The Volokh Conspiracy

[Todd Zywicki, June 28, 2008 at 6:20pm] Trackbacks

Seattle Sonics Trial:

I hadn't realized that a lawsuit just started between the city of Seattle and the Sonics (no longer "Super," right?). I don't know much about the case, but it looks like there are some interesting contract law issues in the case so I flag it for those who are interested. The Sports Economist has a number of posts on the developments in the trial and The Sports Law blog provides an overview of the theory of the case here.

However it turns out, this may be a good subject for a law review note topic.

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BRM:

The Washington Law Review calls dibs on this note topic. I suppose we can fight against Oklahoma Law Review, if need be.

6.28.2008 8:41pm

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Hoosier:

The stuff I learn from this blog! When did they stop being "Super"?

6.28.2008 9:58pm

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TokyoTom (mail):

The trial is being blogged by the Seattle PI here.

6.29.2008 1:10am

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NickW:

They're still Super (note the title and signage). At least, formally. The "Super" hasn't been in the logo since 1995, and most mentions of the team haven't used it since, well, ever. But unlike the unMighty Ducks, the Sonics haven't actually changed their name.

6.29.2008 1:18am

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TRex (mail):

It is easy enough to calculate direct contractual monetary damages in the form of lost rents. But what happens when your anchor tenant with a sweetheart lease breaches causing the rest of your tenants to go broke, vacate, and leave your property worthless? Is the anchor liable for the consequential damages? e.g. Seattle's lost tourism, etc.

And what if your breaching anchor tenant's principals stand to profit immensely in direct proportion to the landlord's (Seattle's) losses when their vast other property holdings (in Ok.C.)appreciate as Seattle's feeder properties depreciate?

Initially, Seattle did not think it necessary to provide a new basketball arena after it had just funded new football and baseball facilities. Now that the horse is out of the barn, it wishes it had built a better barn.

Some cities are suing mortgage banks for damages from dilapidated neighborhoods caused by massive fallouts from the mortgage crisis.

Are cities becoming foreseeably damaged directly or as third parties whenever they are damaged by disagreeable private contracts?

6.29.2008 1:21am

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Bleepless (mail):

Ordinarily, it would be a routine breach of contract case, save that each side has raised clean-hands issues and the judge seems panicky that anybody's shopping list will be left out. On the latter issue, she actually allowed the testimony of novelist Sherman Alexie, who talked about how sad he and others would be to see the team move away.

6.29.2008 7:06pm

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scattergood:

This is NOT like a standard lease deal because the languange of the Arena lease with the Sonics specifically includes states <b>"The obligations of the parties to this Agreement are unique in nature; this Agreement may be specifically enforced by either party," </b>seen in Section 27, paragraph L of the lease.

One of the obligations of the Sonics is to play ALL of their HOME GAMES in Seattle through 2010. The City and State combined to put up $85M to redo the Seattle Center arena to the new Key Arena in 1995, and wanted a 15 year commitment by the Sonics to play their home games there. The Ackerly's, the then owners with NBA support requested a specific arena design that would PRECLUDE NHL teams, and they got it. One of the effects of that design is a relative dearth of luxury boxes and specialty seating. This is the crux of the 'issue' with Key Arena. However, the Ackerly Group was able to be profitable with the Sonics in this location and make money when they fielded a team that went deep into the playoffs, in otherwords a winner.

Clay Bennett bought the team, knew the lease, knew the Sonics were losing money, knew the team would continue to lose money while he traded away all of their experienced players, has alternatively clamied that NBA teams either provide value to their communities or not depending on who he is speaking to, and is now claiming financial hardship if he has to stay.

If the City loses the case the economics of public financed arenas for every sport will change. Why should any city pay when any owner can move the team at any time for any reason, even if the lease he or she signs says exactly the opposite?

6.30.2008 1:21am