Can lease keep Sonics here?
Clay Bennett eventually could be allowed to buy his way out of the KeyArena lease, experts say, but the high cost could force him to rethink moving the team.
Seattle Times staff reporter
Seattle politicians are talking tough about the Sonics' lease at city-owned KeyArena.
Mayor Greg Nickels says he'll force the Sonics to remain through the end of the lease in September 2010, despite owner Clay Bennett's stated desire to take the team to Oklahoma if he doesn't get a deal for a new arena in the next two months.
City Council members say they'll introduce legislation prohibiting any early buyout.
But can city officials really chain the Sonics to KeyArena for three more years?
As a general rule, tenants cannot be forced to stay until the end of a lease; landlords can merely collect monetary damages for breach of contract.
But the Sonics' lease contains language that could allow the city to reject an early buyout. The single paragraph, known as a "specific performance" clause, essentially says the city can require the Sonics to stay at KeyArena for the full term.
At the very least, the city could use that clause to obtain a court order to delay a Sonics move, several experts in contract and sports law predicted.
The experts warned, though, that the contract language is not ironclad and that courts could eventually allow Bennett to buy his way out of the Sonics' lease. (The Storm's lease also runs until 2010, but it allows the team to opt out after any season.)
Seattle officials say they're aware of the legal uncertainties but are confident they would prevail in court.
"We're in as good a position as a city can be to hold a sports tenant to a lease," said City Attorney Tom Carr, who has assigned a city lawyer to prepare to defend the lease.
A Bennett spokesman declined to comment on the matter. Although Bennett has not said he would sue to break the lease, he has indicated he would like to negotiate an early exit. Bennett also has said he'll seek NBA permission to relocate the Sonics and Storm if he doesn't get an arena deal in the Seattle area by Oct. 31.
If it comes down to a fight, the specific-performance clause in the Sonics' lease could give the city important legal leverage. While it would not permanently prevent a move, the clause could jack up a settlement price or even encourage a team sale.
"That's the silver bullet," said Fred Nance, a Cleveland attorney who used similar lease language to fight Browns owner Art Modell's efforts to move the NFL team to Baltimore in the mid-1990s.
Nance said the language in the Browns' lease allowed the city to get an injunction requiring the team to play the remaining three seasons on its lease at Cleveland Municipal Stadium. That prompted Modell and the NFL to negotiate a deal that eventually allowed the team to move to Baltimore but guaranteed Cleveland an expansion franchise that kept the Browns name.
In 1996, King County relied on similar language in the Seahawks' Kingdome lease to halt then-owner Ken Behring's plans to take the team to California. Behring still had 10 years left on his lease at the Kingdome, and the county got a temporary injunction to stop him from leaving. That gave local officials time to broker the team's sale to billionaire Paul Allen and devise a new stadium deal.
The case never went to trial, so it's unclear whether Behring would have prevailed.
Legal experts said judges usually rule that tenants can escape leases provided they pay enough money.
"The general rule in contract remedies is you are only entitled to the economic expectation or its equivalent. You are not entitled to their actual performance of the contract," said Kate O'Neill, a University of Washington law professor who teaches contract law.
Alfred Brophy, a law professor at the University of Alabama, said judges typically enforce specific-performance clauses in leases only when "there is no other kind of relief that would make you whole." In this case, he said, Sonics' owners and the city probably could estimate the amount of money lost from an early Sonics exit.
"That might be an enormous amount of money," said Brophy, an expert in landlord-tenant law. It might even be enough money to make breaking the lease too costly for Bennett, he added.
It is difficult to know exactly how much Bennett would have to pay if he were allowed to leave KeyArena early. At the very least, the Sonics' lease says the team would have to pay the remaining years of rent through 2010. The team also would have to reimburse the city for its share of luxury-suite and concessions revenue. In all, the city estimates in recent years it has received between $8 million and $11 million annually from Sonics and Storm games.
City lawyers also likely would argue for additional damages based on the economic impact on Seattle Center and the surrounding neighborhood. However, the lease also says the team would get credit if any new events were booked at the arena that offset the city's losses.
Michael McCann, a law professor at Mississippi College, said that if the Sonics' lease does wind up in court, elected judges might feel public pressure to prevent, at least temporarily, a sports franchise from leaving town. But usually, he said, courts eventually rule that a buyout is legal.
"I honestly think this will get negotiated. There is a monetary value to it [the lease]. An economist would say everything has a price," said McCann, who contributes to Sports Law Blog (http://sports-law.blogspot.com).
However, McCann said, lawsuits by the city or fans could drag on long enough to achieve their purpose, even if they ultimately lose in court.
"I think it will delay the process, and I think that delay will enable a local ownership group to get involved. The longer it drags out, the more likely they will stay," he said.
News researcher Miyoko Wolf contributed to this report. Jim Brunner: 206-515-5628 or email@example.com
Copyright © 2007 The Seattle Times Company
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