Sonics Trial Blog
Seattle Times reporters Percy Allen, Jim Brunner and Danny O'Neil are filing updates from the courthouse throughout the day.
June 17, 2008 10:35 AM
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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