SuperSonics, Oklahoma City reach preliminary lease agreement

OKLAHOMA CITY -- The Seattle SuperSonics and Oklahoma City have reached a preliminary agreement on a lease at the Ford Center pending NBA approval of the team's relocation.

The 15-year deal calls for the SuperSonics to pay the city $1.6 million annually for use of the building and reimburse $409,000 per year to replace revenue from naming rights for the arena currently paid by local Ford car dealerships.

"I'm very pleased with the deal," City Manager Jim Couch said. "I believe that this is the right decision for the city to go forward with this deal. ... We think that this is a very solid deal for the city of Oklahoma City."

Couch said the city had to make some concessions to the SuperSonics that wouldn't have been included in leases with larger cities, but the agreement should be a "break even proposition or a slightly increased cash position" for Oklahoma City. The city projects an annual profit of $149,000 from the lease, but Couch said that number is based on many moving parts.

"We're very comfortable with the deal we struck, considering the size of the market we have in Oklahoma City," Couch said.

SuperSonics owner Clay Bennett agreed to terms of the deal in a letter to Mayor Mick Cornett on Friday. It will be introduced to the City Council on Tuesday and go up for a vote on March 25, the same day commissioner David Stern and members of the NBA relocation committee will visit the Ford Center.

The deal would not become official unless NBA team owners approve the Sonics' relocation in a meeting next month and until the team can escape its lease in Seattle that runs through 2010.

"We believe it is a fair arrangement for all involved and will be viewed favorably by the NBA as another key part of the relocation process," Bennett said in a statement. "We commend the city for its professionalism and look forward to a successful long-term partnership."

The agreement contains an exit clause that would allow the SuperSonics to leave any time after their sixth season in Oklahoma City if there is a significant drop in the team's revenues.

Beginning after public-financed improvements to the Ford Center are completed, the average revenue from the next two seasons would be used to create a benchmark. To break the lease, the Sonics' revenue would have to fall below 85 percent of that benchmark, adjusted for inflation, over the course of two seasons.

The SuperSonics would then have to pay for a portion of the Ford Center improvements and buy the practice facility that would be built by the city.

"That's now becoming a common lease term in the new NBA agreements," Couch said. "That's a term that's in the Charlotte agreement, that's a term that's in the New Orleans agreement, and you're seeing more and more of those."

Bennett said previously that the Sonics would need a "favorable lease" that would allow them to partake in nearly all revenue streams to be competitive with larger markets. The agreement calls for the Sonics to receive all revenue from game days, including sales of tickets, suites, concessions, merchandise and advertising.

"My guess is they wouldn't enter into an agreement that would allow them not to be competitive," Couch said.

City Councilman Gary Marrs sat in on the negotiations to look out for citizens who voted earlier this month to fund renovations to the Ford Center and build an NBA-specific practice facility at a combined cost of $121 million.

He also heard the SuperSonics owners describe that the lease must make Oklahoma City fit the NBA's business model, even without being able to charge as much for sponsorships.

"They weren't going to put a ballclub in a city that didn't prove that the economic model worked on it. That just wouldn't be good for the NBA and it wouldn't be good for the owners," Marrs said.

"I think we did a good job of also telling our side that we had the citizens' best interests to look out for too, and that it not become a big subsidy to a ballclub that was owned by people that a lot of citizens thought were very well off."

Marrs said it was important for the lease to have a steady revenue stream through charging the team $1.6 million a year for rent. The city also retains control of the arena for bringing in other events, and will collect $100,000 annually for rent on the practice facility.

"I think it's important for the citizens to know that the ballclub's not getting a free ride and they're not getting everything free over there, and there is a cost to them," Marrs said.

Couch said a "firm agreement" needed to be in place before the NBA's Board of Governors vote on Bennett's relocation request during an April 17-18 meeting.