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Sonics Trial Blog

Seattle Times reporters Percy Allen, Jim Brunner and Danny O'Neil are filing updates from the courthouse throughout the day.

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June 26, 2008 7:44 PM

Confidential? Let's talk about it: Slade Gorton's NBA meeting

Posted by Jim Brunner

Former U.S. Sen. Slade Gorton went to New York last fall with Deputy Mayor Tim Ceis and Seattle Center Director Robert Nellams to meet with NBA officials and lawyers for the Sonics. For that Oct. 15, 2007 meeting, Gorton -- who was working for the city in the lease lawsuit -- signed a confidentiality agreement that read, in part, "All communications of any kind made during the meeting, and all materials prepared for, introduced at, or created during the meeting, are confidential and protected from disclosure for any purpose..."

The day after the meeting, on Oct. 16, 2007, Gorton e-mailed Microsoft CEO Steve Ballmer, former Safeco head Mike McGavick and former Sonics President Wally Walker about -- the meeting in New York. (Ballmer led the investors group interested in buying the Sonics.)

After describing some of what was discussed and who asked what, Gorton wrote, "The next question is when and how we inform the league that a local potential owner is a possibility."

Judge Marsha Pechman asked today about the confidentiality agreement and subsequent e-mail.

Click here to see the confidentiality agreement and e-mails, including the Oct. 16 e-mail, from Gorton.

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June 26, 2008 7:22 PM

Press conference audio

Posted by Danny O'Neil

Here's an audio link to the press conference that Deputy Mayor Tim Ceis and attorney Paul Lawrence conducted after the conclusion of the trial. Click on the link to hear the mp3 file.

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June 26, 2008 5:05 PM

News conference with Paul Lawrence, Deputy Mayor Tim Ceis

Posted by Danny O'Neil

Paul Lawrence, lead attorney for the city of Seattle, and Deputy Mayor Tim Ceis answered questions after six days of testimony ended at the U.S. District Court. Here's what they said:

Tim Ceis: So I just want to start off by saying, I just want to express my appreciation for the great work Paul Lawrence over the course of this trial and also particularly, though, today in his closing. I think what Paul did today was clearly lay out the strength of the city's case to the judge, the strength of our claim for specific enforcement of the lease and why that is so important to the city of Seattle and not only the city of Seattle, but the people we represent.

I thought it was particularly telling that the judge asked about the issue of sentimentality and how is it that a city can represent that sentiment of its citizens and the fans of basketball, but that is the job of the city, the mayor. He is elected to represent those interests and the representation of those interests [don't] always manifest themselves in just concrete and parks and things like that. They sometimes manifest themselves in the will and desires of the people he represents. So that's something that's irreplaceable in terms of the Sonics if they should leave Seattle. So that I think was a very poignant point of this case today.

I also want to lay out to you today that our objective of the city remains the same and has been consistent throughout the point in time in which Mr. Bennett told us he wanted to break the lease, the point in time in which we filed litigation to prevent that and the point in time between then and now in trying this case and that was to keep the Sonics as a tenant in KeyArena. To try and solve the KeyArena renovation problem so that we can keep a team here long-term, and that's regardless of who the ownership is and who that team is. That remains the city's objective. And so today was a closure of this trial, I hope that we will take a step forward in meeting that objective for the city.

Paul, do you have anything you want to add to that?

Paul Lawrence: No.

Ceis: Any questions?

Q: Is the case decided on Washington state law or federal law?

Lawrence: It's a Washington contract and Washington law would apply.

Q: It seemed like to me anyway, it seemed like [Sonics lawyer Brad] Keller dropped a new little bit of evidence closing, which found Deputy Mayor Ceis at a meeting at K&L Gates, two days after the "Poisoned Well'" meeting. So what were you there for? What strategy were you talking about there?

Ceis: That is not a new piece of evidence. That was in my deposition that is part of the court record, and it was clear that on October 9 we were meeting to discuss the preparation of the presentation to the NBA of a renovated KeyArena plan. That's the whole purpose of that discussion that day.

Continue reading this post ...


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June 26, 2008 3:50 PM

Judge Pechman to post ruling Wednesday

Posted by Danny O'Neil

Judge Marsha Pechman said she will post her ruling in the case Wednesday at 4 p.m.

"I'm not going to open my mouth and decide this case today," she said before court adjourned today. "I also understand that time is significant for everyone involved."

Then, she added, "So stay tuned."

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June 26, 2008 3:40 PM

City's lawyer gives rebuttal

Posted by Danny O'Neil

In the rebuttal by Paul Lawrence, the city's lead attorney, to the closing argument by Sonics attorney Brad Keller, he said Keller made the statement that no Washington court has enforced specific performance of a lease. Lawrence cited a court case in which the lease was enforced -- a case that had the landlord making specific improvements at a tenant's request.

Lawrence emphasized Keller's closing didn't cite a lot of case law to discuss specific performance and the "unique object."

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June 26, 2008 3:25 PM

Sonics' lawyer: If team stays, trouble could be ahead

Posted by Danny O'Neil

Sonics lawyer Brad Keller concluded his closing argument by pointing to the potential for continued disputes.

Keller cited everything from the marketing of suites to the selection of home dates. Keller said that if the city desired to maximize losses, it could give the Sonics less desirable dates for home games while assigning other dates to other tenants.

Keller said he wasn't there to predict the city and franchise would be "mud wrestling" over all sorts of things, but that the potential for dispute exists

"The judicial concern is if they arise," Keller said. "If they arise, courts just don't want to be in the business of telling the operator how to run his business."

Paul Lawrence, attorney for the city, has 3 minutes left for a rebuttal.

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June 26, 2008 3:14 PM

Is a lease like a marriage?

Posted by Danny O'Neil

Brad Keller, Sonics attorney, cited the loss of personnel and the dwindling opportunities for sponsorship at KeyArena and the general difficulty in marketing a team whose brand is being associated with "abandonment."

He then posed two rhetorical questions about why this relationship has reached this point.

"Why is it that there is not a single Washington court (that) has ever specifically enforced a lease?" Keller asked. "Why is it that courts refuse to enforce a marriage?"

Keller also pointed out that ending the city's association with the K&L Gates law firm doesn't solve all the problems in the city's relationship with the team. Keller also said Mayor Greg Nickels has expressed a desire to have local owners buy the team.

"You can get rid of the lawyers, but you can't get rid of the mayor," Keller said.

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June 26, 2008 3:06 PM

Sonics lawyer suggests team's financial losses will only worsen at KeyArena

Posted by Danny O'Neil

The closing statement by Brad Keller, the Sonics lead ttorney, resumed after an afternoon break. Keller discussed financial losses that have exceeded all expectations.

The implication, Keller said, is that those losses will only get worse if forced to stay at KeyArena.

"To what end?" Keller asked.

Is it because Mayor Greg Nickels' said he's an optimist, Keller said.

"That PBC (Sonics owners) will drown in red ink and forced to sell to the Griffin Gang?" Keller said.

The reality, he said, is that four separate times under three different ownership groups, the Sonics have lobbied the state Legislature to fund an arena upgrade.

"The city had five years of chances to fix the problem and we're here today because it couldn't," Keller said.

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June 26, 2008 2:43 PM

K & L Gates -- a big law firm with a divided brain?

Posted by Danny O'Neil

Sonics lawyer Brad Keller's closing argument included a diagram of the K&L Gates law firm two halves of one brain.

The city's lawyers were shown in green and located on the left side of the brain. The Griffin Group's (Seattle developer Matt Griffin is one of the investors interested in buying the Sonics) lawyers were in blue and on the right. Keller asked if it's really believable that those two sides of the brain were not communicating with each other as one side worked to represent the city in enforcing the lease with the Sonics while the other worked in a separate endeavor to preserve professional basketball in Seattle.

"That's contrary to logic and that's contrary to common sense and if there was even some fleck of plausibility, the law doesn't allow a principal to act as a horse with blinders on," Keller said.

Keller said the specific-performance is being used as a point of a sword to affect the sale of the Sonics. Well, actually, Keller called those two years remaining on the lease a bludgeon, as the city was seeking to force the tenant to sell.

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June 26, 2008 2:33 PM

Sonics lawyer says "Poisoned Well" plan made him feel ashamed

Posted by Danny O'Neil

Brad Keller, lead attorney for the Sonics, began his closing argument talking about the complexities of contract law and how it applies to a lease. He disputed the characterization of the Washington Supreme Court case by the city's attorney, Paul Lawrence, in his closing. Keller said that was a one-shot real-estate deal and this is a lease case.

Keller then turned his attention to the so-called "Poisoned Well" plan, and said it showed a level of scheming that embarrassed him.

"This is my town, too," Keller said. "But I felt shamed by those among us who live in power and privilege and have not learned that the end does not justify the means."

Keller's also pointed out that two days after the "Poisoned Well" Power Point presentation was made at the home of former Sonics President Wally Walker, that Walker's calendar indicated he had a meeting at K&L Gates that included former U.S. Sen. Slade Gorton and Deputy Mayor Tim Ceis.

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June 26, 2008 2:12 PM

Judge questions Gorton's roles with city and investment group

Posted by Danny O'Neil

The city's lead lawyer Paul Lawrence concluded his closing argument,and Judge Marsha Pechman asked about former U.S. Senator Slade Gorton's role working for the K&L Gates law firm, which represented the city and also was involved with an effort to preserve professional basketball in the area. Those twin roles were spelled in the letter in which the city retained K&L Gates.

Pechman brought up the fact that Gorton attended a meeting with the NBA where Clay Bennett was present to discuss the viability of a remodeled KeyArena. The parties were required to sign an agreement not to discuss the contents of that meeting.

Pechman referenced the fact that the next day Gorton sent an e-mail to members of Microsoft CEO Steve Ballmer's investment group (which wanted to put up money to renovate KeyArena and buy the team) about what was discussed.

"I can not explain Mr. Gorton's actions," Lawrence said.

"But that's the city's action because that's Mr. Gorton," Pechman said, and Gorton signed the non-disclosure agreement while in the meeting to represent the city.

Lawrence said there was no evidence that the city directed Gorton to send that e-mail and also noted that the e-mail was not sent to anyone with city.

"There is no evidence that links Mr. Gorton's action with the city," Lawrence said.

Pechman then asked about the possibility of severing K&L Gates representation with the city in this matter, after the case. Lawrence said that is something that's entirely within the judge's discretion.

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June 26, 2008 1:58 PM

Sonics are irreplaceable, city's lawyer says

Posted by Danny O'Neil

The Sonics trial resumed at 1:30 p.m. with Paul Lawrence, lead attorney for the city, having 30 minutes left to conclude his case. Lawrence began the afternoon session by emphasizing the uniqueness of the Sonics as a tenant. Having an NBA team is something that just can't be replaced.

"It can't be replaced with money and cannot be replaced with another tenant, with Ice Capades or other events," Lawrence said.

Lawrence also presented a timeline showing that city officials twice said the city intended to enforce the lease, first in July 2006 after Clay Bennett's group purchased the team and again in May 2007 when Seattle Mayor Greg Nickels rejected a buyout offer.

Lawrence drew the comparison to land disputes. In those cases, he pointed out, damages can be assessed in terms of specific performance and not based on fair-market value. In essence, the courts have decided that the purchaser has a special relationship with the land being bought. The connection there is that the city has a special relationship with its basketball-team tenant. And that's a relationship that can't simply be dealt with in monetary damages.

"Simply being awarded a dollar amount is not going to make the city equal to whatever benefits it perceives are associated with the team," Lawrence said. "You can't put a number to it."

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June 26, 2008 12:41 PM

Pechman asks about Sonics' sentimental importance

Posted by Danny O'Neil

Judge Marsha Pechman's inquiry shifted to the sentimental importance of the franchise, and she asked the city's lead lawyer Paul Lawrence to explain whether that was a valid issue, given that the city is essentially a corporation. The term she used was "corporate tears," and that this was essentially a contract issue between a corporation (the city) and a business (the team).

Lawrence said the sentimental feelings of constituents represents a foundation for public policy argued in the Washington Supreme Court case from 1996 involving the baseball stadium. The court recognized that Safeco Field was a valid use of public funds because it did bring benefits to the city, and that the use of those public funds is at the discretion of the city leaders.

After a lunch break, Lawrence will continue his closing argument at 1:30 p.m.

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June 26, 2008 12:09 PM

Judge Pechman wonders: Will the Sonics and city keep coming back to court?

Posted by Danny O'Neil


The closing argument is being presented by Paul Lawrence, the city's lead attorney.

He said the city agreed to a public-private partnership to renovate the Coliseum in order to get all of the benefits that come with having a professional basketball team in town.

That goes beyond simply getting a share of the revenue.

"First, the city is not a developer," Lawrence told Judge Marsha Pechman. "The city is not like a standard landlord. KeyArena is not like a stripmall or a shopping mall. Finally, the Sonics are not like a Wal-Mart store."

The mall developer wants to make money. The city, however, is not motivated by that bottom line.

"Rather than earn a profit, the city seeks to provides benefits to its citizens," Lawrence said.

And the city agreed to help fund the renovation of the Coliseum into what is now KeyArena knowing it would keep the team through 2010 and get all the benefits that come with having that team.

Pechman interrupted Lawrence's argument to ask about the reciprocal component of that agreement -- that the Sonics bargained for the city to maintain the arena as a viable venue.

Lawrence responded that the issues related to maintenance are explicitly spelled out in the agreement and he argued against any notion that the maintenance requirement was to keep KeyArena as a state-of-the-art arena in the NBA.

"The notion that it would be renovated into a greater, bigger arena is not supported by anything in the record," Lawrence said. Rather, a gradual decline in the adequacy of the building is pretty standard.

"The fact that it's no longer state of the art is not surprising or unexpected," Lawrence said. "But there is nothing in the lease that says you get to leave because time ages the facility."

Lawrence said Sonics owner Clay Bennett was told by Mayor Greg Nickels, after the sale, that the lease would be enforced and that the Sonics ownership spelled out that it understood and assumed it would take on the liabilities and obligations of the previous ownership group led by Howard Schultz.

One concern Pechman voiced was that the parties would keep coming back to the court.

"What I'm worried about is, are we going to have ongoing obligations about the city undermining tenant by plotting to have someone else buy them out?" Pechman asked. "Going to the NBA, and undermining their business position or leaking their secrets. I'd like to know how I can be assured we're not going to be back here with those kinds of problems."

Lawrence had previously spelled out that arbitration is the means of settling operational disputes in all matters except those regarding hazardous waste. So suite sales and concessions are not a subjects eligible to be brought back to the court. Those types of issues would be settled by an arbitrator.

Lawrence responded to Pechman's question that these were two sides that were sophisticated and upstanding people who would move forward.

Pechman wasn't so certain about how well they'd work together, and she pointed out that in July 2007 the mayor wouldn't return Clay Bennett's call to set up a meeting to discuss an exit of the lease. Pechman pointed out that the mayor and Bennett haven't gotten together to talk about anything since the 2007 failure to find funding from the state Legislature.

"Well that's not real sophisticated when they both go to their corners," Pechman said.

Lawrence said a ruling in terms of the lease would settle the dispute between the city and the team, and both sides would move forward once that dispute is decided.

"That's the fundamental dispute," Lawrence said. "That will end based on what your honor decides, and then the parties will move forward on a rational basis."

Lawrence is continuing his closing argument.

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June 26, 2008 11:15 AM

City OK with Ceis not testifying

Posted by Danny O'Neil

Neither side was upset with the ruling that Deputy Mayor Tim Ceis won't testify.

Paul Taylor, an attorney for the Sonics, argued that to allow Ceis to testify now, on the final day of the trial, about communications with the law firm retained by the city, it deprived the Sonics of its opportunity for discovery.

Paul Lawrence, the city's lead attorney, argued that attorney-client privilege had not been asserted with respect to the things Ceis would be testifying about.

Judge Marsha Pechman said she was not going to allow Ceis to testify because there was no evidence the attorney-client privilege had been waived in the record.

"You can not use the privilege as a shield and then turn around and use it as a sword," Pechman said. "You have to decide early on if you’re going to keep matters privileged or offer them up. In this instance, the city never designated the scope of the privilege they wish to waive or decline."

Lawrence, the city's attorney, said he was satisfied with the decision because Pechman accepted the stipulation from Ceis' sworn April 2008 deposition in which he said he had never seen the "Poisoned Well" PowerPoint (distributed at former Sonics President Wally Walker's home in October 2007) until the deposition.

Also entered into evidence was the letter in which the city retained the services of the K&L Gates law firm in September 2007. The letter stated explicitly that former U.S. Sen. Slade Gorton and Gerry Johnson were engaged in a separate effort to retain professional basketball in Seattle. Lawrence termed this a "carve out," which showed the firm was involved in a separate effort that related to the team -- one that did not involve the city at all.

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June 26, 2008 10:53 AM

Ceis will not testify

Posted by Danny O'Neil

Deputy Mayor Tim Ceis won't testify in the final day of the Sonics trial.

Judge Marsha Pechman noted that Ceis' April 28 deposition has been admitted, in which he said he had not seen the so-called "Poisoned Well" PowerPoint presentation.

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June 26, 2008 10:02 AM

Licata, not always wild about the Sonics, but says team should be held to lease

Posted by Danny O'Neil

Seattle City Councilmember Nick Licata just finished answering questions from Sonics lead attorney Brad Keller. Licata was the final witness called by the Sonics.

Keller began by asking Licata about Initiative 91, and emphasizing that under that initiative, the computing of the fair-market value of a civic sports arena specifically excludes, "goodwill, cultural or general economic benefits to the City." Keller entered as an exhibit the explanation of I-91 written out by the City Attorney's Office displayed in the court. He also asked Licata if I-91 passed by a substantial margin, which it did.

In spring 2007, while the Sonics owners were lobbying for public funding in Olympia to help pay for a new arena in Renton, Licata was voicing his opinion that excessive public subsidies for sports arenas were against the public interest. Licata said other city officials in Olympia were taking the opposite opinion. Keller expressed surprise that there were city officials in Olympia voicing support for a new arena. Licata then said he assumed there were, but he didn't know that.

"You were just guessing a moment ago, weren't you?" Keller said.

