Transcript of Schultz' KJR-AM interview
Howard Schultz, who announced the sale of the Sonics Tuesday, had some morning-after thoughts in a live interview this morning on KJR-AM with Mitch Levy.
Here are some highlights from that interview, with Schultz's responses. The questions are paraphrased:
Q: How are you doing this morning?
A: I think we understood that the decision would have ramifications and people would be very disappointed…For two plus years we've been trying to do everything we possibly could with local and state officials.
Q: How did it get to this point?
A: We were turned down not once but twice with Olympia over two plus years. We heard the City Council and its president Nick Licata say Sonics aren't relevant and that we don't need them. The mayor would say one thing us to in private meetings and then say other things that were very disingenuous publicly.
Most tellingly, the mayor appointed a bipartisan committee… to determine the Sonics value…They came back with a unanimous proposal to support the Sonics' initiative and they rejected it.
When that happened the only advocate we had was the governor …and she was fantastic but she didn't have power to garner support.
We have lost $60 million, and we have a fiduciary responsibility to the ownership group. We then said let's find local buyer.
But no local person wanted to step into our shoes… They didn't want to have a fight like we were having.
We had a higher offer from out-of-town team that we knew would move the team and we turned that down.
I understand there are skeptics inherent in something like this but I felt in my heart of heart that Clay Bennett is man of honor...I felt that he was telling me the truth [about his intentions here].
He's a businessman, and knows there is a tremendous opportunity in this market vs. Oklahoma City. But only way he'll stay is if local and state officials would give him the deal we couldn't get.
Did we feel good about exiting this way? No. But our hands were tied
Q: What about the three proposals the city said it made to the Sonics but got no response. Is that accurate?
A: That is not an honest approach of what took place. It's not going to do any good …to replay all that…but we [at Starbucks] have negotiated 11,000 leases in 40 countries…It is a core competency of mine, but I could not get to first base on this one.
I think that if you don't have support of government officials then certainly you're not going to get the support of voters.
Q: We understand that the new owners have a contractual commitment in the next 12 months not to move the team, and are bound by the lease until 2010. Is that right?
A: As part of the negotiation, I asked for something that was a deal breaker in negotiation. What I asked for was a side letter to our ownership group and to me…that said basically he would honor the four-year lease in terms of the 2010 terms, and use his best efforts over next 12 months ...They have obligation and a desire…and what I understand him to say and write in the letter is that they will honor lease and work as hard as they can in the next 12 months to get something done.
The burden is on local and state officials.
I believe they are contractually bound to honor the lease. Unless the city and mayor's office accepted a balloon payment to buy out the lease, but I couldn't imagine that any politician who wants to get reelected would do that.
Q: How did the ownership board vote on this. Was it unanimous?
A: The board was involved for two plus years. Not going to speak what goes on in private board meeting. That remains private.
Q: What is the current financial outlook? Weren't tickets selling well?
A: The team ended on a very good note…and as a result of that we came through the postseason and post-selling season in good fashion. But bare in mind… if we sold out every ticket, every suite, and every sponsorship opportunity, we still would lose millions of dollars next year.
There is no chance for the Sonics & Storm to make a profit under the lease agreement that we have.
Q: But why not hold on to the team? It will be worth much more over time, no matter what.
A: I think that history has shown that professional sports teams, that their value is in excess of a life for life situation if team is unencumbered with a lease.
An unencumbered team has unbelievable value…but I think we felt and this going to be a hard concept to understand….that if team's future is going to be in the Northwest that the best possible outcome is to sell to this group, that there is a better chance with new ownership group, because of leverage. We had none.
I think when we sat down with government officials over two years…at some point we told them we would not able to maintain and hold our ownership group together. We were getting pressure from own group – saying we don't want to keep having capital calls, what's the future? It's not just Howard Schultz…We were not able to do it. We have responsibility to multiple constituencies.
It's a very tough story to tell the fans and young kids and I take that personally and at the end of day, the buck stops with me. I'm the one who has to accept responsibility.
Maybe it was my own ineptitude, that I was not persuasive enough that this was going to happen.
Q: How far did explore Bellevue option?
A: Bellevue is still real, and I spoke about it in process of getting to know [new owners] Clay and Evans, giving them comprehensive analysis of situation, and included in that was my enthusiasm for Bellevue. And I believe Clay is going to look at sites in Bellevue today before he goes back to Oklahoma. Our group did look at that, yes. But for Bellevue to happen, they still have to get state approval, and no guarantee of that.
Q: Were you so excited about buying this team five years ago that you discounted any possible arena problems, or just thought you'd worry about that later?
A: Yes, I think that's a very good observation. Nobody was more enthused about being involved in pro sports and owning the Sonics than me. We never believed…that we would run across a city council and mayor who would act this way against our group. We were naïve. Can't explain it. We did everything we possibly could. We acted honorably.
Q: After all good things Howard Schultz and Starbucks have done for this place, you will still be known as the guy who paved the way for the Sonics to leave. How can you live with that?
A: I certainly will because don't believe that conclusion. If Sonics and Storm end up leaving, the burden will be on city officials…I believe the team is going to stay here. If city and state officials do the right thing they will. I will have to live with consequences.
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