Lawsuits in Seattle give Sacramento head start in race to approve an arena

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The question of which city, Sacramento or Seattle, is ahead in the race to bring the NBA a brand new arena attached to a shiny new public subsidy is unclear at this time, but sources with intimate knowledge of the situation tell PBT that so long as Sacramento Mayor Kevin Johnson delivers on his promises that Sacramento will be ahead in that process.

A lot of that comes down where each city is legally within that process, and how that process is conducted in both Washington and California.

While some early media reports might have led folks to believe that Chris Hansen’s arena deal (and offer to buy the team) were a slam dunk, the documents laying out the framework of his arena proposal are under siege.

Specifically, the Memorandum of Understanding (MOU) and Interlocal Agreement (IA) he entered into with the city of Seattle and King County have been under intense scrutiny locally, as they are currently the target of two lawsuits.  The first of those lawsuits is potentially being decided today at 1:30 PT.

The first suit brought by the International Longshoreman’s Workers Union challenges the site selection process within Washington’s Environment Impact Review (EIR) process, saying that Hansen and the local government conducted a “sham” site review process that did not provide reasonable, actionable alternatives other than Hansen’s hand-picked site.

That site, located in Seattle’s SODO district, has been the battleground of competing arguments regarding traffic and how it might impact Port of Seattle’s operations, and otherwise cause gentrification, loss of business in the area, and impact a large number of family-wage jobs in exchange for temporary construction jobs and a smaller number of low-paying arena jobs.

Arena proponents point out that most of the events at the proposed SODO site would occur after the Port’s business hours. Arena opponents say that the cumulative impact of creating a third large-scale sports and entertainment facility within their maritime industrial area, with an L.A. Live-like experience of retail outlets and restaurants, will necessarily bring more traffic to the region regardless of hour and disrupt Port operations.

These kinds of lawsuits are standard fare in any large-scale development project nationally right now, but they can have impacts on developments. In this case, opponents of the current MOU and EIR process point out that it could take “hundreds of millions of dollars” to mitigate the traffic issues a new arena would face, according to head lawyer for the ILWU suit Peter Goldman.

Hansen has offered $40 million to address traffic mitigation concerns, but in reality the question of who pays what for additional mitigation has yet to be solved because the EIR has yet to address the issue. Should Hansen have to pay for additional mitigation, it could further strap him and his group as it relates to their overall offer for the Kings, but the fear for locals is that the money would have to come from the public coffers.

The ILWU’s suit alleges a number of concerns relating to the site selection process, and asks the court to force Hansen and the local government to declare the MOU and IA “null and void” because they are in violation of the State Environmental Policy Act (SEPA).

It is unclear whether or not this would impact Hansen and the local government’s warranties to the NBA about its current arena situation.

(UPDATE: The judge ruled in favor of Hansen, Seattle, and King county and dismissed the lawsuit.  Hansen and governmental officials argued they did not have an arena agreement in place and that they would look at other locations.)

Goldman said that this suit was “preliminary,” and cited the broad swath of industry that is opposing the arena proposal in its current form. He pointed out that there will be more times for lawsuits to be filed down the road, but that he and his client were concerned that the site selection process wasn’t being conducted according to current state laws.

The second lawsuit relates to Seattle’s in-force Initiative 91 and the contention by its co-author Mark Baerwaldt that the current MOU does not meet the law’s criteria.

Baerwaldt is careful to point out that the courts would decide the matter. His complaints focus on the financing mechanisms that Hansen and the local government are using to meet the statute’s definition of turning a profit on public subsidies for sports arenas. This lawsuit is awaiting response from Hansen, Seattle, and King County.

I-91’s other co-author, Chris Van Dyk, has also been at the center of this discussion, being cited by many Seattle media outlets as being supportive of Hansen and Seattle’s MOU. He addressed those reports exclusively with PBT, saying he “never said it was compliant” and that “if he’s the best cheerleader (Hansen and Seattle) can come up with then they’re in trouble.”

Van Dyk also offered that “he’s looking forward to hearing the expert testimony,” because he didn’t think “I-91 anticipated meeting the type of funding mechanism that Hansen has presented.”

Whether or not the Longshoreman’s suit goes in favor of the plaintiff or Hansen and Seattle, Goldman says to expect more legal resistance down the road.  If they win, Hansen and Seattle has to start over with their MOU and come to the table with alternative sites that they may not like.  Then the city would have to choose between the site that Hansen wants, and a potential site that presents better alternatives in terms of environmental concerns and traffic.

If they lose today, he says that there is a “significant appetite” not just by his clients but a broad swath of industry including the Port of Seattle to appeal the decision and fight the EIR process at every stage. All of the potential delays and injunctions were reflected when David Stern told Jonathan Feigen of the Houston Chronicle that the NBA had “no approved plan for an arena in Seattle.”

Therein lies the rub for the Seattle group. While they seek to convince the BOG that they have an actionable arena plan, they are arguing in court that their MOU and IA just lay out a process for reviewing and financing an arena proposal and do not constitute an ‘action’ under state EIR laws. Therefore, they contend that the Longshoreman’s suit is not “ripe” and are asking for it to be thrown out.