Keller pointed out Licata's role in a study of potential uses for KeyArena should the Sonics leave. The center could become a center for music, film and technology. Licata characterized this as a worst-case scenario, should the Sonics leave. It's a plan, Licata said, to make sure KeyArena would remain viable with the Sonics absent. Keller then had footage from a City Council committee meeting in which Licata was discussing the plan, calling these focuses of film, music and technology as reflective of the area. After it concluded, Licata offered a joke.

"Great speech," Licata said.

Keller responded that indeed it was.

"Certainly not someone with his head down talking about worst-case scenarios," Keller said.

The final thrust of Keller's examination focused on Licata's quotes in a Sports Illustrated story in 2006, in which Licata told a reporter that the economic impact -- if the Sonics left town -- would be near zero. He also said on the impact of their departure, on a cultural basis, would be close to zero.

Licata was shown a copy of the magazine.

"Given all the publicity, I'm surprised I'm not on the front cover," Licata said.

The judge chimed in. "That might be reserved for me," Pechman said.

Keller's questions focused on the disregard Licata expressed for the team in the Sports Illustrated article.

Greg Narver cross-examined Licata for the city. He pointed out comments in a newsletter from Licata in which the councilmember said his quotes in Sports Illustrated were a "glib, foolish remark." He characterized them as "smug and wrong."

The cross examination concluded with Licata's opinion that the Sonics should be held to the term of the lease over an objection by the defense.

Licata was the last witness called by the Sonics attorneys. They introduced two exhibits and have rested their case.

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June 26, 2008 9:09 AM

Ruling on Ceis testimony to come after Licata leaves the stand

Posted by Danny O'Neil

U.S. District Judge Marsha Pechman will rule later this morning whether Seattle Deputy Mayor Tim Ceis will be allowed to testify. She'll make that decision after City Councilmember Nick Licata's testimony concludes.

Lawyers for the city of Seattle want to call Ceis to testify regarding any prior knowledge of what has been termed the "Poisoned Well" plan. Sonics attorneys filed a motion earlier this week to block Ceis' testimony, saying he had refused to answer questions when he was deposed in April.

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June 26, 2008 6:04 AM

Closing arguments today

Posted by Jim Brunner

This is the trial's final day. First up: Sonics lawyers will try to keep Seattle Deputy Mayor Tim Ceis from taking the stand. The city's attorneys want Ceis to testify that he had no prior knowledge of the so-called "Poisoned Well" plan to financially bleed Sonics owner Clay Bennett into selling the team.

After that, the lawyers will make their closing arguments about whether the team should be allowed to get out of the KeyArena lease before 2010.

It is not known when U.S. District Judge Marsha Pechman will rule.

In preparation for closing arguments Thursday, attorneys for Sonics and the city of Seattle summed up their cases in these court filings:

- Seattle's proposed findings (PDF)
- Sonics' proposed findings (PDF)

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June 20, 2008 11:14 PM

Ceis: No conflict of interest in Gorton's work with city, possible ownership group

Posted by Percy Allen

Seattle Deputy Mayor Tim Ceis and Seattle attorney Paul Lawrence met with the media after Friday's trial adjourned. Here's the complete Q&A from the press conference.

Tim Ceis: Good afternoon. I want to start off by saying from the city's perspective we're very pleased about how the case has been going. We were hopeful we would wrap up the testimony today, but we have to come back on Thursday so we'll be here. And I believe Thursday is closing arguments. But we're very, very pleased with how the case has gone as of today. And we're looking forward a good conclusion. So with that, Paul and I will take any questions about what went on today.

Question: Do you agree with Sen. (Slade) Gorton's assessment that failing to win a KeyArena renovation undercuts your specific performance argument?

Paul Lawrence: No. Absolutely not. Our position is that the specific performance case is decided based on the terms of the contract. Whether the Seattle Sonics are a unique tenant and whether they bring benefits to the city over and beyond the rent that are hard to measure. That’s the specific performance case and it has nothing to do with what Sen. Gorton said.

Q: Do you know what Sen. Gorton based that assessment on in his e-mail?

Lawrence: You’ll have to ask Sen. Gorton.

Q: Does the city have unclean hands in bringing this lawsuit to try and enforce specific performance?
Lawrence: Absolutely not. I think what you saw in the testimony today was testimony from Wally Walker, who was a member of the ’79 championship team, a longtime Seattle resident (who) is active in the community and with the basketball team. He as a citizen wanted to keep the Sonics here and worked toward that effort. I think there’s been a lot of argument by the council trying to put two and three together to make four, but it doesn’t add up because there’s simply no evidence of any sort of plan as they look at it. I think if you look at the document that they point to so often, you’ll see that it clearly does not involve the city. It anticipates the city being a participant later on in an effort to keep the Sonics in Seattle, but there’s nothing to suggest that plan involved the city at it’s inception. And of course, this all happened after Clay Bennett announced very clearly his intent to leave Seattle for Oklahoma City.

Q: But didn’t it happen after the city hired Slade Gorton as its attorney?

Lawrence: No. It didn’t happen. As it came up today in the testimony, it dates back to July 2006, which is before K&L Gates was approached. Sen. Gorton prior to being retained by the city, was independently looking to find a solution. And as you heard today, what he was working on originally was a Bellevue arena, which was not in the interest of the City of Seattle as a solution for the Sonics.

Q: If you had a do-over and you were giving advice, would you advise them not to use the “Poison Well” quote on the cover of their PowerPoint?

Lawrence: I think that if Mr. McGavick who wrote that (he) would have to address that to his own attorneys. Again, the city had nothing to do with that, so it’s not our place to say what he should or shouldn’t have said.

Q: What would you have done?

Lawrence: I don’t give advice to him. He never asked me for advice. And again, we were not engaged in that effort to try to convince a prospective owner to come to Seattle and act to provide an alternative to the team leaving.

Q: When was it that Sen. Gorton was retained by the city?

Lawrence: K&L Gates was retained I believe the day that the arbitration – a couple of days after the arbitration was filed. I remember being called in on a Friday and working all weekend to get a complaint filed on Monday. And the arbitration date was the 19th, which I believe was a Wednesday.

Q: What is Gates' history with the City of Seattle as far as representing various other litigations?

Ceis: We don’t have an ongoing retainer with them on litigation issues. They act for us on various capacities on counsels, and in some cases on legal matters. But it’s on a case by case basis.

Q: You said K&L Gates was retained shortly after the arbitration was filed. In that meeting at Mr. Walker’s house that involved Mr. Ballmer and Mr. Gorton was in October. So who was Gorton representing when he was at Mr. Walker’s house talking about the PowerPoint presentation?

Lawrence: Mr. Gorton represented himself. When we were retained, we indicated to the city that prior to that date Sen. Gorton and Gerry Johnson had been working to find a perspective ownership and alternative solutions to losing the team. That was disclosed to the city and it was reflected in the retention agreement with K&L Gates that there was this work being done Sen. Gorton and Gerry Johnson ongoing at the time we were retained on the litigation.

Q. Johnson is working on this case, right?

Lawrence: No you’re not familiar. There are two Johnsons. The attorney Jeff Johnson is a litigation attorney who is working on this case. Attorney Gerry Johnson does not do litigation.

Q. In hindsight, knowing that Mr. Gorton was trying to keep long-term basketball here, was he the best choice for counsel?

A. Ceis: As Paul said the representation agreement, they disclosed the work that Sen. Gorton and Gerry Johnson were doing and the city didn't see any conflict in that work. They were pursuing long-term tenants for the KeyArena, basketball, that was what they were working on. That was our interest, too, is to have short-term and long-term tenancy of the National Basketball Association in KeyArena. So there were no conflicts there.

And given Sen. Gorton's long history in professional sports in this city going back to the Pilots and bringing Major League Baseball back to Seattle, helping to save the Seahawks in Seattle, it was an obvious choice to have for us to have him on board.

Q. Didn't Mr. Griffin acknowledge on the stand that the only one able to inflict bleeding or the pain on the owners that would cause them to call would be the city?

Lawrence: What Mr. Griffin stated that in terms of legal action, that they city would be the entity enforcing its lease, which is it’s legal right to do. It says in the lease that either party, in this case it’s the city, has the right to specifically enforce the lease. The city has made that clear going back to July of 2006, well before anything that was discussed in the courtroom today, that they would specially enforce this lease against Clay Bennett or any other owner because that's what their bargained for and the city wants the full benefit of its bargain. The city's decision to enforce this lease was announced to Mr. Bennett Day One when he purchased the team in July 2006, long before any events you heard about today.

Q. Wally Walker kept saying he was not a consultant with the city until January or February. 2008 yet Bennett's lawyer kept referring to and the judge accepted a letter where he acknowledged that in Sept. 19, 2007 he was a consultant. That never got resolved in today’s trial.

Lawrence: I think that's a pretty simple explanation. He signed the letter at the end of January or February, but the letter reflected that he had been providing advice as he testified with respect to the economics and the NBA process with respect to the approval of a renovated KeyArena going back to September.

Q. To follow up, you said there was no conflict in hiring Slade Gorton because he wanted a long-term team and you guys wanted to take care of the current problem, but doesn't that cut directly to their case that there is conflict. The only way he saw to get a long-term team was to bring the city’s pressure to (them). So it’s a direct conflict it seems like.

Ceis: They disclosed they were doing that work. They didn't give us any details about it. We were not engaged in that work. All we were engaged with in K&L Gates was on the litigation. The work that Sen. Gorton was going in terms of talking to (prospective) owners was something we were not involved in.

Q. Were you worried about a perception of there being a conflict of interest?

Ceis: Again our interest was ensuring that we had a tenant in KeyArena and we wanted basketball as a tenant. So again, we saw no conflict.

Q. (Inaudible)

Lawrence: The people who worked on the litigation for the city for K&L Gates had nothing to do and were not aware of the PowerPoint. I think as it came out today Sen. Gorton and Gerry Johnson in connection with the matters they told the city about that they were acting on separately were the K&L Gates people involved with the PowerPoint.

Q. When did the K&L Gates people aware of PowerPoint presentation?

Lawrence:. Mr. Gorton and Mr. Johnson were aware of it at some point around the meeting time.

Q. And when were you made aware of it?

Lawrence: I can't remember when it came out in terms of a discovery request from the… it came out in the discovery request direct either Mr. Griffin or Mr. Walker or Mr. Stanton, I can't remember.

Q. Can you explain how a bulk of Wally Walker e-mails arrived on Monday?

Lawrence: You'll have to probably address that to Mr. Walker's attorney. As best as I understand it, Mr. Walker in response to his attorney's request, went back and checked and apparently he had not checked his "sent" mail files until a couple of days ago. So Mr. Walker's attorney, trying to make sure the production was complete, went back asked Mr. Walker if he had checked X, Y, Z files and apparently the "sent" mail file had not been checked.

Q. Paul you say you’ve shown that apparently no link between the city and this group’s effort to harm Bennett’s group at all. What is the need for Mr. Ceis’ testimony Thursday?

Lawrence: To make the point that he made here and I was talking about, that at the time of the retention of K&L Gates by the city that it was disclosed to the city that Sen. Gorton and Gerry Johnson had previously and were on a ongoing basis had a continuing effort to try to find a prospective owner. And to establish that Mr. Ceis and no one at the city had an awareness of the PowerPoint presentation.

Q. The last substantive talks you had with Clay Bennett was the settlement offer that they presented to you February?

Ceis: The last discussions I had with Mr. Bennett's representatives were in New York City in October.

Q: Could there be any talks between now and Thursday?

Ceis: The last conversation I had with Mr. Bennett’s representatives were in October in New York. So right now we’re in trial.

Q. What was the outcome of that meeting and what type of information you took back from the NBA.

Ceis: We went back to see the NBA about KeyArena. To discuss the renovation of KeyArena with them. We showed them the design and cost estimates for it. So it was to put KeyArena back on the table as a venue for basketball, to keep basketball in Seattle.

Q. Did they reach any conclusions about your presentation and was it viable?

Ceis: Well as you can tell we are in a continuing process right now on that. So you can reach your own conclusion on the outcome of that meeting.

Q. Mr. Ceis your testimony to Judge Pechman will be the city has clean hands?

Ceis: I’ll leave that to my counsel.

Lawrence: I think saying anything more, you'll have to come back for part, whatever it is, VI on Thursday morning to hear.

Q. Mr. Lawrence can you address the situation in the morning session. You were talking to Wally Walker and the word "appeal" caused a great stir.

Lawrence: I think it only caused a stir because with all due respect to you guys, you probably haven't covered too many trials. From Day One, in front of Judge (Marsha) Pechman she recognized that this case very likely could go up on appeal. For each party to preserve their rights on appeal, there’s some very technical things you need to do in terms to objections to evidence that if you don't make (them) you waive your rights. And not simply because a judge has ruled once on a piece of evidence, if you don't have continuing objection or make the objection on a continuing basis to that line of evidence, then you may lose your rights to appeal. My job, among other things, is to make sure the record is complete and in the case that there is an appeal, whether it’s the PBC appealing or the Sonics appealing or both sides appealing. Part of my job to do it right is to make sure the record is correct.

Q. Deputy Mayor Ceis, did you have dinner with Clay Bennett and call KeyArena one of the finest basketball arenas in the country?

Ceis: Yes I remember that comment to Mr. Bennett. Yes. I was referring to a fan survey that was done in about 1998 where the fans around the NBA said KeyArena was the best place to watch basketball in the country.

Q. So there’s no basis whatsoever for Sen. Gorton suggest that the failure to win the renovation … (hurts the city's case)?

Lawrence: We don't believe that it has anything to do with the case. You have heard PBC make the argument "why bother? there's no point." And I don't like to speculate as to what Sen. Gorton was thinking about. But that argument is being made by PBC and if there had been a funding proposal approved, PBC wouldn't be making that argument. Regardless, we don't think that's relevant, but we've heard PBC make that argument during the trial.

Q. Over the next five days, what will you do?

Lawrence: Catching up on my sleep. But principally there are two things we are going to be focused on. One we have to prepare for the court, proposed findings of fact and conclusions of law, which is essentially looking through the evidence that's been presented and putting them in a form of finding that are facts that have been supported by the testimony to date. Setting forth our legal arguments in the form of conclusions of law that we hope the court will adopt and probably more than that, focusing on drafting our closing argument for Thursday before the judge.

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June 20, 2008 4:28 PM

Next week: Closing arguments and Seattle's deputy mayor

Posted by Percy Allen

Before court adjourned at 4:06 p.m., Seattle attorney Paul Lawrence said the city will call Deputy Mayor Tim Ceis as a rebuttal witness on Thursday. His testimony will take about 15-20 minutes and Sonics attorney Brad Keller said he expects to cross examine

Judge Marsha Pechman said both attorneys should review exhibits and make sure they are in proper order during the five-day break.

When the trial resumes Thursday, City Councilmember Nick Licata will be on the stand.

The trial will conclude after testimony from Licata, Ceis and each side gives a closing argument.

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June 20, 2008 4:13 PM

Licata still thinks KeyArena could be profitable minus the Sonics

Posted by Percy Allen

Sonics attorney Brad Keller questions Seattle City Councilmember Nick Licata.

Licata believed Mayor Greg Nickels had not kept the City Council in the loop on KeyArena renovations, urged that no action be taken until the effort could be thoroughly vetted, in effect, helping block the vote for the state funding in 2006.

Keller introduced Exhibit 522, an e-mail from Licata to state legislators. In the e-mail, he said a poll showed 80 percent of Seattle voters do not support using a tax for the Sonics. He also cited a KING 5 TV poll, in which 65 percent of those polled said they did not support using tax dollars for the Sonics. And another poll indicated only 7 percent of the respondents wanted to keep the Sonics.

Keller introduced Exhibit 520, a Feb. 8, 2006 e-mail from Licata to state legislators. In the email, he wrote: "The welfare of the Sonics should not be linked to the welfare of the Seattle Center."

Licata wrote in the February 2006 e-mail that the city hired consultants that denied the team's assertion that KeyArena would become a "white elephant." The consultants said KeyArena could turn a profit. The consultants said the city needed to invest $20 million in the building.

In the e-mail, Licata wrote: "The net revenue to the Seattle Center is only $5,000 per game whereas it is 10 times that from concerts."

Keller asked if Licata still believes KeyArena could be profitable without the Sonics.

"That is my lone point of view," Licata said.

In his testimony, Licata said it's difficult to calculate the transfer of disposable income. Transfer of disposable income is the theory that if people don't spend their money on the Sonics, then they will spend it on something else in Seattle. Licata said economists will inflate or de-emphasize statistics to support their argument.

When pushed on the topic, Licata said he believes the Sonics have a limited economic impact on Seattle.

Lawrence introduced Exhibit 525, a review for the City Council that states: "There is no empirical evidence showing that major league teams and their stadiums and arenas are effective drivers of local and regional economies."

Lawrence asked about Initiative 91, which Seattle voters approved in November 2006. The measure said any public funding of a sports facility should bring a fair return to the public investment. Licata said he had input in its creation.

Lawrence asked if the initiative was proposed because of the Sonics' efforts to get public funding. Licata said no.

Lawrence introduced Exhibit 518, a document in which Licata wrote: "Yes on 91 says there are more important things than a new stadium for wealthy out of state Sonics owners such as keeping schools open, affordable housing, health care, lower taxes, roads and transit, and real economic development."

Licata ackowledged the initiative's proposal was, in part, directed at the Sonics' public-funding effort.

At 4:02 p.m., Judge Marsha Pechman interrupted the questioning. Licata will return to the stand Thursday at 9 a.m. Court will not be in session Monday through Wednesday.










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June 20, 2008 3:28 PM

Griffin says goal was to keep team at Seattle Center

Posted by Percy Allen

The late afternoon session began with Seattle developer Matt Griffin on the witness stand fielding questions from Seattle attorney Paul Lawrence.

Earlier in the day, Griffin said a group that included K&L Gates attorney Slade Gorton adopted a plan to force Sonics owner Clay Bennett to sell the team. Under cross-examination, Griffin said forcing Bennett to sell was not the only option. In a document, he referred to Microsoft Steve Ballmer, who was going to buy the team and fund a portion of KeyArena renovations, as "reluctantant white knight."

