slippery self and leaving an exit so he can say he never actually promised, or Stern's desire to avoid the perception that Seattle's long legal fight deserves a reward.

Facts that support this premise include the similar situations that happened with the Seattle Mariners and Cleveland Browns, where litigation was resolved in favour of "replacement team" settlements, the language in the memorandum about the NBA statement being a necessary precondition for the settlement (although NBA.com's timestamp has it being released to the public 40 minutes after the start of the press conferences) and the city's abrupt and sudden reversal of their previous policy: it would be great to think that they got some more substantial assurances than were contained in the actual document before deciding to roll over and play dead.

The second possible option is much worse. In this one, there really is little to no hope. The Seattle leaders either were deceived by slick promises of franchises with little to substantiate them, figured their constituents might be, or decided that it would be better to try and avoid a big loss rather than going for the big win. In this scenario, they figured it was more advantageous to take the available money and run instead of running the risk of losing much of their leverage. That may at times be an acceptable strategy in the wider world of life, but it doesn't often work in the world of sports: it makes zero sense to kick a field goal on the last play of the game and lose by a respectable three instead of going for a end-zone Hail Mary that could either get picked off or win you the game.

At the moment, we don't know which of the scenarios is the real truth. Personally, I certainly hope it's the first one. I hope the city knew what it was doing, and I hope that this is much better thought out than it appears. I can't shake the suspicion that it's really the second scenario that went down, though, and that Seattle's leaders sold the Sonics for a mere $75 million (and possibly only $45 million) and a bag of empty promises. It's not a good time to be a Seattle sports fan: in addition to the Sonics tragedy, the Mariners recently fired their manager and GM and have the worst record in the American League to go with the sixth-highest payroll in the majors and the Seahawks recently cut one of their most famous players, meaning things don't look great for them either. Perhaps the only bright spot for Seattle would be the new MLS team, which hasn't even begun play yet. The rest of the Seattle world is also depressing: Bill Gates has left Microsoft, Starbucks is axing jobs and Boeing's getting fined. In any case, the depression and gloom might lead to renewed prominence on the national music scene: if Nirvana found so much to be unhappy about in 1990s Seattle, just imagine what a band in today's Seattle could complain about!

(Welcome, Yahoo! readers!)

8 comments:

John Edwards said...

You seem to be basing your assumptions on the idea that the City would have won the lawsuit. The trial didn't go all that well for them, and I suspect the Sonics had a better than even chance of winning. If the Sonics had won, the settlement amount would have gone way down.

Unfortunately, the Sonics-leaving-Seattle horse left the barn the second the "man possessed" was introduced. The Sonics went about their quest for a new arena all wrong, from the word go - prior to and during the Bennett era.

The trick with this settlement is that there are 30 million reasons for the NBA to go back into Seattle.

I never saw the Schultz case as providing any serious hope, as it basically relies on "these mean carpetbaggers tricked me." Uh, yeah. Good luck with that, idiot. That said, it's still around. Schultz was deliberately not part of the settlement.

There are enough unstable NBA franchises (Memphis, New Orleans) around that I'd say it's better than even that this works for Seattle in the long term.

As for life as a Seattle (& Vancouver for me) sports fan, it's been 34 years of misery, and this just piles on. That said, I'm hoping things are darkest before the light. The Mariners seem to have hit rock bottom, and have finally cleaned out - about two years too late. The Seahawks are still fine, thanks to playing in a division that rivals the 1981 CFL East for ineptitude. (Releasing Alexander was actually a good move. Running backs get real old, real fast.)

Andrew Bucholtz said...

It's a fair point that the trial didn't go too well for the city, but given the strength of their evidence, I thought they still had a good shot at winning it: they had a lease specifying that the Sonics were forced to play all games in Seattle until 2010, and they did an okay job of suggesting intangible value and community benefits that would come from keeping the team. The big problem for me is how they backed out right before the decision. If they decided to settle for cash, a better time would have been long before this went to court, before they created the animosity with the NBA. David Stern certainly isn't jumping up and down with joy at the idea of another Seattle team.

In any case, those "$30 million reasons" don't mean very much: that money is Bennett's, not the NBA's, and Bennett is merely one owner. Yes, he appears to have the ear of the commissioner, but he can't decide to put a team in Seattle. Also, the NBA is not very committal in their statement: basically, they state that if KeyArena is renovated soon, it might be an acceptable place for an NBA team, and then they'll let the city know (along with every other prospective suitor) when a team comes up.

The Schultz case actually has potential, I think, as the "sweet flip" e-mail in particular suggests Bennett was already planning to move the team before he bought it, which raises questions about the good-faith clause. His case would have been a lot stronger if the city had won, though, which again raises questions about the validity of this move. To me, at least, it seems foolish to throw away a decent chance at keeping the team in favour of a long expansion process that doesn't seem all that likely to guarantee anything.

Andrew Bucholtz said...

Oh, and fair point on the Seahawks. I only mentioned the release of Alexander because he used to be the team's big star, but he certainly wasn't accomplishing much of anything last year. I don't see the Seahawks doing anything too amazing this year, but you never know in the NFL.

sager said...

The Seattle Times was pretty succinct: "There's no prettying this up. Some money is coming to the city. Big whoop."

It's been rough for the fans in the Emerald City -- the UW Huskies football team's long slide into irrelevance, Bill Bavasi ruining the Mariners and now this.

Duane Rollins said...

Yes, but the Seattle Sounders FC debuts next spring, so that's something.

Andrew Bucholtz said...

Indeed... apparently the Sounders already have the highest season-ticket base in MLS , and they haven't even got most of the team put together yet. Now, if only Vancouver can crack that league and renew the Sounders-Whitecaps I-5 rivalry...

Duane Rollins said...

Well...season ticket deposits anyway...but, yes they seem to be doing well at the box office. They've done some things that are cause for concern too (which might be a bit too niche for me to detail in this blog...let's just say they aren't playing nice with their supporter's groups, which is playing with fire long-term).

But, all this is off topic. I wish them well. And, I long for the day when Montreal and Vancouver are in MLS (I'd be good with Ottawa too!).

t said...

My sympathies Seattle sports fans. This is a terrible decision. I personally believe, like the writer seems to, thatt the second scenario is more likely. As Bill Hicks (R.I.P.) said, "I hope you know. All politicians are lying a**holes." I don't think the politicians gave a rat's behind about the local bond between the community and the team. This scenario seems to play out so often. The city held out for the sake of appearances until the 11th hour, and then said "reluctantly" that they would have to make the sale but offering you unfortunate Seattle fans the bone of a possible replacement team and Bennett's claim that you would collect more money if he doesn't help find a team for Seattle by 2013 (if you believe that, I'd like to sell you on the notion of a coffee franchise which I'm going to call Harducks. Its logo will be green and white and within 10 years, barring any completely unforeseen copyright disputes, the company will be valued at billions of dollars). But like Aerosmith (and others) have said, "Don't get mad, get even". If you want to do something, check out Ralph Nader's new community of fans who love sports but are concerned about the lack of accountability of these mega franchises, League of Fans. I'm not involved in this, I just think it's a good idea. Again, sorry Seattle sports fans.