The Work

July 3, 2008 1:55 PM

Hoopless in Seattle: $75 Million Settlement Clears Way for Sonics Move

Posted by Brian Baxter

This post has been updated with new information.

Think of it as a half-court heave that goes in at the buzzer.

U.S. district court judge Marsha Pechman was set to deliver a decision on July 2 in Seattle's civil lawsuit seeking to prevent the National Basketball Association's Seattle SuperSonics from moving to Oklahoma City. But in the final moments, team ownership agreed to a $75 million settlement with the city. Now it's official--the Sonics are leaving town.

The Am Law Daily and The American Lawyer have previously reported on Seattle's efforts to hold onto its oldest professional sports team, detailing the legal guns at K&L Gates who worked to keep the team in the Pacific Northwest, their discounted fees, and an expert witnesses's unlikely implosion on the stand.

That's all moot now. The agreement announced on July 2 between Seattle and Sonics principal owner Clayton Bennett calls for Bennett's Professional Basketball Club LLC to pay the city $45 million to buy out the final two years of the team's lease at KeyArena. An additional $30 million will be paid to the city in 2013 if the State of Washington authorizes funding for a new sports arena.

As part of the agreement, the team's name and colors will remain in the Emerald City. The deal allows Bennett's ownership group, represented during the two-week trial by Bradley Keller and Paul Taylor of Seattle litigation boutique Byrnes & Keller, to proceed with a planned move to Oklahoma City. (The NBA approved the proposed move in April, and the league has already made the Sonics a part of history--the team's Web site was taken down and revamped by the morning of July 3.)

A call and e-mail message to K&L Gates of counsel Slade Gorton, the city's lead lawyer, was not been returned by the time of this post. But we can't begrudge the 18-year veteran of the U.S. Senate if he got an early start to the holiday weekend. (Update: Gorton later declined to comment and while he didn't serve as trial counsel--K&L Gates litigation partners Paul Lawrence and Jeffrey Johnson handled those duties--a damaging e-mail written by Gorton surfaced on the trial's final day.) The settlement marks the end of several months of contentious litigation--both sides seemed relieved to put the ordeal behind them.

One potential hurdle remains. Former Sonics owner and Starbucks founder Howard Schultz is suing Bennett for failing to negotiate with the city in good faith after Schultz sold the Sonics to him. Schultz is represented by Richard Yarmuth, a name partner at another Seattle litigation boutique, Yarmuth Wilsdon Calfo. Schultz is seeking to have the sale rescinded so he can sell the team to an ownership group that will keep it in Seattle.

Yarmuth told The Seattle Times that Schultz's civil suit is separate and that "we are not a party to [the city's] settlement and, in fact, we chose not to participate in it."

Seattle has said it's hoping for a new NBA team sometime in the near future.

Download the memorandum of understanding between the city and Sonics ownership.

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