Griffin said former Safeco president Mike McGavick authored the "Sonics Challenge: Why a Poisoned Well Affords a Unique Opportunity" power point presentation.

Lawrence examined Exhibit 576, an e-mail from Gorton to Griffin and others.

Griffin said he was willing to buy the Sonics along with Ballmer, wireless magnate John Stanton and Costco CEO Jim Sinegal. He said the group had three options. 1.) Bennett and his group would stay at KeyArena. 2.) Bennett would sell the Sonics. 3.) Another team would move to KeyArena.

Griffin said his group committed $150 million toward a $300 million KeyArena renovation.

Griffin said he never met with Mayor Greg Nickels about the city's legal plans.

Lawrence asked: "Did you and Mr. Ballmer want to bleed Clay Bennett or did you want to get a team in Seattle Center?"

"We clearly wanted a team in Seattle Center," Griffin said.

At 3:26 p.m. Lawrence concluded.

Under redirect, Sonics attorney Brad Keller asked what efforts Griffin made to get another NBA team.

"We didn't think we could get another NBA team without a renovated KeyArena," Griffin said.

Lawrence asked if Griffin had ever spoke to Bennett about KeyArena.

"No," Griffin said.

At 3:29 p.m., Griffin was excused and City Councilmember Nick Licata was being questioned by Keller.


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June 20, 2008 3:03 PM

Walker had predicted an ugly trial over Sonics' relocation

Posted by Percy Allen

Sonics attorney Brad Keller closed out his questioning of developer Matt Griffin by going over the efforts during the last legislative session to fund a $300 million renovation of KeyArena.

That proposal was a last-ditch effort to get an acceptable arena plan together before the NBA voted to approve the Sonics' relocation to Oklahoma City. Griffin was working with Microsoft CEO Steve Ballmer and other businessmen, who said they'd pay half the cost of the project.

Keller pointed to an e-mail by Wally Walker, former Sonics president, to Griffin in March 2008. Walker warned in that e-mail that politicians needed to get something done this year and not put off a decision. (Legislators in fact did put off the decision, deciding to form a task force for next year.)

Walker wrote "the gig may be up for good if we don't succeed now." Absent a funded arena, he predicted a nasty trial over the Sonics' relocation.

"Think of how ugly the trial will be, how ugly the Sonics' departure will be," Walker wrote.

Keller concluded his direct examination and Seattle attorney Paul Lawrence began cross examination. Lawrence asked Griffin what his goals were in getting involved with the KeyArena plan.

Griffin said he and Ballmer wanted to maintain the health of KeyArena and preserve NBA basketball for the city.

"If it was possible for it to be the Sonics that would be great, but if it was another NBA team that would satisfy our objectives as well," Griffin said.

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June 20, 2008 2:02 PM

Developer Matt Griffin testifies about effort to buy Sonics

Posted by Jim Brunner

Lunch recess is over, with Seattle developer Matt Griffin on the stand.

Sonics lead attorney Brad Keller is questioning Griffin about his involvement with Microsoft CEO Steve Ballmer and others who were trying to purchase the Sonics.

Keller is trying to establish that the city of Seattle was a party to a "Machiavellian plan" to force Sonics owner Clay Bennett into selling the team.

Noting that part of that plan was to make Bennett lose money at KeyArena, Keller asked Griffin, "you had no ability to lock the PBC (Bennett's group) into losses at KeyArena, did you?"

Griffin responded: "Not that I know of." He agreed with Keller that only the city could create those financial losses (by holding the team to its lease.)

Keller also displayed e-mails in which Griffin and others discussed putting Bennett "in a box."

Keller asked whether "in a box" meant forcing Bennett to sell the team. Griffin resisted that, saying the goal was to make Bennett do something other than relocating. "I would have been happy if he'd stayed," Griffin said.

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June 20, 2008 12:22 PM

City concedes nothing; we correct earlier post

Posted by Jim Brunner

Seattle is not conceding anything about their chances in the ongoing Sonics trial.

My apologies to the city's lead attorney Paul Lawrence and the city's legal team for an earlier blog item.

The city's lead attorney, Paul Lawrence, did make reference to an "appeal" after Judge Marsha Pechman sustained an objection.

But Lawrence said in an interview that he does that in any trial in which either side might appeal the final decision -- a likely outcome in this case. "It's routine in cases," Lawrence said.

Lawyers need to make sure their objections are recorded so that an appeals court has a written record.

Former Sonics President Wally Walker's testimony just concluded, with Lawrence trying to show the city was not involved in a "Machiavellian plan" to force a team sale.

Referring to the PowerPoint presentation that talked about inflicting losses on Clay Bennett's group, Walker testified that the document had been written by Mike McGavick, a former aide to Sen. Slade Gorton.

"We didn't have anything close to a plan. These were ideas to hopefully stimulate interest," Walker said.

Seattle developer Matt Griffin took the stand just before the trial paused for the lunch recess.

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June 20, 2008 11:04 AM

Is the city thinking ahead to appeal?

Posted by Jim Brunner


The city has been frustrated by Judge Marsha Pechman, who has overruled numerous objections this morning by Paul Lawrence during the aggressive questioning of former Sonics President Wally Walker. At one point she also told Lawrence he was reading court rules incorrectly.

Pechman cut off Lawrence when he was asking Walker about his basketball career and connection with the Sonics, including Walker's presence on the 1979 Sonics championship team.

Pechman said she'd seen Walker play and didn't need to hear more about his NBA career.

"I appreciate that your honor, but we do have to make a record for our appeal," Lawrence said.

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June 20, 2008 10:20 AM

The "Machiavellian plan" revealed? The Sonics like to think so

Posted by Jim Brunner

Sonics attorney Paul Taylor has been trying to expose former team President Wally Walker's role in a "Machiavellian plan" -- in which he says the city participated -- to force Clay Bennett to sell the team to local owners led by Microsoft CEO Steve Ballmer.

Taylor revealed an until-now secret document called "The Sonics Challenge: Why a Poisoned Well Affords a Unique Opportunity." The document was used at an October 2007 meeting that included Walker, Ballmer, former Safeco CEO Mike McGavick, and former U.S. Sen. Slade Gorton. (This document had been sealed up until now.)

"For the best likely outcome, two things have to happen next: Oklahomans have to be willing to sell and the public folks have to do the right thing," the plan said.

It continued: "...the critical path is to separate the NBA from the Oklahomans while increasing the exposure for each."

And it added: "So it's a pincer movement, increasing the Oklahomans' cost in an unpleasant environment while increasing the league's belief that an alternative solution gains it a good new owner and keeps it in a desirable location."

Seattle's lead attorney Paul Lawrence objected to the admission of this document and related ones, arguing there was no proof that Walker was working for the city.

But Judge Pechman Marsha rejected that, pointing to another memo, which Walker signed, that said he began working as a consultant for the city on saving the Sonics as of September 2007.

Lawrence asked, "Can I respond, your honor?"

"No, you've made your argument," Pechman said.

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June 20, 2008 9:17 AM

Former Sonics President Wally Walker takes the stand

Posted by Jim Brunner


Court has resumed this morning with the Sonics calling Wally Walker, former team President and part-owner of the Sonics.

Sonics attorney Paul Taylor asked Walker about the inadequacies of KeyArena.

Taylor asked whether Walker knew KeyArena was an inadequate NBA facility as far back as 2004.

"I believe I said publicly it was a challenging arena at that time, yes."

Taylor asked: "The lease was not competitive with other NBA leases, right?"

Walker: "Yes."

At 9:08 a.m. Taylor showed Walker a memo of talking points written by K&L Gates attorney Gerry Johnson, who was then working for the Sonics.

"The current lease between the city and the Sonics does not work for either party," Johnson wrote in the memo. Further, the memo said that due to ongoing financial losses, owners would have to consider selling the team, or even moving outside the region.

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June 20, 2008 6:08 AM

Day 4 scorecard; and coming today: Wally Walker and someone who wants to buy the Sonics

Posted by Jim Brunner

KEY WITNESS: Seattle's lawyers certainly put a passionate Sonics fan on the stand Thursday when they called writer Sherman Alexie, winner of the National Book Award. But was he really the best fan representative? Alexie's gushing, theatrical testimony compared NBA players with figures from Greek mythology -- with LeBron James as Hercules (we hear he's cleaning out poop from some cow stables this off-season). Alexie also had a beef with how he had been treated by Sonics staff since Clay Bennett bought the team. At one season-ticket holder event, Alexie testified, Bennett's people failed to offer him cucumber sandwiches or popcorn like he'd been served in the past. Staff members also failed to recognize him -- Sherman Alexie! -- by sight. The Sonics' lead attorney "apologized" to Alexie before cross examination. "I'm sorry that the locker guy didn't know who you are, I am sorry there wasn't popcorn when you came in the door," said Brad Keller. Seattle attorney Michelle Jensen stood up: "Your honor, I will object. He is mocking the witness." Keller responded: "I am not."

OBJECTION SCORECARD: Seattle continues to lose the objection war by a huge margin not unlike that last game of the NBA Finals. At times, Judge Marsha Pechman has been downright mocking, particularly of city lawyer Jeffrey Johnson of K&L Gates, who has scored a few points, but can come across like a nice fellow who wandered into the wrong courtroom.

MR. CONFIDENT: Sonics lead attorney Keller apparently thinks his case is going so well he asked Pechman whether she wanted him to do his closing arguments today (Friday) -- instead of waiting until next week. Seattle's lead attorney, Paul Lawrence, meanwhile, was pleading Thursday with the judge to allow two rebuttal witnesses before closing arguments start.

UP TODAY: The Sonics hope to call former Sonics President Wally Walker and Seattle developer Matt Griffin -- both of whom are likely to be interrogated about their participation in what Clay Bennett's lawyers have called a "Machiavellian plan" to force Bennett to lose so much money at KeyArena that he'll have to sell the team. The final witness for the Sonics will be Seattle City Councilmember Nick Licata, who famously told Sports Illustrated a couple years ago that the impact of the Sonics' departure would be "close to zero." Sonics fans got mad at him for that and he apologized. But now Bennett likes Licata's assessment. Or at least his lawyers do.

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June 19, 2008 8:53 PM

Correction

Posted by blog

A post Thursday morning ("Is this microphone on?") about one of the lawyers expressing annoyance with the other side's lawyers in a somewhat audible courtroom aside was apparently wrong. We were moving fast and made a mistake. We apologize. We probably don't know quite enough yet about who said exactly what to whom to fully correct it. But again, we regret the error. The post has since been deleted.

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June 19, 2008 5:45 PM

The city's take on Day 4

Posted by Percy Allen

Lead Seattle attorney Paul Lawrence met with the media following today's trial. Here's how the press conference went:

Question: Do you think the judge will order the Sonics to pay separate damages to Sherman Alexie?

Lawrence: (Laughs) I think there is a season-ticket holder suit so I won't comment on that.

Q: How do you think it went today?

Lawrence: We thought it went well. I was trying to think who was up today. Our economic expert I think was effectively demonstrating there's a lot more economic activity relating to the Sonics than simply what they paid to the city in rent and the admissions tax. Sherman Alexie spoke very eloquently from the fan perspective, which is one perspective that the court hasn't really heard before today. I'll leave it to you to decide about their economist, but we fail to see how --even you believe his theory -- how an analysis of the King, Snohomish and Pierce counties areas has anything to do with this case, which is about the impact of the Sonics leaving the city of Seattle.

Q: Is it a war of economists?

Lawrence: I think the reality is because there are so many varying opinions, that actually supports the city opinion that it's difficult to measure to the degree of certainty that you need to award damages, what the value to the community is of the Sonics playing in Seattle. The fact that you've got a wide range of opinions among economists just tells us it's a hard number to measure which is a fact that supports specific performance.

Q: (Mitchell) Ziets showed a profit at KeyArena.

Lawrence: First of all, the variety of forecasts that there are about the Sonics of the last two years of the lease further suggest the uncertainty of the situation and supports the notion that specific performance is appropriate. Is it $60 million loss? Is it a $200,000 gain for the Sonics? Obviously that makes a difference in the context of their case. Obviously it's not a hardship to make money as Mr. Ziets forecast when the team was purchased by Mr. Bennett. The fact that it's really hard to say what the hardship will be undermines PBC's case.

Q: What did you think about Mr. Keller's objections during Jeffrey Johnson's line of questioning?

Lawrence: You'll have to ask Mr. Keller about his tactics. Obviously it's a fair game for people to object to questions and for attorneys to restate their questions when objections are obtained. It's just part of what happens in courtrooms.

Q: Did the interplay between the judge and your team go as well as you would have liked?

Lawrence: I don't read anything into objections.

Q: Do you read anything to the judge frequently correcting your attorneys?

Lawrence: No I don't read anything. Judge (Marsha) Pechman is going to make a decision based on the evidence and the law. The fact that she wants the question asked in a particular way or a document presented in a particular way is entirely within her realm as judge, and we do our best to meet her requirements. Each of the federal judges and each of the state court judges has their own method of how they like things to proceed in their respective courts and you adjust to what the judge wants.

Q: What happened during the morning exchange between Mr. Keller and your attorneys?

Lawrence: This is the someone overheard something? I don't think it would be appropriate to comment other than to say I have not seen the blog that reported what was said, but I can tell you what was reported was not accurate.

Q: (Laughs) So what was accurate?

Lawrence: You overheard it wrong is all that I can say. I don't ... conversations between counselors like that is something that should be shared. From what I heard about it, it's not the conversation that took place.

Q: Are things getting heated between the two sides?

Lawrence: Things are no more heated than what typically happens when you're in trial. Actually, things are pretty normal and calm between lawyers in trial.

Q: Do you know if the questions Judge Pechman will have for you (Friday) will be made public?

Lawrence: I don't know.

Q: Does it make you nervous that she said found case law that neither side did?

Lawrence: No. If it was case law that only they found, then that might make me nervous. (Laughs) When you're arguing a case in front of any judge, you want to know what they want to learn about. So I think it's great that she's going to have questions that she wants us to address. That tells the lawyers what she's most interested in hearing about and allows you to address those points that she needs to be educated about.

Q: Is that fairly common?

Lawrence: It's not out of the norm. Obviously it's limited to judge cases. ... Given the structure of the case, having these three days off to allow people to prepare is encouraging that kind of questioning.

Q: What was your impression of the cross-examining of Dr. (Deborah) Jay?

Lawrence: I thought it went fine. I don't want to draw conclusion from the testimony. That's for the judge to draw her own conclusions. The main points were being made and...being argued was that is the question that she asked people, really the right question to find whether or not people in Seattle or the Seattle MSA care about whether the Sonics stay or not. Secondly, some of the verbal answers that are written in the report, you'll see when you read it, actually demonstrate some very sound reasons why people want the Sonics to stay -- even people who said they would be not impacted by it. And finally, the bottom line is even under this worst-case scenario, that's a million people in this area who care and that's a lot of people.

Q: Have you seen any other studies like Mr. Humphreys' that said the Seattle economy might be worse off for having the Sonics?

Lawrence: I haven't seen any other studies that show Seattle or any other community is worse off for having a sports team. I think that is intuitively not correct. Even if you talk about substituting dollars, it's hard to see how having a football team or baseball team or basketball team is a drain on the economy.

Q: Why was it important to hear from Sherman Alexie?

Lawrence: The fans needed a voice at trial. He's a long-time season-ticket holder. He's been articulate both in his writing, in his novels, his non-fiction work about the value of basketball to him as an individual and to his family and to his community. So he seemed like a very natural spokesperson for Seattle Sonics fans.

Q: (Inaudible)
Lawrence: On the one side you have their claim that we just have to pay rent and I guess that maybe they are now suggesting admissions tax. What we showed is a combination of various factors. One, they agreed to stay and agreed to the fact that the Sonics are a unique tenant and agreed to specific performance. Secondly, the Sonics are indeed a unique tenant and there's no basketball team or comparable team that can fill KeyArena the way that (the) Sonics can. ... Seattle is not just going to put a Wal-Mart in the Seattle Center at KeyArena. That's just not a substitute for the Sonics team. Thirdly, are there things beyond rent and taxes that accrue to the city and that includes both the benefit of the type of economic activity that Lon Hatamiya talked about that there's hundreds of millions of dollars of economic activity generated that's over and beyond whatever is paid for rent. And then of course, the intangibles, which their expert admits, which Mr. Bennett admits, and we all know who follow and like sports it's something that the community can rally around your sports teams and that is an important benefit to the community. So it's a combination of those factors.

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June 19, 2008 4:24 PM

Former Sonics President Wally Walker to testify Friday

Posted by Percy Allen

Sonics' attorney Brad Keller said he expects to close their case in the morning after calling former Sonics President Walker, Seattle developer Matt Griffin and City Councilmember Nick Licata.

Seattle attorney Paul Lawrence said he planned to call Seattle Center director Robert Nellams as a rebuttal witness to refute claims made by Sonics interim President Danny Barth in his testimony on Wednesday.

Keller asked if both sides should present closing arguments tomorrow, but Pechman said no.

She wants the attorneys to clean up their evidence and present it to her again. She plans to ask questions about case law and "then we'll take a deep breath and everybody can get themselves ready to make closing arguments."


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June 19, 2008 4:12 PM

Would we be better off if the Sonics leave? Sonics' witness gives her survey's results

Posted by Percy Allen

Sonics' witness Deborah Jay took the stand. Jay is the President and CEO of Field Research Corps., a polling company.

She told Sonics' attorney James Webb she had a PhD, and he drew laughs from the courtroom when he told her: "I'm going to call you Dr. J."

Jay's company has provided surveys for several government agencies and companies including the Center for Disease Control, Microsoft and Starbucks.

Jay said she was paid her $100,000 for her research. Her company conducted 402 interviews of people in the Seattle Metropolitan Area (SMA), which included 276 people in Seattle.

Webb introduced Exhibit 614, Jay's survey. In her report, she asked: "Do you think that (a) you would be better off (b) it would make no difference (c) you would be worse off if (team) were to leave Seattle?"

Jay provided several options for teams including: the Seattle Mariners, the fictitious Needles, the Seahawks, Sounders, Storm and the SuperSonics or Sonics.