Sources with intimate knowledge of the situation tell PBT that this is a tightrope that the Seattle group can walk, and Scott Howard Cooper of NBA.com illustrated that point by saying the league isn’t overly concerned with legal issues in either Seattle or Sacramento, but the question goes back to points made by TNT’s David Aldridge about which city can get an arena deal done first.

Aldridge, who had previously reported Seattle had a “clear path” to obtaining the Kings, said on Saturday “there are questions about whether or not the Seattle deal is as airtight as they say it is.”

After Stern’s press conference on Saturday Aldridge elaborated, “We have very equal bids here. What it comes down to is the feel the owners have on ownership groups, and which arena can be built the fastest.”

The EIR process in Seattle is underway, but with two lawsuits pending and only the judges in both suits being capable of delivering an up-or-down answer to the litany of issues presented, the uncertainty over what type of delays Seattle could face and what type of mitigation will be needed to preserve other parties’ rights are huge question marks.

On the other side, it’s Johnson’s track record of delivering on promises to the NBA that has insiders optimistic about Sacramento’s chances of delivering that ‘fair and competitive’ offer that will include a significant public subsidy and downtown arena.

That effort has been underway for a while now, as the NBA negotiated the current arena deal that the Maloofs backed out of, a deal that Johnson and Sacramento have maintained is still on the table.

Additionally, proposed arena locations in Sacramento aren’t likely to have the same types of blowback being faced in Seattle, where their sizable maritime industrial economy feels threatened by Hansen’s proposal.

One source with intimate knowledge of the situation speaking to PBT under conditions of anonymity spoke about Sacramento’s pair of proposed locations:

“Both potential Sacramento sites are complimentary to the existing downtown commercial uses, and unlike the fight in Seattle the downtown proposals are being welcomed as a revitalization project. Both are efficient reuses of developed property, and both sites qualify under the expedited state AB 900 CEQA process, which limits the delay from any potential lawsuits. Having already approved a deal structure a year ago with no lawsuits filed, Sacramento has a big advantage to deliver a timely arena facility.”

That AB 900 CEQA process is an interesting wrinkle to Sacramento’s effort to keep their team, as the bill creating that process was recently signed into law and co-authored by Think Big Sacramento supporter and California Senate President pro Tem Dan Steinberg. According to law firm Stoel and Rives:

“The (bill provides) an incentive for applicants to move forward with their projects because any challenge to a leadership project Environmental Impact Report (“EIR”) under the California Environmental Quality Act (“CEQA”) will be venued immediately in the Court of Appeal. The court will then have a maximum of 175 days to issue its decision on the challenged EIR”

Incidentally, the bill was passed in part to help facilitate the potential Farmer’s Field deal to bring NFL football back to L.A. The company driving that proposal is AEG, who is supporting Sacramento’s bid and being pursued for purchase by Ron Burkle, who is one of the ‘whales’ that reportedly stands behind Sacramento’s offer.

“It’s time for big thinking and big projects that put Californians back to work,” said California Governor Brown. “Projects like Farmers Field can create thousands of jobs during a tough economic time, so it is imperative for the state to cut the red tape that could delay projects like this for years. These bills strike the right balance between protecting our environment and kick-starting jobs and investment in California.”

Sources say NBA owners will be weighing the totality of the arena timelines for both sides, and in Seattle’s case how many years a potential Sonics team will have to play at Key Arena, a facility deemed by the NBA to not meet its standards when the Sonics left for Oklahoma City in 2008.

Hansen’s current plan calls for a potential Sonics team to play in Key Arena (with modest improvements) for as little as two years, while arena opponents believe that timeframe could be extended to as many as four years if lawsuits hold up the process. While Sacramento could face similar lawsuits, they didn’t face any during the 2011 arena deal, and the expedited review process and potential for less environmental concerns at the city’s proposed sites have sources pointing at the issue as a point in favor of Kevin Johnson’s expected proposal.

While Seattle’s lawsuits aren’t likely to be the defining factor in this saga – Sacramento’s production of an actionable offer will be that factor –the fact that the Emerald City can’t say with certainly how long they’ll be locked up at Key Arena could be the starting point for their bid to take the Kings to unravel.

Damian Lillard opposes idea of later NBA season start running into summer

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At the MIT Sloan Sports Analytics Conference a few weeks back (although it feels like a lifetime ago), Atlanta  CEO Steve Koonin suggested the NBA should permanently shift its schedule to a mid-December start with the Finals running into August. The idea was to stop going head-to-head with the NFL and college football at the start of the season. Then the pushed back playoffs forced by the coronavirus have made that discussion more relevant. NBA Commissioner Adam Silver has said everything is on the table.

Damian Lillard is not a fan of the idea.

He likes the schedule just the way it is, something he said during a video conference with the media on Tuesday, hat tip to Dwight Jaynes of NBC Sports Portland.

