Tough city contract keeps grip on Blazers
Allen signed 30-year pact declaring team can't move
A legal document signed by Paul Allen prohibits him from relocating the Trail Blazers to another city while he owns the NBA franchise. If he sells the team, Allen agreed to make sure the new owner would be bound by the same conditions.
Under a 30-year 'exclusive site agreement' with the city of Portland that went into effect June 23, 1993, Allen promised to keep the Blazers in Portland.
The 18-page document is signed by Allen and then-Mayor Vera Katz, among others. Parties to the agreement include Allen, the city of Portland and Trail Blazers Inc.
Three weeks ago, Allen's representatives made public a plea to city, county and state officials for financial support for the Blazers through a proposed 'public-private partnership' to help fix a 'broken financial model.' A representative said then that the NBA club stands to lose $100 million over the next three years.
In meetings with local government officials, Allen's representatives have not been specific about what sort of form that partnership could take. But there have been veiled references to Portland's somehow losing its NBA team. In fact, in a posting on the Trail Blazer Web site last weekend, in a 'Conversation with Paul Allen,' the owner broached the possibility of the team's moving:
'I want the team to stay in Portland,' he wrote. 'If this all ends up in the courts, or someone buys the team and moves it, it would be a shame.'
But the 'Exclusive Site Agreement' would seem to make that impossible.
Portland Mayor Tom Potter was unavailable for comment. His press aide, John Doussard, said Potter 'is aware of the document. I don't know he has read it. We know the document exists and know what it says. I have seen the document. (But) Paul Allen has not called us up and talked about moving the team.'
Under terms of the 1993 document Ñ signed more than two years before the Rose Garden opened Ñ moving the Blazers would be a costly proposition for the world's sixth-richest man. Allen's personal liability is limited to Sections 3.4, 3.5 and 3.7, which deal with transfer of ownership of the team. In signing, Allen agreed that a franchise move to another city would result in paying damages to the city of Portland.
'In the event of a breach of this agreement by TBI (Trail Blazers Inc.) or Allen,' Section 4 begins, 'the city will suffer both damages compensable by the payment of money, and damages (that) will not be compensable by money and É will be irreparable.'
If that happened, the city could ask for a judge to issue an injunction to prevent Allen from selling or moving the club until its legality was decided in a court of law.
The document stipulates that a purchaser of the Blazers would 'agree É without modification or qualification, with the covenants and restrictions applicable to Allen set forth in this agreement.'
A legal opinion obtained by the Portland Tribune suggests that the agreement is unusually strong on the side of the city, which would be the third-party beneficiary for any breach of contract.
Even if Trail Blazers Inc. were to file for bankruptcy, the party assuming ownership of the club would be responsible under Section 3.2, which reads, 'In the event of the liquidation or dissolution of TBI, the covenants and restrictions É set forth in this agreement shall be binding upon the shareholders of TBI or any other distributee of the franchise and related assets and properties of TBI.'
Blazer team President Steve Patterson and J. Isaac, the team's senior vice president of business affairs, referred questions to Andy Brimmer, communications director for Vulcan Capital, Allen's private investment group.
'As we said yesterday, both Vulcan and the city expressed a common goal of keeping the franchise in Portland,' Brimmer said in an e-mail. 'However, in the ongoing discussions, we decline further comment.'