The report said: If the respondent said he/she would be "better off" or "worse off" then they were asked:
How much (better off/worse off) do you think you would be if (team) were to leave Seattle? Do you think that (a) you would be slightly (better off/worse off) (b) be somewhat better off/worse off or (c) no difference.

Here's the results of Jay's poll. The first numbers are for Seattle Metropolitan Area and the second set is city of Seattle:

SuperSonics
No difference: 58 percent and 54 percent
Better off: 7 percent and 12 percent
Worse off: 31 percent and 33 percent
Did not know or say if it would make a difference: 4 percent and 1 percent

Storm
No difference: 68 percent and 62 percent
Better off: 1 percent and 3 percent
Worse off: 23 percent and 30 percent
Did not know or say it would make a difference: 8 percent or 5 percent

Mariners
No difference: 38 percent and 37 percent
Better off: 2 percent and five percent
Worse off: 57 percent and 56 percent
Did not know or say it would make a difference: 3 percent and 2 percent

Seahawks
No difference: 36 percent and 43 percent
Better off: 4 percent and 7 percent
Worse off: 57 percent and 49 percent
Did not know or say it would make a difference: 3 percent and 1 percent.

Webb concluded at 3:43 p.m.

In re-direct, Seattle attorney Jeffrey Johnson said Jay's survey was wide in scope, but Jay disagreed. He said Jay did not ask people if they 'cared' about the Sonics, but Jay said her survey reflects how much they cared about the teams.


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June 19, 2008 3:25 PM

Can it be? Did someone just say the Sonics didn't trade away their best players?

Posted by Percy Allen


Seattle attorney Jeffrey Johnson began his cross-examination just before the afternoon break.

Before the recess, Johnson asked Mitchell Ziets, president of MZ Sports, a financial advice firm, why he didn't include the Montreal Expos as a lame-duck team in his report. Earlier, Sonics attorneys submitted a report in which Ziets studied 11 lame-duck teams. The Expos were not included, Ziets said, because the baseball team played some of its home games in Puerto Rico.

When we returned at 3 p.m., Ziets was on the stand.

Ziets said the NBA's Charlotte Hornets and NFL's Houston Oilers, as lame ducks, each suffered losses in attendance even though the teams had winning seasons.

Johnson asked if the Sonics were to have a winning record in their lame-duck seasons, then they would not fit the Ziets' model.

Johnson tried to introduce Exhibit 343, but Sonics' attorney Paul Taylor objected and Judge Marsha Pechman sustained. Johnson tried to introduce the Sonics win-loss records.

Johnson pointed out that Ziets did not factor in win-loss records with the 11 lame-duck teams he studied.

Johnson asked if the Hornets or Oilers traded away the team's best and most beloved players. Ziets said they did. Johnson asked: "And that's not the case with the Sonics." Ziets replied: "It is not."

In a study for the NBA, before owner Clay Bennett bought the Sonics, Ziets said the Sonics would reap profits over the next two years if the Sonics played in a renovated KeyArena. He said the team would have made $858,024 in 2008-09 and $657,093 in '09-10.

This testimony contradicts Bennett's claims that a renovated KeyArena is not viable.

Johnson closed his cross-examination at 3:23 p.m. Taylor asked a few questions in redirect and Ziets was excused.

Sonics' witness Deborah Jay is taking the stand.

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June 19, 2008 2:41 PM

Sonics' witness details expected financial losses

Posted by Percy Allen

MZ Sports President and CEO Mitchell Ziets said the Sonics will suffer considerable financial losses in the next two years if the team is not allowed to break its lease. MZ Sports is a financial advice firm, catering to the sports industry.

Ziets, testifying for the Sonics, says he draws that conclusion from comparing teams in similar situations. He found nine teams that were one-year lame ducks. Those teams are: Los Angeles Rams, LA Raiders, Cleveland Browns, Montreal Expos, Minnesota North Stars, Quebec Nordiques, Winnipeg Jets, Hartford Whalers and Vancouver Grizzlies.

Ziets said the NBA's Charlotte Hornets and NFL's Houston Oilers were two-year lame ducks like the Sonics. In fall 1995, the Oilers signed an agreement to relocate to Nashville. The team moved after the 1996 season and moved to Tennessee in '97.

Ziets said during the two-year lame duck period, the Oilers' ticket revenue declined 40 percent. He estimated the team had a 1994 ticket revenue of $18.1 million. He said in a normal situation (i.e. if the team hadn't announced it was moving) the Oilers should have $20 million in ticket revenue in 1996. The actual 1996 ticket revenue was $11.8 million, a 40 percent decline.

Ziets said the Charlotte Hornets began relocating to New Orleans in 2000. The team moved following the 2001-02 season. Zietz said during the Hornets' lame duck seasons, the team averaged 11,990 fans in 2000-01 and 9,546 in 2001-02. The attendance declined 42 percent.

In his calculations, Ziets said the Sonics are expected to suffer a 40-48 percent decline in tickets. He said concessions follow tickets. He predicted a 30 percent decline in sponsorship revenue and a 50 percent decline in suite revenue. That's a $14 million to $16 million decline in those categories, Ziets said.

Ziets projected the total losses during the lame-duck years between $60.9 million to $64.9 million.

Sonics attorney Paul Taylor closed his questioning and Seattle attorney Jeffrey Johnson began cross-examination.


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June 19, 2008 2:14 PM

One more economist leaves the stand

Posted by Percy Allen

During redirect from Sonics attorney Paul Taylor, economist Brad Humphreys explained the difference between gross economic impact and net economic impact. He said gross economic impact takes into account the total cash flow.

In re-cross examination, Seattle attorney Paul Lawrence asked if Seattle is 18 percent of the population of the Seattle Metropolitan Statistical area. Humphreys agreed.

Humphreys is excused stand and MZ Sports President and CEO Mitchell Ziets takes the stand.

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June 19, 2008 2:03 PM

Just how much do the Sonics matter to the local economy?

Posted by Percy Allen

We're back from lunch. Before intermission, Seattle attorney Paul Lawrence asked economist Brad Humphreys to clarify his area of expertise. Earlier, Humphreys said there be no impact on the economy if the Sonics left town. He said if fans didn't spend their money on the Sonics, then they would spend it on something else.

Lawrence made sure to point out that Humphreys' studies were about metropolitan areas and not specifically cities or towns.

Lawrence presented Humphreys' deposition in which the economist agreed when asked that the gross economic benefit to the KeyArena area would be lost if the Sonics left.

Lawrence is trying to distinguish between a smaller area such as the KeyArena area and the city as opposed to the much larger Seattle metropolitan area. Seattle has a population of 582,454, it was pointed out, and the population of the Seattle Metropolitan Statistical Area, which includes King, Pierce and Snohomish counties, is 3,263,497.

Lawrence is continuing to make the point that fans who do not buy Sonics tickets may spend their money in Bellevue or Tacoma -- not Seattle -- if the team leaves. Humphreys agreed.

After several minutes of verbal sparring, Lawrence finally got Humphreys to admit that he doesn't know if Seattle would suffer a loss if the Sonics were to leave because he hasn't specifically studied cities.

Humphreys agreed that there are intangible benefits to having a sport team, which include community spirit and local pride. In his deposition, Humphreys said it is "difficult, but not impossible" to put a dollar figure on those benefits.

Lawrence noted that the Sonics are spending $3.5 million on attorney fees.

A point of clarification to an earlier post: I was told by someone inside the courtroom that the verbal spat between Sonics attorney Brad Keller and Lawrence, was started by Seattle attorney Jeffrey Johnson and not Keller as was reported.

The sparring took place just before the second morning session began.

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June 19, 2008 1:32 PM

City tells how much it spent on witness who got clobbered

Posted by Jim Brunner

Seattle paid $17,753 for the expert testimony of Andrew Zimbalist, the Smith College economics professor whose credibility was ripped by a Sonics attorney on the witness stand Tuesday.

According to figures released today by Seattle City Attorney Tom Carr's office, that amount included a basic fee of $10,000, plus other charges for time and expenses.

Zimbalist is a renowned expert on sports economics who testified on Tuesday that the presence of the Sonics in Seattle creates intangible benefits such as -- civic pride and water-cooler chatter associated with the team -- that cannot be calculated in terms of a cash payment.

Zimbalist prepared a 21-page report for the city stating his conclusions, on which he estimated working 20 hours or so.

But he was savaged on the witness stand Tuesday by Sonics' attorney Paul Taylor, who pointed out that Zimbalist copied sections of his report for Seattle from a report he'd done two years ago for Anaheim.

Zimbalist responded that those sections were largely background discussions of economics, but grew flustered under the brutal questioning.

Even worse for the city's case, Zimbalist was able to arrive at a dollar figure of more than $7 million for some of the intangible benefits brought by the Angels baseball team. But in his report for Seattle he said he couldn't arrive at a dollar figure.

Zimbalist tried to explain that he'd been talking about somewhat different questions in the two cities, but Judge Marsha Pechman wouldn't hear it.

"Do I understand that you came up with a number in Los Angeles on page N that would be 7.75 million, but you are unable to come that up with a number in Seattle?" Pechman asked.

"Yes. And as I explained..." Zimbalist started to say.

"Thank you. You've answered my question," Pechman said.

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June 19, 2008 12:06 PM

Seattle attorney goes after expertise of Sonics economist

Posted by Percy Allen

Seattle attorney Paul Lawrence had just a few minutes to begin his cross-examination before Judge Marsha Pechman interrupted his questioning and recessed for a 90-minute lunch.

Before the break, Lawrence made a minor point to get economist Brad Humphreys to clarify something he said in his testimony. Humphreys misspoke when answering questions from Sonics attorney Paul Taylor. Instead of referring to cities or towns, Humphreys should have said, "I have not studied cities or towns."

Humphreys' expertise is in metropolitan statistical areas. It's a small point, but it appears that Lawrence is going to elaborate further and force Humphreys into a contradiction.

The trial will resume at 1:30 p.m.

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June 19, 2008 11:58 AM

Battle of the economists

Posted by Percy Allen

At this point in the trial, we have the battle of the economists.

The Sonics began their case with Associate Professor Brad Humphreys who teaches at the University of Alberta in Canada.

Humphreys is refuting earlier claims by economists Lon Hatamiya and Andrew Zimbalist who were called by the city. Humphreys said his theories are widely accepted by other economists.

When Sonics attorney Paul Taylor asked if the departure of a professional franchise would have an impact on that city or its economy, Humphreys said: "It won't have an impact on Seattle's economy. It will only re-distribute spending."

Taylor asked what happens to the money spent on the Sonics.

"It will be spent somewhere else in the Seattle area," Humphreys said. "They won't be going to KeyArena. They wont be going to games ... they'll spend it on some other alternative activity."

Taylor concluded his questioning and Seattle attorney Paul Lawrence began cross-examination.

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June 19, 2008 11:48 AM

Judge rejects city's effort to play McClendon video

Posted by Jim Brunner

Seattle attorney Paul Lawrence tried to introduce co-owner Aubrey McClendon's deposition as evidence, however, Judge Marsha Pechman said she's read the deposition. Lawrence argued the importance of watching the video clip to see McClendon's reaction to questions, and to see his body language.

Pechman said she'll review the video on her own time and advised counselors the best use of their 15 hours of testimony is to use it on questioning witnesses.

The city rests its case.

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June 19, 2008 11:20 AM

City again brings up Sonics' role in helping children

Posted by Jim Brunner

Matthew Wade, the Sonics' former community relations manager, is testifying about the large number of community appearances that Sonics players do.

Greg Narver, the city's attorney, led Wade through the visits by players to schools and children's charities like the Ronald McDonald House.

Wade said kids love to see the giant athletes. Former team star Gary Payton, in particular, was always a huge hit who "went beyond" the NBA requirements.

"Gary walks into a room and he has the cure for whatever that little child is ailing from," Wade said.

This is part of the city's case that the departure of the Sonics would have impacts on the community that can't be measured in dollars.

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June 19, 2008 10:31 AM

Alexie, ever the writer: "I want two more years of the Greek gods"

Posted by Percy Allen

Author Sherman Alexie said his love for basketball began when he grew up in Eastern Washington. He told colorful stories of playing the game with his father as a child.

Alexie is very long winded and takes a minute or two to answer each question. Sonics attorney Brad Keller asked Judge Marsha Pechman if Alexie could shorten his responses and Seattle attorney Michelle Jensen acknowledged she'll try to speed up his responses.

Alexie, a Native American, said Sonics crowds are racially mixed and enjoys the diversity at the games. He said he's an enthusiastic fan and compared NBA players to Greek mythology. He said LeBron James could be Hercules to future generations.

When asked if he would attend other basketball games if the Sonics left, Alexie said: "That's like telling Seattle they only get to have me as a writer and not Shakespeare. The Sonics would beat the Huskies by 70 points. The Sonics would beat the best high school team by 150 points and I want to see the very best."

Jensen asked: "Why do we need the Sonics to stay here?" Alexie said because it's a diverse sport. He also said it's the sport or poverty. He noted that several players rise from positions of poverty, including Jerry West, a poor West Virginian. He also said seven players in the NBA hail from Seattle.

Alexie characterized a 2005 playoff game in which former Sonics missed a potentially game-winning shot as "stuck in that moment between the mystic and the real."

Alexie said last August the team changed the annual seat relocation party. The party used to be a big event, but Alexie said this year it "was incredibly rude" this year.

Alexie said he hasn't been allowed to renew his season tickets. Jensen introduced Exhibit 336, a letter from the Sonics to season-ticket holders stating the team is not taking renewals until the trial concludes. Alexie said he felt the Sonics weren't interested in selling tickets and operated as if the team were leaving.

Jensen introduced Exhibit 337, a letter from the Sonics to season-ticket holders that told fans the NBA approved the move to Oklahoma City, and the team would contact fans on their account after the trial ends.

Jensen asked if the team leaves why will you renew?

Alexie said: "They've been here 41 years. I've been a season-ticket holder 12 years. I love this team. ... if they leave, the fellows have not been given the proper way to say goodbye. I 'm hoping in those two years if they do leave, the season-ticket holders, the fans , the city and team will have a chance to celebrate each other.

"I want two more years of the Greek gods."

Jensen closes and Keller begins cross-examination. Shortly into his questioning, Pechman broke for a 15-minute recess.

The trial will resume at 10:45 a.m.


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June 19, 2008 9:59 AM

How much do the Sonics help the local economy? Also, Alexie up next

Posted by Percy Allen

To begin his cross-examination, Sonics attorney Paul Taylor challenged economist Lon Hatamiya's claim that if fans don't buy Sonics tickets, then they're likely not to spend those entertainment dollars on other things.

Taylor introduced into evidence an article from a noted economist that refutes Hatamiya's theory. The article says consumers would spend their money on other choices.

Taylor also presented a document prepared by Seattle City Council staff that said sports teams have no impact on local economies. Hatamiya said he was not aware of that report.

The exchange between Taylor and Hatamiya is becoming testy. Hatamiya said Taylor is making assumptions that Hatamiya doesn't agree with. Taylor also has had difficulty introducing evidence because some documents were out of order or the defense was not given a copy.

Taylor says he is having great difficulty believing the Sonics generate $187 million annually. He said that calculation means the team generated a little under $1 billion in the last five years, which is "a very big number." Taylor said the Sonics are a relatively small company and not the size of a company such as Macy's.

Hatamiya testified in the Anaheim Angels trial in 2005, the same case sports economist Andrew Zimbalist. Taylor skewered Zimbalist on Tuesday and is trying to punch holes in Hatamiya's testimony in that case, however, he switched the line of questioning after a few minutes.

Taylor asked if he studied the spending pattern of a professional basketball team and where the money goes. Hatamiya replied: "Only in this instance."

Taylor abruptly closes and Johnson began redirect.

Before leaving the stand, Judge Marsha Pechman asked: "Using your model, does it work no matter what the business is. Does it work for Wal-Mart or Boeing? ... There is nothing unique about the type of business?"

Hatamiya said no.

Author Sherman Alexie is next to testify.



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June 19, 2008 9:24 AM

By the numbers

Posted by Percy Allen

Economist Lon Hatamiya said the total aggregate economic impact of the Sonics on the Seattle-metro area was an average of $187,842,290 per year from 2003 to 2007.

Seattle attorney Jeffrey Johnson presented this chart created by Hatamiya:
2003: $183,290,083
2004: $193, 694,463
2005: $189,960,778
2006: $184,044,664
2007: $188,221,460
Average: $187,842, 290

Using an economic multiplier, Hatamiya said the Sonics support 1,200-1,300 full- and part-time jobs annually. The multiplier is a difficult concept. Johnson gave the example that if someone where to spend a dollar in a store, then that dollar is given to someone else to spend and so on and so on.

Hatamiya said the team creates millions of additional household income. Johnson entered this chart as evidence:
2003: $25, 605,592
2004: $25, 890,767
2005: $26,290,305
2006: $25, 330,701
2007: $25,994,647

Hatamiya said that if the Sonics were to leave, the benefits of the economic impact would also leave.

Johnson concluded his questioning at 9:20 a.m. and Sonics attorney Paul Taylor began his cross-examination. On Tuesday, Taylor engaged in a heated exchange with sports economist Andrew Zimbalist and seemed to discredit the city's witness.

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June 19, 2008 9:09 AM

Sherman Alexie causes a celebrity stir; Bennett's sticking around

Posted by Percy Allen

We're back it again.

Before the Day 4 of the six-day trial resumed at 9:02 a.m., the buzz on the federal courthouse steps was about author Sherman Alexie, who drew a small crowd of photographers and TV camera crews when he entered the building.

And here's a slight surprise, Sonics owner Clay Bennett is here today even though he won't testify any more. There was a thought he'd return to Oklahoma, but it's likely he'll sit at the defendant's table for the remainder of the trial.

Today will begin with economist Lon Hatamiya on the witness stand being questioned by Seattle attorney Jeffrey Johnson. Hatamiya said Wednesday the Sonics "make a positive contribution to the community." He's expected to attach a dollar figure to that contribution of $188 million annually.

The witness schedule includes: Sonics season-ticket holder Alexie, submission of a videotaped deposition from co-owner Aubrey McClendon; and former Sonics employee Matthew Wade, who is expected to be the final witness for the city.

The Sonics will begin their case with Brad Humphreys and Deborah Jay.