“I just don’t see it. I mean, the season starts when it starts now, then February all-star weekend, getting toward the end of the season in April and then getting into the playoffs. You get that early June Finals and then you get to go off into your summer…

“You get to enjoy real-time summer,” Lillard said. “Our break is into the summer and then you get to come back as summer is leaving. I think that’s been perfect…

“It’s been perfect for us,” Lillard said. “So, for that to change and for things to be pushed back, I’m definitely not a fan of that and I don’t see many guys being a fan of that.”

Lillard is not alone in thinking this way, but Silver is more open to change than most sports commissioners. That said, changes that break with long-standing traditions are hard to make a reality.

There would be a lot of questions around a schedule change. Would the ratings still be as high for a Finals series in the heart of the summer? The NBA season no longer would sync with the NCAA or international leagues’ schedules, leading to questions about the draft and timing for players who want to test the waters. There would need to be reworked television contracts, both regionally and nationally. It could make scheduling a challenge at arenas used to having more concerts and other events in the summer.

Plus, all of this would need to be negotiated with the players union — and Lillard speaks for a lot of players on this issue.

If the NBA could somehow convince players that starting later meant more money in their pocket, those union negotiations would take on a different tone. But would the move increase revenue? That’s not an easy sell.

With this NBA season likely running late, the start of next season could be pushed back, and this theory could get a little bit of a test. Or, the next season could be shortened a little to get the league back on its regular schedule.

Which would make Lillard happy.

Report: NBA deprioritizing playing regular-season games for local TV

Steve Kerr and LeBron James before NBA game
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The NBA is financially incentivized to play more regular-season games to satisfy local-TV contracts.

How does that square with resuming play – currently suspended due to the coronavirus pandemic – with a play-in tournament and playoffs?

It doesn’t.

Marc Berman of the New York Post:

According to one source, getting some teams to a magical number of 70 regular-season games had been a goal, but in the last week has taken on less of a priority.

This stoppage is going to cost the NBA a lot of money. There’s no way around that. Not every source of revenue can be preserved. It’s about finding the optimal setup.

Importantly, canceling games could allow the NBA to reduce player salaries through force majeure. Of course, the union would consider that action when negotiating how to proceed.

LeBron James advocated for playing some regular-season games before the playoffs so everyone could get back into shape. But Steve Kerr called it very unlikely the Warriors would play another regular-season game. Perhaps, playoff-bound teams like the Lakers will play tune-up regular-season games while Golden State – the only team officially eliminated from the playoff race before the hiatus – doesn’t. It’d be a little odd to have such different formats, though. (Then again, these are odd times).

Considering this report, we ought to give more credence to the idea that Kerr knows something about the NBA’s plan and that the regular season is finished.

Lakers update that all players ‘currently symptom-free of COVID-19’

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Nearly two weeks ago, the Lakers announced that two of their players tested positive for the coronavirus. “Both players are currently asymptomatic, in quarantine and under the care of the team’s physician… All players and members of the Lakers staff are being asked to continue to observe self-quarantine,” the Lakers said at that time.

On Tuesday, the team provided an update saying nobody on the team is showing any symptoms after a couple of weeks of quarantine.

“All Lakers players are currently symptom-free of COVID-19. The team will continue to follow the health and safety guidelines set by government officials, the Lakers and the NBA,” the statement said.

The Lakers’ players who tested positive were never publicly identified (in fitting with HIPAA regulations).

A total of 10 NBA players — plus five members of staff associated with teams — have tested positive for the virus that has upended life in the United States. None reportedly have had to be hospitalized. Players such as Marcus Smart and others have recovered and free from the virus.

The NBA remains suspended, with the league hoping to jump-start the playoffs in June, possibly with all the teams in one location.

Report: NBA won’t hold draft until after season

NBA draft
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The NBA draft is scheduled for June 25. Most expect that date to change as the coronavirus pandemic causes postponements around the world.

Apparently, the draft will come after the NBA season – whether the season is completed in a modified format or just cancelled.

Adrian Wojnarowski of ESPN:

I think everybody in the league feels it’s almost impossible to have a draft if you still have a season that’s ongoing.

You can’t have a draft while teams are still playing. You can’t have some teams able to do trades because their season’s done and then some teams unable to do trades because they’re still playing.

It doesn’t strike me as difficult to hold the draft before the season ends. Teams wouldn’t be allowed to trade current players. The restriction would apply across the board, just like the interrupted pre-draft process. That’s not ideal, but compromises must be made amid this chaos.

Importantly, holding the draft sooner could appeal to both sides of the Collective Bargaining Agreement.

It’d be an opportunity to hold a revenue-producing TV event. Obviously, drafted players wouldn’t attend a mass gathering. But with sports fans starved for content, people would watch the selections. A handshake with NBA commissioner Adam Silver is only a small part of the festivities.

The National Basketball Players Association should also push for an earlier draft. Prospects want information sooner so they can prepare for their next step – whether that’s the NBA, returning to college or playing overseas. That said, the union has bigger priorities than potential future members.

So, it’s easy to see why postponing the draft has gained momentum, even if that’s not a no-brainer solution.