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Friday, September 21, 2007
With deadline looming, Sonics seeking arbitration for KeyArena lease

Associated Press

SEATTLE -- Seattle and the SuperSonics have been partners for four decades. Now comes the inevitable ugliness of a divorce.

The Sonics have asked for an arbitration panel to rule that they do not have to play the final two seasons of their lease at KeyArena, saying the contract's terms allow the team to negotiate a buyout. That would allow the Sonics to relocate after this coming season unless the team secures a new arena in the Seattle area by Oct. 31.

"Given the tenor of the city government … demanding that we play in KeyArena for three years, the city's retention of a very highly respected former U.S. senator to assist in their efforts and their own statement of 'lawyering up,' we believe it's time to engage," Sonics chairman Clay Bennett said Friday, after the team filed a demand for arbitration with the American Arbitration Association.

Bennett said he hoped his action will "serve as a catalyst to bring leaders together to find a solution" in the next six weeks to prevent a move, likely to Bennett's hometown of Oklahoma City.

Instead, his power play was a catalyst for anger at City Hall, where the belief remains that the Sonics' lease binds them to occupy KeyArena through the 2009-2010 season. The city has lined up former U.S. Sen. Slade Gorton to work on keeping the Sonics in town.

"I am outraged at today's actions by Sonics owner Clay Bennett," Seattle mayor Greg Nickels said in a statement released hours after Bennett's announcement.

"My door has been open, is open and remains open to Mr. Bennett but he has refused to meet. Typically, people acting in good faith engage in a conversation before seeking arbitration."

Nickels said his position is unchanged.

"I will do everything in my power to enforce the contract keeping the Sonics and Storm where they belong -- in Seattle and in KeyArena," he said.

A spokeswoman for City Attorney Tom Carr, whose office will oppose the Sonics in the arbitration hearing, said Carr would not comment until Monday.

Bennett, who with fellow Oklahoma City investors bought the Sonics and Storm for $350 million in 2006, reiterated that KeyArena won't work, either in its current or a remodeled form. He did announce the Storm will play one more season in the building on the grounds of Seattle Center, the city-owned land which Bennett called "the iconic, makes-sense location" for a new arena.

As for finding a new, $500 million building outside Seattle but within the region, Bennett said he's fielded only vague proposals from private investors.

"As we approach the Oct. 31 deadline, we've seen nothing tangible. We've seen nothing that is coming together ... that would suggest a development of an arena will take place in the next couple of weeks," Bennett said, referring to his self-made deadline.

He said he intends to remain "engaged" with the Muckleshoot Indian Tribe, which funded a just-completed feasibility study that said an arena could prosper on tribe-owned land in Auburn, 25 miles south of Seattle. But Bennett again said he is concerned about the site's relative remoteness and the traffic issues surrounding it.

The demand for arbitration, signed Wednesday by the Sonics' Seattle-based law firm, states the team has incurred losses every year since 1999 and that in the past five years, the Sonics have lost over $55 million. It says that losses for the fiscal year ending Sept. 30, 2007, will be over $17 million.

"I'd argue [Seattle] has not supported the team. The business has not been in good shape for many years," Bennett said, adding that he bought the Sonics because he was certain he could get a new arena deal in the Seattle area.

"The business model today, where we are, cannot continue. The franchise will not remain in this marketplace without a new facility. We will not break the lease. We will operate within the legal parameters set forth in the document -- which we hope to now have more clearly defined."

Bennett said he hopes to have a decision from a three-member arbitration panel by January. That would then give Seattle's NBA team since 1967 time to file for relocation with the NBA for the 2008-09 season. Teams must file for relocation with the league by March 1 for the following season.

"I absolutely know the team can survive and be profitable in Oklahoma City. ... It will certainly work today a heck of a lot better than it's working here today," Bennett said, with a small chuckle. "The Ford Center [there] is quite adequate -- but another building would be needed in the future.

"I can assure you there is high interest in bringing the league to Oklahoma City."

The Sonics say they haven't determined an exact price tag yet to buy out the lease, pending the arbitration.

According to the demand for arbitration filed by the team's law firm, the base rent for the upcoming season is $1.7 million and would increase per inflation for the final two seasons of the lease. The document also states the team would owe the city 8.5 percent of preseason and playoff ticket shares, percentages of gross revenues from concessions, suites and other sources plus "reimbursement of certain out-of-pocket expenses incurred by the city related to KeyArena."

Bennett said neither the Sonics nor the Storm is for sale, though he acknowledged he's fielded some inquiries from Seattle-area business people about potentially buying the teams.

"We remain bullish on the NBA," Bennett said.

NBA commissioner David Stern has called the Sonics' lease at KeyArena the league's worst, though he said last summer he has a gut feeling the Sonics will find a way to stay in Seattle.