Judge Marsha Pechman said the city has a little less than seven hours of testimony remaining and the Sonics a little more than eight hours. Each side receives 15 hours.

Pechman also said she's read McClendon's deposition.

Johnson is questioning Hatamiya.

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June 19, 2008 7:44 AM

Day 3 scorecard: Bennett's "negligible" $100 million; up today, Sherman Alexie

Posted by Jim Brunner


KEY WITNESS: Clay Bennett finished up his time on the witness stand Wednesday. City attorney Paul Lawrence again sought to discredit Bennett's contribution to that $500 million arena he'd proposed in Renton. While Bennett said publicly that owners would kick in $100 million for the project, he privately described the contribution as "negligible." How could $100 million be negligible? Because, as Bennett said in e-mails, the owners' money would not come out of their pockets, but from advertising or ticket surcharges in the new arena. One e-mail even suggested Bennett's group would get "credit" against that amount for their ongoing operating losses. By contrast, Seahawks owner Paul Allen contributed $130 million up front to build Qwest Field.

ADVERTISERS BAIL: Sonics CEO Danny Barth testified that, not surprisingly, potential advertisers at KeyArena are spooked and not signing new deals. With $4.3 million in sponsorship business up for renewal, two large sponsors worth $1.1 million of that have said they won't come back, Barth said. "The main reason was they didn't want to be associated with all the turmoil that is going on, and they also indicated, one of them, that there was what they called 'arena fatigue,' that this has been going on for so long and it was time to get out."

OBJECTION SCORECARD: Advantage Sonics. Judge Marsha Pechman continues to be more impressed with the objections by Sonics' lawyers than those of the city. Brad Keller, the smooth-talking, silver-haired lead attorney for the team, even blocked the city from bringing up the "Save our Sonics" chants at the final game of the season. In one case, Pechman sustained an objection by city attorney Jeffrey Johnson, but she also told him he'd objected on the wrong legal grounds.

UP TODAY: Seattle will call economist Lon Hatimaya, who says the Sonics contribute about $188 million a year to the local economy. Author and avid Sonics fan Sherman Alexie is also expected to testify.


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June 18, 2008 5:28 PM

Lawrence: The lease says what it says

Posted by Percy Allen

After court adjourned, the city's lead attorney, Paul Lawrence, met with the media.

Lawrence: So what would you like to know today?

Question: How do you think it went?

Lawrence: It's a good day. We thought we got some more points with Mr. (Clay) Bennett and I think we made a good showing in terms of the community and civic contribution of the Sonics to the community. It started off with Mr. (Lon) Hatamiya whose going to talk about the economic activity that's generated with having the Sonics in the community.

Q: Talk about why he's so important to your case?

Lawrence: No one witness is that particularly more important to the other. Part of what we want to get across is there is a lot of activity that's generated by the Sonics that's beyond simply the economics of paying rent or paying taxes or paying admissions taxes. They generate a lot of game day revenue with people buying merchandise and that generates activity by going to restaurants, going to bars, staying overnight at hotels. All that type of activity. Jobs associated with the Sonics and spending associated with those jobs. All of those types of economic activity contribute to the Sonics community.

Q: What do you think the e-mails show in your case?

Lawrence: We're trying to make several points with Mr. Bennett, and the judge will decide whether we made those points. We talked about a lot in the court, and talked about today some more and also with Danny Barth is really just about everything that Mr. Bennett, Mr. Barth and the Sonics are complaining about are things or issues that were existing when they signed on to the lease. The lease says what it says. It provides for them playing their home games and it also provides for the revenue sharing. It provides for certain control by the city as the owner of a building with respect to how the building looks. And those were all issues that were in the lease at the time that Mr. Bennett signed it and there shouldn't be excuses to try and leave a year later.

There's also questions to what Mr. Bennett was really trying to achieve over the past year in terms of activity with the Washington state Legislature, and what his goal was and I think we presented evidence that at least demonstrated he had a very significant focus on meeting a good faith best effort commitment in order to show the NBA that he met their requirement as a prerequisite to filing for relocation.

Q: So you're saying that it was only show?

Lawrence: If he wants to find an arena here in Seattle, you have to ask yourself the question what's the best way to do that? What type of plan is most likely to get the support of Legislature. His own people were telling -- as well as the legislative leaders were telling him -- "Look, it's got to be a plan where there is a specific commitment from the team as to how much they're going to contribute. There's got to be a plan in which the team is going to cover cost overruns because you're the ones who are asking us to build this facility."

Again the timing, whether or not it's likely to pass the Washington state Legislature to put a $500 million tax proposal in play in March in a short legislative session. These are all questions that were raised by his actions, and as I said, the judge will look at that set of e-mails and actions and come to her conclusions.

Q: If there's a ruling that a cash payment is an adequate buyout of the lease when will that be determined?

Lawrence: This was the effort that the Sonics tried to do when they tried to amend the complaint. She rejected that so there would be a separate trial on that issue.

Q: Trial by jury?

Lawrence: It's our belief that at that point it's a breach of contract damage claim so we would be entitled to a jury. I don't want to get too legal. The remedy of specific performance, even though it's in the contract, is something that the judge decides. But the measure of monetary damage is something that typically a jury decides. So it's the position of the city that we'll never get there, but if we do get there we would ask for a jury.

Q: Happy on where you are?

Lawrence: Absolutely. As I said yesterday, we're making the points that we want to make and we felt we had another good day further making the points and rebutting the evidence that Mr. Keller tried to draw out with Mr. Bennett this morning.

Q: What about Judge Pechman's apparent irritation about the lack of evidence being ready, mostly by your side, and her ruling mostly against your objections and in favor of the Sonics' objections.

Lawrence: I don't see it that way. We provided Judge Pechman with notebooks to be responsive and she wanted a list, and we just had a miscommunication about that. We gave her a notebook that had all the exhibits in it and she made it clear to us today that she preferred to just have a list and she'll put together her own notebook.

Q: What was your take on the rather bleak outlook on a lame-duck season as pointed out by the Sonics. Was that relevant?

Lawrence: I don't think that it's particularly relevant because the things that they're complaining about are pre-existent to Mr. Bennett signing the lease. Furthermore, the lame-duck status is a function of their decision to announce they're moving to Oklahoma City three years early. I think there's evidence if you look at the Sonics' performance and listen to what (former Seattle Center Director) Virginia Anderson said, that really the key to whether the team will make money next year regardless of whether they're in Seattle or Oklahoma City is how well the team does. If the team has a turnaround like the Boston Celtics going from 20-some odd wins to the NBA championship, I assure you they're going to make money no matter where they are.

Q: They can make money on this current lease?

Lawrence: Sure, and that was the point that Virginia Anderson made the other day. When the team goes to the playoffs and have a great playoff run, they make money. There's a very direct relationship between attendance and wins. Between wins and Nielsen ratings. The Boston Celtics is an easy number to play with. The Sonics, were two years ago a 1.62 rating. The Celtics were 1.6 rating. The Sonics went down, their rating went down. The Celtics had a great season and they are over three this season. Performance means a lot on a lot of different revenue basis for a team.

Q: Aubrey McClendon e-mail?

Lawrence: My job is just to present the facts as we see them and let the judge make her conclusions in that regard.

Q: Why did you take McClendon off the list?

Lawrence: I didn't take McClendon off the list. Because he is a resident of Oklahoma City and not an operating officer of the club we do not have the right to call him so we are left to presenting his testimony based on the deposition we took in Oklahoma City. It was PBC that determined not to bring him to Seattle to testify.

Q: You'll show the (McClendon) video at some point?

Lawrence: I probably forget to mention that, we still are considering doing that. We will be submitting to the Court much more extensive portions of his depositions. We may show part of his deposition in court.

Q: You told the judge you are paring down your case. How much and how significant is that?

Lawrence: For example, one of our experts was focused on the Sonics operations over the years leading up to the signing by Bennett and the years after. He thinks, through Mr. Bennett, we've been able to get out the fact that Mr. Bennett understood the degree of losses that the Sonics were facing in the years leading up to when he purchased the team, so that expert became unnecessary.

Q: Were you aware that the Sonics were not selling tickets?

Lawrence: That was something we were aware of. You wonder why they ask that question, when the answer is simply is no one calling because you're not selling. Why would anyone call to buy when you announced you're moving. Why would anyone be buying sponsorships next year in Seattle when you announced you're desire to go to Oklahoma City. I didn't get what the point of that testimony was.

Q: Any witness you're cutting because of time constraints.

Lawrence: No. If there's anything we think is important we'll put that witness on. We had 10 hours of our 15 hours left as of this morning. I think we're doing just fine. Mr. Meneberg, the expert, points that he was going to make, had been made using fact witnesses, which is always preferable.

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June 18, 2008 4:11 PM

Sherman Alexie will testify Thursday

Posted by Percy Allen

Economist Lon Hatamiya took the witness stand with just six minutes remaining before the trial was scheduled to end Wednesday.

Seattle attorney Jeffrey Johnson had just enough time to examine Hatamiya's background and resume. Hatamiya earned his undergraduate degree from Harvard and a master's in business administration from UCLA.

Using an input/output model, Hatamiya said: "The Sonics make a very positive contribution to the local economy."

At 4:01 p.m., Judge Marsha Pechman excused Hatamiya and asked both attorneys about Thursday's witnesses.

Seattle attorney Paul Lawrence said he's calling author Sherman Alexie in the morning and former Sonics employee Matthew Wade. Lawrence will likely close his case after Wade's testimony.

Sonics attorney Brad Keller said the plaintiffs will call Brad Humphries, Deborah Jay, possibly an employee from MZ Sports, Seattle developer Matt Griffin, former Sonics president Wally Walker and city councilmember Nick Licata.




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June 18, 2008 3:52 PM

Sonics aren't selling tickets for next season

Posted by Percy Allen

During redirect from Seattle attorney Jeffrey Johnson, Sonics interim CEO Danny Barth said the team is not selling tickets for next season.

Johnson gave several examples of disputes between the Sonics and the city that have been resolved without lawsuits.

Johnson examined Exhibit 505, television ratings on FSN. He pointed out that the 1.24 rating occurred during the Sonics' worst season in franchise history.

Johnson examined Exhibit 508, the no-show rate. He asked if Barth compared the figures against the NBA average or double checked to make sure the figures were accurate. Barth said no.

Johnson examined Exhibit 504, which detailed Sonics payments to the city. He pointed out the lease was intended to give more money to the Sonics over time. For instance, suite sales splits were originally 80-20 in favor of the city, but now they are 60-40 for the city. Barth agreed.

Johnson examined Exhibit 596, Barth's projection of the Sonics' lease payments to the city for the next two years. Barth said he normally uses one-year projections, but in this case he used a two-year projection based on MZ Sports analysis.

Johnson introduced evidence in which a Goldman Sachs analysis predicted the Sonics would only lose $3.7 million in 2009 and $1.9 million in 2010.

Barth said in 2004-05, the Sonics made more money than expected because the team had an unexpectedly "good" season and made the playoffs. Barth said the team sold more season tickets than expected following the 2005 playoff run that ended in the conference semifinals.

At 3:48 p.m., Johnson concluded his questioning and Seattle attorney Brad Keller began re-cross.

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June 18, 2008 3:19 PM

Sonics' lease payment projection is disputed

Posted by Percy Allen

Sonics attorney Brad Keller tried to introduce Exhibit 595, but Seattle attorney Jeffrey Johnson objected. Judge Marsha Pechman allowed Johnson to redirect before Keller could continue.

The attorneys disputed projections made by interim Sonics CEO Danny Barth used to quantify the team's lease payments to the city based on a calculation from MZ Sports, a financial advising company.

Pechman allowed a part of Barth's projection to be discussed and said the Sonics attorneys can discuss the other part after they call an analyst from MZ Sports later in the week.

In his analysis, Barth determined the city is due $9.2M in lease payments over the next two years.

Keller introduced Exhibit 514, talking points prepared by the Sonics for a Sept. 29, 2004 meeting with city officials. The memo states: KeyArena is "the worst lease in the NBA."

It also said: "Current Sonics ownership must consider sale of the franchise under these conditions and the real possibility that the team will move to a more modern facility [possibly outiside the City or even the region] with lease terms comparable to other teams."

Keller concluded his questions and Johnson began redirect.


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June 18, 2008 2:50 PM

Surprise! Sonics are having a hard time selling tickets

Posted by Percy Allen

During re-direct from Sonics attorney Brad Keller, interim CEO Danny Barth said the Sonics have had "some significant challenges in the ticket sales area."

"Fan apathy and our brand recognition has been very difficult," he said. "Ticket sales we've had indicate that there is no interest. After the [NBA] Board of Governors voted to relocate to Oklahoma City we received no phone calls."

Barth said after the Sonics received the No. 4 pick in the draft, the team didn't field any calls from fans looking to buy tickets.

"It's normally a large event," Barth said. "We received phone calls when we [drafted] Mouhamed Sene. Some negative and some positive. ... This time nothing."

When asked to explain the apathy, Barth said: "Individuals have a problem with our ownership group and some of them being from Oklahoma."

Keller asked Barth what he predicted business in Seattle would be if the team is forced to stay.

"There's another indicator that we look at, it's called no-show rate," Barth said. "Individuals who pay for tickets and don't show up. That number is 28 percent. ... I anticipate our ticket sales will be significantly down."

Barth said 23 of the team's 125 employees have left in the past six months. Recently, a high level executive left the company.

Barth said he expects more employees to leave and said it would be difficult to replace them during a "lame-duck" period. He said keeping up morale has been difficult.

Barth said the city determines the price and the contract of the KeyArena suites. He said in one instance a potential suite buyer wanted a three-year contract that included an out-clause if the team left, but the city declined to provide the provision.

Keller introduced Exhibit 509, which detailed the KeyArena suite sales. Barth said only 5 1/2 of KeyArena's 48 suites are sold for next season. Last season, the team sold 19 1/2 suites and 24 1/2 suites in the 2006-07 season.

Keller introduced Exhibit 507, season-ticket holder attrition rate from the 2002-03 season. Back then there were 190 club seats ticket holders out of 1,100. At the end of last season, only 72 club seat ticket holders remained.

Barth said there were 3,992 season-ticket holders last season. He said the real capacity of KeyArena is closer to 16,400 and not 17,072, which is widely regarded.

Keller introduced Exhibit 510, which was the average regular-season net gate receipts and average paid attendance between 2000 and 2008. The Sonics ranked 17th in average gate receipts in 2000-01. Last season, the team ranked 27th in both average regular-season net gate receipts and average paid attendance.

Barth said he doesn't anticipate the team will improve its net gate receipts or paid attendance and said the team could rank last in the NBA in both categories.

Keller introduced Exhibit 504 and Barth said the Sonics have paid the city more than $94 million in lease payments since 1994. Including the 2007-08 projections, the Sonics will have paid $114 million in lease payments since 1994.

Judge Marsha Pechman called for recess at 2:45 p.m.

When the trial resumes, Barth will attempt to quantify the team's payments for the next two years.

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June 18, 2008 2:01 PM

City emphasizes the importance of players' community service

Posted by Percy Allen

Continuing to emphasize the team's role in the community, Seattle attorney Jeffrey Johnson began the afternoon session by introducing a video clip of Sonics Kevin Durant and Jeff Green and former Sonic Kurt Thomas performing a dramatic reading of "The Eagles Who Thought They Were Eagles" at Burien's Sylvester Middle School during an assembly for Black History Month.

Johnson introduced a video clip of Sonics Nick Collison and former Sonic Ray Allen attending a holiday event.

Johnson submitted three pieces of evidence detailing the Sonics community activities.

Exhibit 201: The Hip To Be Fit Program is intended to get school-aged children interested in physical fitness.

Exhibit 203: Read to Achieve, the Sonics partnership with local schools to promote reading.

Exhibit 204: Sonics and Storm Foundation.

Johnson used several examples to make the point that the Sonics receive considerable media attention, and in turn, it benefits the city of Seattle.

Johnson began to ask Barth about the 2007-08 final regular-season game against the Dallas Mavericks when fans chanted "Save our Sonics," however, Sonics attorney Brad Keller objected and Judge Marsha Pechman sustained.

Johnson concluded his questioning and Keller began his cross-examination.

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June 18, 2008 1:42 PM

Save Our Sonics lawyer says city's case rebounds after rough patch

Posted by Percy Allen

The trial resumed at 1:36 p.m. with Sonics CEO Danny Barth taking questions from Seattle attorney Jeffrey Johnson.

During the break, attorney Paul Schneiderman, who gives legal advice for Save Our Sonics, said Seattle lawyer Paul Lawrence did well during his questioning of Sonics owner Clay Bennett.

Schneiderman did not attend the first two days of the trial, but acknowledged the city likely recovered from early stumbles.

"Trials are like sports in the sense that a good player can make a bad pass, but the final result is the end of the game," Schneiderman said. "Pitchers in a nine-inning game can have a bad inning or two, but they can still get a win."

When asked if the "bad inning" analogy was a reference to the testimony given by Mayor Greg Nickels and sports economist Andrew Zimbalist, Schneiderman said: "I didn't see them, but I heard they weren't as good as they could have been."

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June 18, 2008 12:08 PM

Seattle attorney brings up Sonics' community service

Posted by Percy Allen

Shortly into the testimony from Danny Barth, Sonics interim president and CEO, Judge Marsha Pechman interrupted the proceedings for lunch.

Before the break, Seattle attorney Jeffrey Johnson introduced Exhibit 59, which provided details about the team's 622 hours of community service. The report mentions that former Sonics Ray Allen and Rashard Lewis spent $5,000 to buy jerseys for the Cleveland High boys basketball team and that Chris Wilcox gave away 540 turkey to needy families.

Johnson submitted letters from the Boys and Girls Club and the Ronald McDonald House to Sonics Director of Community Relations Rick DuPree that thanked the team for the contributions.

The trial will resume at 1:30 p.m.

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June 18, 2008 11:54 AM

Bennett testimony ends; Sonics CEO up now

Posted by Percy Allen

After a 12-minute cross-examination from Sonics attorney Brad Keller, owner Clay Bennett endured more questions from Seattle attorney Paul Lawrence.

It was the third time Lawrence questioned Bennett.

At 11:49 a.m., Bennett was excused from the witness stand after about six hours of testimony.

Sonics interim CEO Danny Barth is on the stand and being questioned by Seattle attorney Jeffrey Johnson.

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June 18, 2008 11:44 AM

Bennett defends good-faith efforts

Posted by Percy Allen

During the second morning session, Seattle attorney Paul Lawrence returned to the line of questioning about the 12-month "good faith best efforts" stipulation in the sales agreement.

Lawrence introduced Exhibit 265, an e-mail between Icon consultant Tim Romani and Sonics co-owner Clay Bennett in December 2006. In the e-mail, Bennett said he would need a significant public investment to receive a reasonable economic return.

"In doing the work we had done ... have we met our obligations of good faith best effort? Legal question," Bennett wrote. Romani advised Bennett to invest just $10 million toward a new arena project.

Lawrence used this evidence to hammer home the point that Bennett was unwilling to make a significant investment in the $500 million Renton arena. But Bennett repeated: "We made a $100 million commitment."

Lawrence admitted Exhibit 324, e-mails on Nov. 9, 2006 between Bennett and spokesman Brent Gooden. Gooden asked: "The question of the hour is what constitutes a good-faith effort?"

Lawrence introduced Exhibit 253, which is another Gooden e-mail to the ownership group and Sonics lawyers. Gooden wrote about "the strategy to lay the groundwork to explore several options including relocation. We have worked with our legal and PR team to formulate this strategy and craft the right messages."

Lawrence admitted Exhibit 139, which was an August 2007 e-mail from co-owner Aubrey McClendon to Bennett referring to a story in an Oklahoma City business newspaper. McClendon wrote: "Clay, oh no I just read this have I created problems for you. The truth is we did buy it with hope of moving to OKC, but we did first have an obligation to Seattle to negotiate in good faith, which of course you have done. Does the team need to put out a clarifying press statement."

Exhibit 138, Bennett's e-mail response: "... we get killed on this one. I don't mind the PR ugliness. But I'm concerned from a legal standpoint that your statement could perhaps undermine our basic premise of good faith best efforts where you infer that we basically never plan to stay in Seattle. I have the lawyers contemplating a response strategy."

Lawrence asked Bennett why he didn't say: "Aubrey why did you say that? It's not true." Bennett said he said those things to McClendon in a telephone conversation.

"But that's not represented here in your e-mails," Lawrence said.

"No it is not," Bennett replied.

Shortly after McClendon's blunder, Bennett hired a Cleveland PR firm, which constructed a 60-day media strategic plan. In an e-mail to the PR firm, Bennett wrote: "It is clear such a strategy will have little or no [or quite likely negative] effect in Seattle, but we are attempting to impact the national sports media and most important David [NBA commissioner David Stern] and the other owners."

Lawrence concluded with a series of e-mails and memos that he introduced into evidence.

Exhibit 279 is a memo from Bennett to co-owners on June 2007. Bennett wrote: "We will be playing our games in Seattle next year. While the League was willing to consider a special relocation process we could not meet their requirements before their June 1 deadline."

In the memo, Bennett shot down the Muckelshoot Tribe plan and nixed an arena deal involving developer Dave Sabey.

In the memo, Bennett said he was working with lawyers to consider a renovation of KeyArena, however, Lawrence asserted the Sonics owner never considered KeyArena to be a viable solution. Bennett agreed.

Exhibit 263: an e-mail between Bennett and political consultant Jim Kneeland on Nov. 10, 2006. "Please stay Way Away from talking about our investment in the building."

Exhibit 90: an e-mail in February 2007 from Kneeland to Bennett. Kneeland wrote: "The original plan was to have a site and financing plan ready for the opening day of the Legislative in January. We are now into February and people are still waiting for us to name the site and outline the financing package."

The purpose of the evidence was intended to show Bennett was slow to develop the Renton arena plan and he was unwilling to make a meaningful investment in the project.

Sonics attorney Brad Keller has began questioning Bennett again.


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June 18, 2008 10:34 AM

City's attorney questions Bennett

Posted by Percy Allen

During redirect from Seattle attorney Paul Lawrence, Sonics owner Clay Bennett said no free agents have refused to sign with the team because the team is moving to Oklahoma City.

Lawrence introduced Exhibit 272, which is an e-mail from February 2007 from Bennett to Microsoft CEO Steve Ballmer. In the e-mail, Bennett wrote: "A contribution from the team nominal and should include development costs and some portion of ongoing operating losses as credit for this piece."

Still, Bennett maintained that his group was committed to pay $100 million toward the $500 million Renton arena project. Lawrence tried to pin him down and reminded Bennett that he did not make state lawmakers or Gov. Christine Gregoire aware of his $100 million contribution.

Bennett conceded the point.

Lawrence introduced two e-mails between Bennett and former Renton Mayor Kathy Koelker in April 2007 in which Bennett backed away from the $500 million arena plans. In one e-mail, Bennett wrote: "I wouldn't get to too far out on this. Lots to discuss but cost overruns is a non-starter."

In the other e-mail, Bennett wrote: "Sorry Kathy, this is just nothing we can consider."

Lawrence said Bennett's e-mails to Koelker were a week after his famous "man possessed" e-mail.

"So the man possessed to keep his team in Seattle shoots down an arena plan because of cost overruns, is that correct?" Lawrence asked.

Lawrence said Bennett's consultants stopped looking for a successor arena six months into a 12-month, good faith best effort period. Bennett agreed.

Lawrence asked if Bennett could have built an arena without public help and Bennett said: "That would not have been viable."

Bennett said Ford Center cost $89 million to build and is four or five years old. Oklahoma City will spend $120 million the next two years to renovate the building. Construction has not started.

Lawrence introduced Exhibit 69, which is an e-mail from former Bennett partner Ed Evans to Bennett and his spokesman, Brent Gooden. In the e-mail, Evans said a conversation with Deputy Mayor Tim Ceis shortly after Bennett bought the Sonics "went amazingly well." He also wrote: "What they [the city] had offered was a starting point."

This evidence was used to contradict Bennett's claim that he had no interest in renovating KeyArena.

Bennett said he had a "good faith best effort" obligation with former Sonics owner Howard Schultz and the NBA.

Lawrence introduced Exhibit 81, which is a letter dated Nov. 1, 2006 from the NBA that confirms the approval of the sale.

Lawrence noted that it's 10:30 a.m. and a good time for a recess. Judge Marsha Pechman agreed.

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June 18, 2008 9:49 AM

Bennett: "We bought this team with grand visions of success"

Posted by Percy Allen

Sonics owner Clay Bennett testified he had "little hope" in April 2007 after the team's bid to gain taxpayer funding for a $500 million Renton arena failed in Olympia.

"We were concerned about next steps," Bennett said. "This was clearly an impasse."

"But were you were still trying?" Sonics attorney Brad Keller asked.

Bennett: "Absolutely."

Bennett said following the defeat in Olympia, he began formulating plans to move the team to his hometown of Oklahoma City and terminate the Sonics' KeyArena lease.

Sonics executive Terry McLaughlin, a former city employee, initially approached the city and met with Deputy Mayor Tim Ceis to discuss breaking the lease. Bennett said he spoke with Oklahoma City about available dates in 2008-09 at the Ford Center before dispatching McLaughlin to meet with Ceis.

Bennett, 48, and married with three children, has been involved in sports activities for nearly half of his adult life, he said. He also helped the New Orleans Hornets temporarily relocate to Oklahoma City.

Bennett said he has tried to move the Sonics because "We were out of options in this region. No facility. No prospects for a facility. We had become acrimonious with leadership. ... Good faith best effort, we performed on that clause. ... Ultimately we made the decision to relocate because of the response of the NBA in Oklahoma City."

City attorney Paul Lawrence objected to the line of questioning because he had not been allowed to delve into the Oklahoma City prospects on Tuesday. Pechman upheld the objection.

Despite the objection, Keller was still able to discuss the Sonics' potential in Oklahoma City.

"Studies indicate and projections indicate a $7 million profit in Year 1 and a $10 million profit in Year 2," Bennett said. "The central driver is the building."

Bennett said the difference between a potential $60 million loss at KeyArena over the next two years and a possible $15 profit at the Ford Center is directly tied to the difference in the buildings. He said the Ford Center's courtside suites are a new high-end revenue stream unavailable at KeyArena.

Amenities include higher level concessions, a competitive lease that gives most of the revenue generated by the building to the Sonics and the support of the community. The Hornets had sellout crowds, Bennett said.

Bennett said he anticipates operating challenges if he's forced to stay in Seattle.

"We're in a highly competitive business ... and each team seeks the best talent," Bennett said. "Notwithstanding our good fortune in the draft and we know we're going to attract fine players next week (in the NBA draft).

"Players can choose where they want to play, and we are in uncertainty and that is a very difficult element in developing a team. Players want to know where they are going to play. They want to know where they're families are going to be. ... The team is their second home and their life.

"It would be certain for two years, but players would say, 'I don't want to move for two years or one year and I'm going to put Seattle off the table' ... and we might be out of the mix to compete for the high-end talent."

Added Bennett: "Employees are not sure if their jobs will exist. ... We've seen retention become an issue at the senior level."

Bennett said a senior corporate sales executive recently left the team.

Keller said Sonics CEO Danny Barth will testify today, which is a slight surprise because he is not on the court's witness schedule.

Before concluding, Keller asked: "Now that you're here, is there anything about the process that got you here that you'd like to share with us?"

Bennett said: "We bought this team with grand visions of success. Did we do everything right, did we understand everything that there was to understand? Certainly not.

"Did we do everything we could ... at all cost perspective? Yes. I believed at the bottom of my heart that we would succeed and I'm personally disappointed that we did not."

Lawrence began redirect.

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June 18, 2008 9:11 AM

Clay Bennett back on the stand; co-owner McClendon may testify later this week

Posted by Percy Allen

Day 3 of the city of Seattle v. Sonics trial began this morning with co-owner Clay Bennett returning to the witness stand. Bennett's testimony was interrupted Tuesday because sports economist Andrew Zimbalist, who had a scheduling conflict for today, was allowed to testify.

Bennett is being cross-examined by Sonics attorney Brad Keller.

Today's witness schedule includes: Todd Menenberg, Lon Hatamiya, former Sonics employee Matthew Wade, author Sherman Alexie and City Councilmember Nick Licata.

Videotaped testimony from co-owner Aubrey McClendon has been scratched and it appears he will testify later this week in the courtroom. Also Sonics CEO Danny Barth was scheduled to appear in court, but he is no longer on the witness schedule.

Judge Marsha Pechman said the city has 601 minutes (10 hours) and the Sonics have 593 minutes (9 hours, 50 minutes) remaining for testimony. Each side is given 15 hours of testimony.

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June 18, 2008 6:00 AM

Day 2 scorecard ... and more Clay today

Posted by Jim Brunner

KEY WITNESS: Sonics owner Clay Bennett was on the stand for most of the day Tuesday, repeating his claim that his "man possessed" e-mail referred to a desire to keep the team in Seattle -- even though even his co-owners apparently believed he was talking about Oklahoma City. Bennett remained calm even after Seattle lead attorney Paul Lawrence pointed out that Bennett's next actions were to call the NBA about moving to Oklahoma City and reserving dates at that city's Ford Center. One newly revealed e-mail shed light on why Bennett and his co-owners were unwilling to commit much in the way of up-front cash to their proposed $500 million Renton arena. The January 2007 e-mail by a Sonics political consultant said Bennett's group paid $350 million for the team "in a rushed auction and subsequently learned that we paid too much..." Whoops!

ECONOMIC HIT: Smith College Professor Andrew Zimbalist is regarded as one of the pioneers in the sports economics field, having written 10 books on the subject. But he looked awful during a brutal cross examination by Sonics attorney Paul Taylor on Tuesday afternoon. Taylor ripped Zimbalist's "expert" report for the city, in which large sections were virtually identical to a report he wrote two years earlier for the city of Anaheim (which was suing the Angels baseball team over its name change to the "Los Angeles Angels of Anaheim"). Taylor also pointed out a judge elsewhere had nixed Zimbalist's testimony, referring to him as a "hired gun" expert who would reach whatever conclusions his current employer demanded.

OBJECTION SCORECARD: Seattle won the first objection of the day, with attorney Greg Narver successfully fending off a Sonics' effort to introduce a consultant's report about KeyArena deficiencies. Judge Marsha Pechman agreed with Narver that the Sonics were improperly trying to sneak the report in as expert testimony. But Sonics attorney Brad Keller came out ahead later -- successfully blocking Seattle from introducing evidence of the $170 million a year in economic benefits the Sonics claimed they'd bring to Oklahoma City (while simultaneously denying they'd have any such benefits in Seattle.) Incredibly, Keller also convinced Pechman to halt Lawrence's questions to Bennett about why Sonics owners refused to put up the same level of cash for an arena similar to what Mariners and Seahawks owners had contributed to their stadiums. Pechman said she didn't understand the relevance of that.

LEAST LIKELY KEYARENA PROMOTION: Seattle attorney Paul Lawrence suggested one solution to the Sonics' financial woes if the team has to play two more years at KeyArena. All Bennett would have to do is advertise that he'd be at the game: "You know, you get a big reaction when you have Clay Bennett Day, a sellout."

UP TODAY: Clay Bennett's testimony resumes. After that, the list of possible witnesses includes author Sherman Alexie.

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June 17, 2008 4:12 PM

Sonics' lawyer spars with sports economist

Posted by Percy Allen

Smith College professor Andrew Zimbalist, a leading sports economist, said the importance of a sports team to a community is difficult to quantify because of the intangible benefits.

He said teams provide a consumer surplus to a community, offers a boost in morale and a public good, which is a synergy between people.

Zimbalist said there have been studies examining the rent of housing and apartments in urban environments that have determined the presence of an NFL team had an intangible benefit on the rent.

A study about the Pittsburgh Penguins said the NHL hockey team offered intangible benefits of $53 million to $72 million. Seattle attorney Greg Narver asked if those figures would be comparable to Seattle. Zimbalist said he couldn't apply the data to the Seattle market or the Sonics.

Zimbalist said that despite Sonics' lame-duck status, the benefits are large and too variable to quantify.

At 3:27 p.m., Sonics attorney Paul Taylor began cross examination.

During Zimbalist's videotaped deposition, he came up with his figures from scratch or from his notes, Taylor said. Taylor said that Zimbalist "lifted" large portions of his May 2, 2008 notes for the Sonics case from his Nov. 21, 2005 testimony in a trial involving the City of Anaheim and the Angels baseball team.

Taylor introduced Exhibit 602 and Exhibit 604, which were reports from the Anaheim case and the Sonics case. Taylor showed that Zimbalist copied his notes almost verbatim on several pages.

At this point, the exchange became adversarial. Taylor clearly tried to discredit Zimbalist and portray the economics professor as witness who was not credible.

Taylor: "You even lifted the footnotes on some reports, did you not?" Zimbalist agreed.

Taylor charged that Zimbalist also used a report without giving the author credit.

Taylor asked, "Is it true the city of Seattle asked you to say that there's lots of money here?"

Zimbalist admitted he had problems getting his testimony submitted in a Kentucky Speedway vs. NASCAR Association case.

The federal district court judge in that case characterized Zimbalist as a "hired gun" expert and said Zimbalist's approach "has not been tested and has not been subject to peer review and publication; there are no standards controlling it and there is no showing that it enjoys general acceptance within the scientific community."

Taylor asserted that Zimbalist said Seattle's weather has economic value and the economist agreed. The PBC attorney asked if going to church gives a community economic value and Zimbalist agreed. This line of question was an attempt to dilute Zimbalist's claim about economic value of a sports franchise.

At 4:03 p.m., Sonics and Seattle attorneys agree to extend testimony beyond the 4 o'clock deadline. It's clear now that Zimbalist is in town for the day and neither side wants him to return Wednesday. Judge Marsha Pechman grudgingly agreed to go into overtime.

Taylor concluded by saying that TV ratings for the Sonics were below 1.0 last season.

In his re-direct, Narver said Zimbalist had not met with the Seattle attorneys before this case. Narver also asserted that Zimbalist's basic economic ideas had not changed in three years and he did not have to re-write his ideas.

At 4:08 p.m., Zimbalist was excused from the stand and the trial ended for the day. It will resume at 9 a.m. Wednesday with Clay Bennett on the stand.


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June 17, 2008 3:09 PM

Economist to testify now, but Bennett may be back within the hour

Posted by Percy Allen

When the trial resumed at 3:02 p.m., Sonics chairman Clay Bennett was no longer on the witness stand.

Judge Marsha Pechman didn't explain why Bennett was no longer testifying, but it appears as if the city needs to call Smith College economics professor Andrew Zimbalist because of time constraints. Zimbalist lives in Northampton, Mass.

Bennett will likely re-appear after Zimbalist's testimony is complete.

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June 17, 2008 2:54 PM

Bennett says he's committed to putting a winner on the court

Posted by Percy Allen

Sonics chairman Clay Bennett told Sonics attorney Brad Keller that after he bought the team, he felt he could get state lawmakers to approve money for a $500 million arena. He thought his outsider status would give him leverage that the previous owners did not have because they have strong ties to Seattle.

Bennett said he turned down ownership offers ranging from $20-50 million from potential investors.

Keller admitted Exhibit 94, a summary of the funding package for the $500 million Renton arena project. The report says Bennett would pay for the gap between the funding, which would have been $100 million.

Keller showed a clip of Bennett at the state Senate Ways and Means Committee. This clip is longer than the one shown by Seattle attorney Paul Lawrence. In the clip, a state lawmaker asks Bennett what he would commit to the team. Bennett said he committed $350 million, which was the price he paid for the team. He said he's committed to putting a winner on the court and talked about recruiting former Sonics legend Lenny Wilkens as a top executive. Wilkens was released last year.

Bennett said he hired HOK architectural firm to analyze KeyArena.

Bennett said the need for NBA specified facilities -- the size of locker-room and press facilities forced him to look at a new arena rather than renovating KeyArena.

Bennett said he spoke with numerous business and civic leaders to help him gain support from state lawmakers.

Bennett said he narrowed the choices of the new arena to Bellevue and Renton. Bellevue, however, would have been very expensive and it would have been problematic to build parking facilities near an arena. Before eliminating Bellevue, Bennett met with representatives from Microsoft.

Bennett said he made two appearances in Olympia to lobby for state funding toward a new Renton arena. He said he was "getting signals that we were making progress and continued to push."

"We were getting signals that we were having trouble and that's when we began a consumer push from (Sonics) staff," Bennett said. The push was an e-mail blast from Sonics employees asking state lawmakers for their support.

Keller introduced numerous exhibits, which detailed the Sonics ownership group's attempt to lobby state lawmakers.

In an e-mail to Bennett, adviser Jim Kneeland wrote: "We are sending out blast e-mails Monday morning letting opinion leaders supporters know that this is the last week to make a difference and convince the Governor and the legislative leadership. Ryan Blethen came through with a great editorial in this morning Times."

In a Feb. 15, 2007 e-mail, Bennett wrote to Microsoft's Steve Ballmer (who this year lead a group wanting to fund a renovation of KeyArena): "Speaker Chopp blasted us this afternoon. Would appreciate anything you would be willing to do! Thanks."

Responding to Keller's question about how he felt when the Renton plan died, Bennett said: "After that I re-grouped, became a man possessed and expanded the process."

Keller introduced Exhibit 62, the sale agreement between the Professional Basketball Club (PBC) and the Basketball Club of Seattle (BCOS).

The agreement says: "For a period of 12 months after the Closing Date, Buyer shall use good faith best efforts to negotiate an arena lease, purchase use or similar arrangement in the King, Pierce or Snohomish Counties of Washington as a venue for the team's games to be used as a successor venue to KeyArena provided ... use of similar arrangement shall be at the Buyer's sole discretion."

Lawrence objected to Exhibit 62 being admitted as evidence. Pechman overruled.

At 2:47 p.m., Pechman broke for a 15-minute recess.

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June 17, 2008 1:56 PM

Bennett denies trading Ray Allen to save money

Posted by Percy Allen

The trial resumed at 1:30 p.m.

A three-year Sonics' outlook plan prepared by the consultant firm, Icon, for chairman Clay Bennett, said the team would lose $26 million in 2007-08, $40 million in '08-09 and $52 million in '09-10.

Bennett denied he traded guard Ray Allen, the team's highest paid player, last year to save money.

If the team is forced to stay in Seattle, Lawrence asked if Bennett would dramatically change how the team spent money. Bennett said no.

Lawrence asked if Bennett would still allow the mayor to see games and Bennett said: "He'll probably be able to see more of them than I'll be able to," which drew laughs from those inside the courtroom.

At 1:42 p.m., Lawrence submitted Exhibit 93, a February 2007 e-mail between Bennett spokesman Brent Gooden and members of the ownership. Bennett wrote: "While I am prepared for us to take responsibility for securing private money in order to ensure this is a true public and private partnership, I will not be committing to a dollar figure for our ownership group."

Lawrence submitted Exhibit 268, a January 2007 e-mail from political adviser Jim Kneeland. In the e-mail, Kneeland reported that Gov. Christine Gregoire said Washington taxpayers will not solve their problem by constructing an arena "with no direct participation on their part."

Lawrence submitted Exhibit 276, a January 2007 memo from Kneeland to Bennett: "We paid $350 million in a rushed auction and subsequently learned that we paid too much based on the current performance of the franchise not just on the court but especially in the overall business operation. What that means for us as owners is it limits how much we can contribute to this new building."

Lawrence asked Bennett why he felt he could get a $500 million arena built even though he was committing just $100 million. "Because you're an eternal optimist right?" Lawrence said.

"Yes," said Bennett.

"Like Mayor Nickels," Lawrence said.

"Not that optimistic," Bennett said.

Lawrence concluded at 1:51 p.m.


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June 17, 2008 12:08 PM

The "man possessed" says he never considered KeyArena

Posted by Percy Allen


Seattle attorney Paul Lawrence submitted as evidence a report from a consultant who told Bennett that KeyArena was viable. The report states: "It's not that Key is not a functional building. It is that Key can never be the entertainment venue that the entire Seattle area really deserves."

Lawrence aired a video clip of Bennett testifying before the state Senate Ways and Means Committee on Feb. 13, 2007 in which Bennett said KeyArena is viable for a few years, but is not viable long term.

At 10:56 a.m., Lawrence began asking about the benefits other cities receive from NBA teams.

Lawrence said the Sonics and Storm Foundation and its players donate more than $1 million per year to the region.

Bennett agreed there would be a loss to the Seattle region if the Sonics were to move. Bennett agreed the state would lose taxes generated from the team's payroll and from ticket buyers if the team were to move. Bennett said there are 125 Sonics employees and those jobs would be lost if the team were to move.

Bennett said there are economic benefits for the city if the Sonics were to stay.

At 11:06 a.m., Sonics attorney Brad Keller objected to Lawrence's attempt to question Bennett about how profitable the team would be in Oklahoma City. Lawrence said he plans to present evidence that the Sonics generate $180 million annually for the Seattle area. Judge Marsha Pechman questioned the relevance.

Lawrence was able to get admitted as evidence a Sonics Relocation Proposal that was presented to the Oklahoma Legislature. In the report, Bennett said the team would generate $171 million annually for Oklahoma City.

At 11:15 a.m., Lawrence asked about other NBA leases. Bennett said he knows other leases provide an early termination provision and specifically made reference to the lease he signed with Oklahoma City.

Lawrence asked about the efforts to find a successor venue to KeyArena.

At 11:21 a.m., Lawrence admitted exhibit 60, an e-mail exchange among owners Bennett, Tom Ward and Aubrey McClendon. In the e-mail, Bennett said he had no problem making a strong, good-faith effort to former owner Howard Schultz. Bennett wrote: "If we are successful we are probably looking at a sweet flip and with the strength of our group I think we would still be in good shape for something in OKC."

Bennett admitted he never considered a renovated KeyArena as a successor venue. He said he did not concur with Mayor Greg Nickels' plan to remodel the building.

Lawrence said a KeyArena renovation was going to cost $200 million. Bennett said Renton and Bellevue were chosen as possible sites for a new $500 million arena from a list of 30 possible sites.

Lawrence said the $500 million arena would have been the most expensive arena in the NBA. Bennett admitted that he did not have legislation, a detailed arena plan ready to submit by Dec. 30, 2006 to the state Legislature. Bennett admitted that he missed the Feb. 1, 2007 deadline and was given an extension.

Lawrence asked Bennett if he considered extending his Oct. 31, 2007 deadline to move the Sonics since the team missed deadlines with the Legislature. Bennett said no.

Bennett talked of his hiring of political consultant Jim Kneeland. Kneeland told Bennett he should pay for a considerable portion of the $500 million arena, and Bennett said they should not discuss the Professional Basketball Club's financial commitment.

In an e-mail to his lobbyist, Bennett said his contribution to the project would be "negligible."
Bennett wrote: "I am confounded by the focus on our contribution. At the end of the day, it will be neglible and has nothing to do with the deal or the reality of the imminent need for the facility in the marketplace."

Bennett, however, said his group was willing to pay $100 million toward the project. Lawrence asked him repeatedly if he had made that figure known to anyone and Bennett said he did. Lawrence kept asking similar questions until Keller objected and Pechman sustained.

Lawrence tried to ask Bennett about the financial contributions made by the Seahawks and Mariners to their stadiums, but Keller objected and Pechman sustained.

At 11:45 a.m., Lawrence admitted exhibit 115, a series of e-mails. Responding to a Seattle Times story, Bennett wrote "there's little hope" the team will remain in Seattle. Ward wrote: "Is there any way to move here next season or are we doomed to have another lame duck season in Seattle?

Bennett wrote: "I am a man possessed! Will do everything we can. Thanks for hanging with me boys. The game is getting started."

Bennett said he meant he was possessed to keep the team in Seattle. Lawrence hammered away at this point. Lawrence pointed to the responses from Ward and McClendon who said they wanted to watch basketball games in Oklahoma City.

Lawrence asked: "Did you respond back and say 'I meant I want to keep the team in Seattle?'" Bennett said: "I did not."

Lawrence submitted an e-mail between Bennett and NBA executive Joel Litvin in which Bennett asked if there was any way he could move the team to Oklahoma City next season. Said Lawrence: "So the man possessed to keep the team in Seattle is asking how he can move the team to Oklahoma City."

Lawrence submitted an e-mail from McClendon to Bennett which said: "Where will be next year sir?" Bennett replied in the email that he was working hard.

Lawrence asked: "Did you tell Aubrey, 'no, no I'm working hard to stay in Seattle.'" Bennett said: "I did not."

Bennett said he contacted the Ford Center in Oklahoma City to reserve dates for the 2008-09 season.

Bennett initially met with Sonics attorney Brad Keller on April 25, 2007 about possible litigation.

At 10:57, Lawrence changed his line of questioning. He asked about Bennett's meeting with Seattle Mayor Greg Nickels and his relationship with the mayor's office. The two sides did not speak between Aug. 8, 2006 and July 2007.

At noon, Pechman suspended the testimony for lunch. Bennett has been on the stand for 2 hours, 8 minutes.

The trial will resume at 1:30 p.m.

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June 17, 2008 10:35 AM

Seattle attorney grills Bennett

Posted by Percy Allen

At 9:37 a.m., Sonics chairman Clayton Ike Bennett took the stand.

Seattle attorney Paul Lawrence asked the total value of investment of Dorchester Capital (Bennett's investment firm), but the defense objected to the question and Judge Marsha Pechman sustained the objection.

Lawrence asked if the losses at KeyArena would cause Bennett an undue burden and Bennett said: "They are significant, but they would not alter our lifestyle."

Lawrence submitted as evidence his deposition of Bennett.

Bennett said he tried to purchase the New Orleans Hornets after the team temporarily moved to Oklahoma City following Hurricane Katrina. Bennett said negotiations with Hornets owner George Shinn broke down because Shinn did not want to sell the majority stake in the team.

Bennett said former partner Ed Evans helped broker the deal with the former Sonics owners.

Lawrence submitted a Goldman Sachs report, which Bennett relied on before buying the team, which said that NBA teams accrue interest after the sale.

Bennett said the NBA is not planning expansion at this time.

Lawrence asked Bennett if he's aware that there's substantial tax benefits with owning an NBA team and Bennett replied: "Yes."

Lawrence asked if Bennett understood that the Sonics were losing money when he bought the team and Bennett said: "That's fair."

Bennett agreed that the team would continue to lose money until a new arena was built. He declined to say that he had thought there was a possibility that a new arena would not be built until Lawrence replayed his video deposition in which Bennett said: "We accepted that possibility although that wasn't what we, that wasn't the bet we made."

Bennett agreed that he knew the lease ran through 2010 and was called the most unfavorable lease in the league.

Bennett said he was made aware of a KeyArena Subcommittee report by the city that was released Feb. 15, 2006 four months before he bought the Sonics.

Bennett said he was unsure if he had read a Mayor's Task Force for Seattle Center sustainability report that was released May 2006.

Lawrence entered as evidence a September 2006 memo to the Bennett ownership group that said the owners should expect operating losses and capital calls. The memo also said "There can be no assurance that the City will agree to any proposed revisions to the lease arrangements or that the Company will be able to locate a suitable alternative playing site."

Lawrence also entered as evidence an operating cost report that showed the team lost $23.8 million in 2004 and $29 million in '05. Bennett said he knew of the losses.

At 10:11 a.m., Lawrence began peppering Bennett with questions about his state of mind before buying the Sonics. At this point, Lawrence was rehashing the evidence and made Bennett say that he was aware of the risks when he purchased the team and aware of the financial losses it had sustained and was likely to continue to sustain.

At 10:17 a.m., Lawrence admitted exhibit 62, the sale agreement between the Professional Basketball Club (PBC) and Howard Schultz. Bennett said he agreed to the KeyArena lease with the city.

Lawrence admitted exhibit 65, which was a letter Bennett wrote to Schultz. In the letter, Bennett wrote he would honor all commitments from Schultz's group.

Lawrence admitted exhibit 69, which is a instrument of assumption. In the document, PBC agreed to assume all liabilities of the Schultz group.

"I never envisioned that I would be sitting here today," Bennett said. "We knew there would be risks."

Lawrence asked: "Did you intend to honor or breach the lease?" and Bennett replied: "We intended to honor our obligations under the documents." He also said he intended to honor the lease to the extent of the law.

When asked if he knew of any provisions of an escape clause, Bennett said: "None that I knew of."

At 10:28 a.m., Lawrence changed his line of questioning and began asking about KeyArena. The Seattle attorney said the building has not changed since Bennett purchased the team.

Pechman called for a recess. The trial is scheduled to resume at 10:46 a.m.

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June 17, 2008 9:41 AM

Clay Bennett will testify next

Posted by Percy Allen

Former KeyArena manager Jyo Singh answered questions from Sonics attorney Paul Taylor about improvements that were made to the building.

Taylor said KeyArena is 368,000 square feet, which is the smallest NBA arena. The size of the arena limits sales opportunities for concessions and limits revenue streams, he said. The building has just one loading dock, which also limits the versatility of the building.

The NBA average for premium seating revenue is $16.9 million and at KeyArena it was $3.3 million. At its peak in 1997, revenue for premium seats at KeyArena was $10.5 million.

Taylor said the Sonics get 100 percent of the revenue from the sales of courtside seats and asserted that the Sonics have more incentive to sell courtside seats than to sell suites.

"No one wants to sign a three-year lease or a five-year lease because the no one knows if the Sonics will be here," Taylor said.

Singh replied: "I can't speak to that."

Sonics co-owner and chairman Clay Bennett will now take the stand.

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June 17, 2008 9:12 AM

Day 2 begins; Bennett scheduled to testify

Posted by Percy Allen

The second day of the trial between the city of Seattle and the Sonics began at 9:01 this morning. District Court Judge Marsha Pechman said the city has a balance of 778 minutes of testimony remaining and the Sonics have 722. Each side is given 900 minutes of testimony.

Outside the courthouse, the atmosphere is considerably more subdued than Monday. Yesterday, a small crowd of Sonics fans gathered on the courthouse steps in the morning and today the steps were clear of any fans.

The day will begin with former KeyArena manager Jyo Singh on the witness stand and he's being cross examined by Sonics attorney Paul Taylor.

Sonics chairman Clay Bennett, co-owner Aubrey McClendon, Andrew Zimbalist, Sonics CEO Danny Barth, Todd Meneberg and Lon Hatamiya are scheduled to testify today.


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June 16, 2008 11:11 PM

Day 1 scorecard... plus the moment you've all been waiting for

Posted by Jim Brunner


KEY WITNESS: Seattle Mayor Greg Nickels didn't look too smooth Monday when he was cross-examined by Sonics lead attorney Brad Keller (who lived up to his reputation as a tenacious trial lawyer). Nickels danced around questions at times, trying to avoid saying the words Keller wanted him to say. You got the impression Nickels would try to deny the sky was blue if that's what Keller asked. A couple times, Keller made hizzoner look rather foolish by cutting to Nickels' April 2 videotaped deposition in which Nickels admitted the facts he was now resisting on the stand.

BENNETT WATCH: The trial was interrupted Monday morning by the loud coughing of a spectator wearing a green Sonics T-shirt. Judge Marsha Pechman threatened to toss the man out if he couldn't stop. Bennett, sitting at the defense table, appeared to be nursing his own sore throat, and offered the fan a cough drop. The fan refused. The man, a yoga-studio owner from West Seattle, later explained that he thought Bennett's gesture was courteous, and only said no because he didn't think the lozenge would help.

He stopped coughing after Pechman's admonition.

[The Associated Press reports the coughing was a "stunt." (Sonics lawyer Brad) Keller "was like a steamroller," the man told the AP during Monday's lunch recess. "He had to be slowed down.'']

OBJECTION SCORECARD: Advantage Sonics. Pechman ruled for the Sonics on a couple of hearsay objections Monday. The first nixed introduction of a fairly innocuous letter from a sports-bar owner who wrote to Nickels about the importance of the Sonics. The objection seemed to catch the city's attorney, Jeffrey Johnson, off guard. Later, Pechman quashed the city's effort to introduce a 1995 video of NBA Commissioner David Stern praising the then-newly opened KeyArena. The city's attorney, Greg Narver, succeeded in one objection -- getting Pechman to rule that former Seattle Center Director Virginia Anderson did not have to answer a question about Starbucks dropping its sponsorships at KeyArena.

UP TUESDAY: After former KeyArena manager Jyo Singh wraps up, we get to the moment you've probably all been waiting for. Sonics owner Clay Bennett will be called to the stand. He'll be interrogated about his now famous "man possessed" e-mail of last April, which he says has been misinterpreted. Bennett insists it referred to his desire to keep the team in Seattle.

During his opening remarks Monday, Seattle's lead attorney, Paul Lawrence, gave a taste of what Bennett is in for Tuesday if he sticks to that story: "Let's see what the evidence will show that a man possessed did in the two weeks following this e-mail exchange. Mr. Bennett contacted the NBA to seek to relocate the team to Oklahoma City for the 2007/2008 season. He contacted Oklahoma City to reserve arena dates there for the 2007/2008 season. He announced publicly that the Sonics have little hope of staying. He meets with Brad Keller, his litigation attorney in Seattle."

"He was a man possessed," Lawrence continued. "I think the evidence will show he was possessed to get to Oklahoma City."

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June 16, 2008 4:28 PM

Crowd gathers for Save Our Sonics rally

Posted by Percy Allen

A large crowd of fans clad in green and gold has gathered on the courthouse steps for the Save Our Sonics rally. The group was hoping to attract a few hundred fans, however, one observer said the number could reach 1,000.

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June 16, 2008 4:22 PM

Today's session ends; Clay Bennett to testify Tuesday

Posted by Percy Allen

Judge Marsha Pechman excused former KeyArena manager Jyo Singh and concluded the first day of the trial.

"That's all we have time for today," she said. "Let's talk about what's happening tomorrow and are we ahead or are we behind."

Attorney Paul Lawrence said the city is "about where we thought we would be. It's taking longer than expected because of cross examination."

The city will call Sonics co-owner and chairman Clay Bennett to the stand Tuesday.

The city may submit an audio video clip from Sonics co-owner Aubrey McClendon, who may also appear in person, Lawrence said. The city will also call experts Andrew Zimbalist, Sonics CEO Danny Barth, expert Todd Meneberg and expert Lon Hatamiya.


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June 16, 2008 4:03 PM

Judge won't allow YouTube video of NBA's Stern raving about KeyArena

Posted by Percy Allen

Former KeyArena manager Jyo Singh said the relationship between the Sonics and KeyArena staff will not be dysfunctional if the team plays there for the next two years.

Singh has been the building's manager for 11 years. He's been the director of director of commercial facilities and events at the Seattle Center for three years.

"We're there to produce the highest quality that we can," Singh said.

Singh said building's staff treated the Seattle Thunderbirds fairly last season. The T-Birds played at KeyArena and are moving to Kent next fall.

Seattle attorney Greg Narver tried to submit a YouTube video of NBA Commissioner David Stern raving about KeyArena during a 1995 interview with KJR talkshow host Mitch Levy.

Sonics attorneys, however, objected to admitting the video clip as evidence. Judge Marsha Pechman grilled Narver for a few minutes about the relevance of the clip. The video was not admitted.

Narver concluded his questioning at 3:56 p.m and Paul Taylor is cross examining with only a few minutes remaining before the trial will break for the day.

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June 16, 2008 3:49 PM

Anderson completes testimony

Posted by Percy Allen

Former Seattle Center Director Virginia Anderson said KeyArena had 58 suites and 1,100 club seats, and those were primary source of revenue from the building.

Sonics attorney Paul Taylor noted that revenue at KeyArena declined in 1999 because the number of suites in the Seattle area doubled when Safeco Field was built. Two years, later Qwest Field was built and KeyArena had about 30 percent of the luxury suites in the Seattle market. Taylor also said construction of the Everett Events Center adversely affected KeyArena.

Anderson, who retired in 2006 after 18 years as Seattle Center director, said all revenue streams went down, and not just because of the new stadiums, but also because of the recession and the team was not playing well.

Anderson said: "The deal was based on shared risk. The deal was based on shared investment. ... The deal wasn't based on win or lose. The revenue coming in went down."

Taylor said there was a lot of buzz and excitement when the Sonics began playing at a renovated KeyArena in 1995. He asked Anderson if there was a lot of buzz and excitement around the team now.

She said: "Well there's a lot of buzz right now. There's not a lot of excitement about this trial, though." Her response drew laughs from the media in the auxiliary courtroom.

Taylor said there are 1,100 season ticket holders.

Taylor seemed to flounder late in his questioning. He asked Anderson to comment on the Seattle Center, but the city objected, noting she no longer works there. Judge Marsha Pechman sustained the objection.

Anderson, said 40 percent of an annual revenue to a team can be associated to the playoffs. She said the Sonics could double its revenue if it were successful on the court.

Taylor countered with a 2006 task force report that said even if the Sonics sold ever seat to every game, it would still be $6 million below the NBA average.

Anderson re-countered and said "that doesn't mean the team would lose money." She said also said ticket revenue is "just one component" of overall revenue.

Former KeyArena manager Jyo Singh is now on the witness stand. Singh is the director of commercial facilities and events at Seattle Center. Greg Narver, from the city's legal team, is asking questions.

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June 16, 2008 2:54 PM

How much did team pay for 1994 renovations?

Posted by Percy Allen

Judge Marsha Pechman called for a 15-minute recess about eight minutes into Sonics attorney Paul Taylor's cross-examination of former Seattle Center director Virginia Anderson.

Taylor was trying to establish how much the team has paid for the $84 million KeyArena renovation in 1994.

He asserted the team paid $115 million, but Anderson said the city used its borrowing capacity to buy the bonds and, in exchange, Seattle received 60 percent of revenue from the suite sales, 40 percent of revenue from the club seats sales and a portion of concession for non-Sonics games.

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June 16, 2008 2:43 PM

Former Seattle Center director takes stand

Posted by Percy Allen

Former Seattle Center Director Virgina Anderson said the city of Seattle asked for a 20-year lease when it negotiated with the Sonics on its lease in 1994. The team wanted a 10-year deal and the two sides agreed to 15 years.

Seattle attorney Greg Narver asked Anderson if the marriage between the city and the Sonics is dysfunctional and she said: "I suspect that if the Sonics were to go to the championship, they would fill the building and it (the lease) would work."

Anderson testified about the 1994 renovation and the improvements to the building. She said the building "brought new life to the Sonics. ... They were working in first-class competitive building. ... For us it elevated the stature of our national and sometimes international booking ability."

Narver concluded his questioning at 2:40 and Sonics attorney Paul Taylor began cross-examination.

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June 16, 2008 2:33 PM

Nickels: Bennett knew lease terms when he bought the team

Posted by Percy Allen

Mayor Greg Nickels issued a statement after his testimony and did not take questions.

"Our position has been consistent from day one: to keep the Sonics playing in Seattle and playing at KeyArena.

"Mr. Bennett knew the terms of the KeyArena lease when he bought the team from Howard Schultz. The terms of the lease did not change. We intend to hold him to the lease agreement that he assumed when he bought the Sonics because we have a responsibility to our taxpayers to vigorously protect our financial investment in KeyArena. City taxpayers renovated KeyArena for the Sonics in exchange for the team's promise to stay and play.

"During this trial, you'll hear a lot of speculation from Mr. Bennett's attorneys, but let me be clear. We have a lease and Mr. Bennett is trying to break it. That's the issue before the court."

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June 16, 2008 2:18 PM

Nickels' testimony concludes; says he's "eternal optimist"

Posted by Percy Allen


JULIE NOTARIANNI / THE SEATTLE TIMES

On redirect, Seattle attorney Jeffrey Johnson asked Mayor Greg Nickels if there were any provisions in the lease that would void the contract if KeyArena became outdated. Nickels said: "No."

When asked why he wants to keep the team tied to it's lease, Nickels said: "I'm an eternal optimist."

At 2:09, Sonics attorney Brad Keller asked about four more questions before Nickels left the stand.

Former Seattle Center Director Virginia Anderson has taken the stand and is now being questioned by Seattle attorney Greg Narver.

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June 16, 2008 2:05 PM

Nickels: City negotiating with Seattle University to play men's basketball at KeyArena

Posted by Percy Allen

The afternoon session began at 1:31 p.m with Sonics attorney Brad Keller questioning Mayor Greg Nickels.

Keller started with a line of questioning about the city of Seattle's effort to lobby Gov. Christine Gregoire and state lawmakers to authorize $75 million toward a KeyArena renovation plan. The lobbying effort in March 2008 failed, the fourth time state lawmakers refused to use taxpayer money for KeyArena.

Keller said more than 70 percent of those who voted for Initiative 91 supported the bill that restricts the use of public funds to subsidize arenas or stadiums for professional franchises.

Nickels said the city has studied alternatives for KeyArena. A subcommittee determined a $20 million facelift would make the building profitable for the city.

Nickels said the city has begun negotiating with Seattle University to play its men's basketball games at KeyArena. He gave the school a symbolic key to KeyArena.

Keller concluded questioning at 1:52. He spent 1:55 minutes cross-examining Nickels. Each side gets 15 hours to question witnesses.

Jeffrey Johnson, one of the city's attorneys, is questioning Nickels again on redirect.

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June 16, 2008 12:18 PM

Nickels said he's attended two Sonics games in the last 10 years

Posted by Percy Allen

In his cross examination, Sonics attorney Brad Keller tried to get Mayor Greg Nickels to admit that a 2006 city task force determined that the Sonics were suffering from an economic hardship because of KeyArena.

After several exchanges, Nickels grudgingly admitted the point. But he tried to assert that both the city and the team were not benefiting from the original lease.

Keller established that former Sonics owner Howard Schultz had complained about the limited revenue-generating potential of KeyArena.

Nickels acknowledged that the long-term lease was not beneficial to Sonics ownership.

Keller described the lease as "economically dysfunctional," however, the mayor declined to use that characterization.

Keller introduced a Seattle Center task force report that agreed with the city's KeyArena subcommittee that the building had become antiquated and outdated.

Paul Lawrence, the lead attorney for the city of Seattle, made several objections during Keller's cross examination and argued a lack of foundation. Judge Marsha Pechman overruled the objections each time.

At 11:31 a.m., Keller began a line of questioning on what the city of Seattle did while the Professional Basketball Club lobbied to build a new $500 million arena in Renton.

Nickels said Deputy Mayor Tim Ceis told state lawmakers that they would need to consider adding another $30-40 million to pay off the KeyArena debt. The mayor said he did not think the additional cost would hinder PBC's effort to gain support for a new arena.

At 11:36 a.m., Keller introduced an April 2006 letter from Nickels and the City Council to Gov. Christine Gregoire that said a new facility outside of Seattle should not be built.

At 11:48 a.m., Keller introduced a July 2007 e-mail between former Sonics President Wally Walker and a Nickels' staff person.

Nickels repeatedly stated he had not met personally with Walker, however, Keller established that Nickels' staff was consulting with Walker.

It seems Keller is trying to establish that Nickels was in cahoots with Walker and the John Stanton group long before the city filed its lawsuit. If Keller establishes this point, he can assert that the city's lawsuit isn't about the final two years of the lease, but about the city's plans to "bleed the Sonics dry."

Keller repeated Nickels' infamous "lawyering up" quote and noted that the city set aside $1 million for legal fees.

At 11:56 a.m., Nickels said he's attended just two Sonics games in the last 10 years. Keller asked: "Are you going to feel pride and exuberance if the only reason they are here is because of a court order?" Nickels stumbled through his first response then said "yes" when asked again.

Keller hammered in on Nickels about Seattle being a word-class city before Pechman interrupted the questioning and suspended the proceedings for a lunch break.

The trial will resume at 1:30 p.m.

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June 16, 2008 11:23 AM

Nickels says he did not help create the Ballmer group's offer

Posted by Percy Allen

The morning session resumed at 10:45. During the break, media inside the courtroom noted that one of the city's lawyers, Jeffrey Johnson, momentarily froze when Sonics attorney Brad Keller's objection was held. One reporter said: "It was awkward. Like he didn't know what to do next."

Two reporters observing the morning session said Keller gave a more impressive opening argument.

Johnson returned to questioning Mayor Greg Nickels in the second morning session.

Nickels said he did not assist in creating the Steve Ballmer, Matt Griffin, John Stanton and Jim Sinegal group that offered to split the cost of a KeyArena renovation and buy the Sonics.

Nickels said he did not consult with former Sonics President Wally Walker at any point during the past year or so, but he has had discussions with Griffin.

At 10:57 a.m., Johnson finished questioning Nickels and Keller began his cross examination.

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June 16, 2008 10:43 AM

Nickels testifies that Bennett's reaction to renovating KeyArena "wasn't much of a reaction"

Posted by Percy Allen

At 10:13 a.m., Mayor Greg Nickels took the stand and answered questions from one of the city's lawyers, Jeffrey Johnson of K&L Gates. Nickels is the first witness in the trial.

Nickels described his first meeting with Clay Bennett. The mayor said he presented Bennett with options about renovating KeyArena and "the reaction was, there wasn't much of a reaction."

Nickels said in May 2007, he was approached by the Sonics owners about a buyout, but he said he wasn't interested.

In July 2007, Bennett made an offer to meet with Nickels face to face. The meeting never took place because Nickels said he read in newspaper reports that Bennett said: "If my intention was to talk about KeyArena, it wasn't something he wanted to talk about."

Bennett responded by saying: "If he wanted to talk about a buyout it wasn't worth the cost of a plane ticket."

The next communication between Nickels and Bennett was a series of legal filings. Bennett filed a resolution to the lease and the city responded with its lawsuit.

Johnson asked: "Can the Sonics be replaced by having a college team?"

Nickels replied: "Not the role that the Sonics play." Nickels said the city benefits from the Sonics.

At 10:30 a.m., Johnson tried to introduce a letter from the owner of Sport Bar and Grill and get Nickels to expound on his belief that the Sonics play a key role to city. But Sonics attorney Brad Keller objected and Judge Marsha Pechman upheld the objection.

Before Johnson could get into another line of questioning, Pechman broke for recess at 10:31. The trial will resume at 10:45.

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June 16, 2008 10:26 AM

Sonics' attorney says strategy used by Gorton, Walker, Ballmer was "bleed them until they sell"

Posted by Percy Allen

In his opening statement, Sonics' attorney Brad Keller said the case hinges on two fundamental premises. He acknowledged the city wanted a 15-year commitment from the Sonics for the 1994 renovations, but argued the second fundamental premise was that "the Sonics would have a venue that was economically feasible and comparable from an economic and physical standpoint to other NBA venues."

Keller said the relationship between the city and the Sonics "broke down. And it failed as the years went by and just got worse and worse."

Keller said that while Clay Bennett's Professional Basketball Club was in Olympia lobbying for a new venue in Renton, the city of Seattle was thwarting that effort. "The landlord response was, 'You either play in my sandbox or drown in red ink.' "

Keller said when the city helped in the construction of Safeco Field and Qwest Field, KeyArena's luxury suite sales plummeted.

Keller told Pechman that she will learn about the economics of an NBA arena. That an NBA arena needs to be able to generate revenue streams well beyond selling seats. That an NBA arena needs very special amenities to attract suite holders.

Keller's first evidence was information about the inadequacies of KeyArena. He noted that the average NBA arena is 700,000 square feet and KeyArena is half of that. He said other arenas have larger coaches offices and locker rooms. He said the federal courthouse has a news conference room and KeyArena does not.

Keller highlighted a 2006 report from a city task force that said: "KeyArena has significant shortcomings and issues that affect the financial health of its tenants. ... The original funding plan doesn't work."

Keller introduced his "unclean hands" defense later in his statement. He noted that Slade Gorton, one of the city's attorneys, conspired with former Sonics president Wally Walker and Microsoft CEO Steve Ballmer to "force bleeding of about $20 million per year to get them to sell."

Keller said the trio engaged in a "bleed them until they sell" strategy that began months before the city filed its lawsuit November 2007.

Keller said the city has other tenants and treats them better. He said the city's other tenants are allowed to leave their lease. He said Seattle is a world-class city and would still be a world-class city without the Sonics.

Keller said a lame-duck relationship would not benefit either the city or the team. He downplayed arguments about the civic pride surrounding the Sonics.

Keller noted that lawmakers failed to support a KeyArena renovation package four times. He noted the passage of I-91 and said "the public has made it very clear how it views sports teams." He said 30 percent of the ticket buyers didn't go to games last season. He said television ratings have declined and the situations would just get worse.

Said Keller: "The last two years of this lease is all that this case is about. And rightly or wrongly the owner of this team has decided to move to Oklahoma City and instead of losing $60 million, it stands to make a profit of $10 million."

Finally, Keller said: "This marriage is broken and it has been broken for over five years. We say it's time to stop."

The city has called Mayor Greg Nickels as its first witness.

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June 16, 2008 9:41 AM

City makes its opening argument

Posted by Percy Allen

Judge Marsha Pechman calls the trial to order at 9 a.m. and Paul Lawrence, the lead attorney for the city of Seattle, began with his opening argument.

Lawrence spoke for 20 minutes, highlighting the benefits the team received from the $84 million KeyArena renovation in 1994 that was financed by taxpayers. He said Clay Bennett and his co-owners are "smart businessmen" who knew about the lease and knew the team was losing money before they bought the team.

Lawrence said the team has brought undue hardship upon itself and stressed the importance of forcing the team to honor its lease.

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June 16, 2008 9:23 AM

Bennett greeted with calls of "liar" and "thief" as he arrives for trial

Posted by Percy Allen

Sonics co-owner and chairman Clay Bennett arrived at the federal courthouse shortly after 8 a.m. with his team of attorneys in tow. Bennett hurried up a ramp on the side of the building and rushed in the front entrance attempting to avoid the small gathering of Sonics-clad fans gathered on the courthouse steps.

The fans greeted Bennett with insults, yelling "liar" and "thief." Bennett did not acknowledge them and neither did his lead attorney Brad Keller or spokesman Dan Mahoney.

Mayor Greg Nickels, who will be the first witness to testify, arrived at the building around 8:30 a.m. He will address the media after his testimony. Lawyers representing the city will speak each day at 4 p.m.

Judge Marsha Pechman overestimated public interest in the trial. She allocated 44 seats and established a lottery in which anyone wanting to attend the trial needed to sign up between 7 a.m. and 8 a.m. for a court pass.

Only 15 passes were distributed.

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July 2008

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Recent stories

Sonics attorneys focus on city's "poisoned well" plan
Bennett says Sonics could lose $60 million if forced to stay in Seattle 2 more years
Sonics CEO: Fans are apathetic
Clay's excuses sound as contrived as his arena plan
On the hot seat: Sonics' attorney trips up Nickels
Attorneys in Sonics case described as tenacious, polite
This judge will decide the fate of the Sonics
Seattle vs. Sonics: Trial starts next week, if there's no settlement
Take a closer look at the Sonics case
More revealing Sonics e-mails emerge
OKC officials inform Schultz they expect Sonics to relocate, no matter who owns team
Sonics e-mail hints at NBA's concern over breach of promise
Howard Schultz suit adds fuel to e-mail fire
NBA owners approve Sonics' move, but legal fight continues in Seattle
E-mails reveal Sonics owners intended to bolt from Seattle
Oklahoma House passes tax package designed to help lure Sonics

Documents

2007 "Poisoned Well" document (PDF)
Ward: "Are we doomed to have another lameduck season in Seattle?" (PDF)
Bennett's e-mail to Stern: "You are just one of my favorite people on earth" (PDF)
Clay Bennett and Sonics' court filing (PDF)

Multimedia

Gallery | Seattle SuperSonics: Lasting memories
Gallery | Bittersweet night for Sonics fans
Gallery | Sonics through the years
Gallery | 25th anniversary of Sonics world championship
Gallery | End of a Season, End of a Franchise?
Sports fan "Big Lo" seeks answers from Howard Schultz

Fans weigh in about the state of the Sonics
Cartoon | Schultz jumps into action
Talk about the team in the Sonics forum

Other links

Trial coverage from www.newok.com
ESPN.com | Hope (still) springs in Seattle