# "Blazers see sale negotiations as hopeless"



## wastro (Dec 19, 2004)

Bad news ...



> Negotiations to jointly put the Portland Trail Blazers and the Rose Garden arena up for sale have deadlocked and the team is increasingly looking at "other options," a representative for the NBA franchise said Thursday.
> 
> "In our opinion, negotiations have reached an impasse that may not be resolved," said Andy Brimmer, a spokesman for Blazers owner Paul Allen's investment firm, Vulcan Inc. "Our preference has been to reach an agreement with (the arena owners) to keep the team in Portland. However, as negotiations have drawn out, we have been forced to look more seriously at our other options."


It's pretty much the exact opposite of what Dwight Jaynes said in the Tribune recently ...


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## Dan (Dec 30, 2002)

thanks vulcan.

btw, this is just BS move by the team. the team can be sold individually and the arena can be bought later by the new owners. Why would Paul Allen honestly care if the team and arena are sold seperatly? He (Allen) gets the same either way.


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## wastro (Dec 19, 2004)

SMiLE said:


> thanks vulcan.
> 
> btw, this is just BS move by the team. the team can be sold individually and the arena can be bought later by the new owners.


I was thinking that this morning ... why doesn't someone do just that, especially since they won't have the bad blood with PAM?


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## blue32 (Jan 13, 2006)

They're not moving outta the city, so let them drown in their own shiiiiiiiiiiiiiiiiiiiiaaaaaaaatttttt =)


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## B_&_B (Feb 19, 2004)

Nobody is going to want to buy the team unless they also get the arena. Buying the team only, then hoping to later get the arena is to big of a risk. Without the arena, a new owner would continue to lose $$$ like Paul is now.


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## Dan (Dec 30, 2002)

BEER&BASKETBALL said:


> Nobody is going to want to buy the team unless they also get the arena. Buying the team only, then hoping to later get the arena is to big of a risk. Without the arena, a new owner would continue to lose $$$ like Paul is now.


companies are bought all the time with big debt issues, and contractual issues being up in the air.

I would hope that if there's a group interested in buying the team, they'd much rather buy the team and then buy the arena, than have Paul Allen..er..Vulcan...threaten to and then try to move the team because they ****ed up in the first place.

There's always a chance that this is just Vulcans way of trying to A: help move the team (which shows that they are scum) or B: trying to strong arm PAM or C: really don't have the best interests of the team/city in their minds.

whatever the scenario is, there's always the chance that PAM would rather deal with someone who DIDN'T default on the loan in the first place.


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## RedHot&Rolling (Jun 26, 2004)

I see the bankruptcy filing coming soon. This will allow Allen to move the team out of Portland and away from the RG/PAM group. Hardball politics.

Porter says he'll know what direction he's moving in a week or so. That means to me that his group is either moving toward purchasing the Blazers or not. If not, it looks as if Allen will have exposed his hand of really not wanting to sell the team to avoid losses $$ but rather just trying to renegotiate the RG lease/profits.


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## It's_GO_Time (Oct 13, 2005)

Stern mentioned in the article that the only "model" that makes sense is to own the arena along with the franchise. I think most investors would think it is too risky to buy one of two necesssary components and then hope you can buy the other one later.

Things just get worse and worse for the Blazers. I don't kow how real of a possibility it is for the team to move, but Vulcan sure makes it sound like a possibility. Has the Blazer organization turned into the worst organization in the league? Worst record, worst attendence, worst financial situation, owner threatening banckruptcy or moving the team. 

I think posters on this board deserve a pat on the back for still following and being intersted in the Blazers. We are the die hard fans . . . with the emphsis on "die" :biggrin:


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## maxiep (May 7, 2003)

Not to worry. It's a nothing story. Allen couldn't get PAM to budge on their price and he's saber rattling, hopeing to get them to lower their price by the threat of bankruptcy.

PAM's lawyers have reviewed the lease in detail and are perfectly comfortable if the Blazers declare bankruptcy. They believe the lease can't be broken. Of course, any judge can be completely crazy, but they're not too worried about the threat. That makes me not too worried.

The Blazers aren't moving. The worst part is that we may be stuck in neutral, not making any moves other than cap clearing ones while Allen waits to get his price. Allen needs to look in the mirror, acknowledge his moves have killed the value of this team and sell it for market value.


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## yakbladder (Sep 13, 2003)

SMiLE said:


> companies are bought all the time with big debt issues, and contractual issues being up in the air.


Only when those companies either have A) huge assets that can piece-mealed off for money or B) the person buying the company has some sort of inside lead on the negotiations.

Unless someone talks with PAM on the sidelines first they would be ABSOLUTELY NUTS to buy this team separately. No investor with that kind of money is his or her right mind would walk in there without something in their back pocket to save the day.


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## It's_GO_Time (Oct 13, 2005)

maxiep said:


> PAM's lawyers have reviewed the lease in detail and are perfectly comfortable if the Blazers declare bankruptcy. They believe the lease can't be broken. Of course, any judge can be completely crazy, but they're not too worried about the threat. That makes me not too worried.



So if PAM isn't worried if the Blazers declare BK and think that won't lead to the lease being broken, what happens to the Blazer organization if they declare BK?


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## maxiep (May 7, 2003)

Kiss_My_Darius said:


> So if PAM isn't worried if the Blazers declare BK and think that won't lead to the lease being broken, what happens to the Blazer organization if they declare BK?


It's business as usual. Declaring bankruptcy is like having your mom settle a disagreement. Basically you can't agree with your siblings so you air your grievances in front of a judge and ask for relief. Sometimes they give you a break, sometimes they don't.


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## Masbee (Dec 31, 2002)

maxiep said:


> Not to worry. It's a nothing story. Allen couldn't get PAM to budge on their price and he's saber rattling, hopeing to get them to lower their price by the threat of bankruptcy.
> 
> PAM's lawyers have reviewed the lease in detail and are perfectly comfortable if the Blazers declare bankruptcy. They believe the lease can't be broken. Of course, any judge can be completely crazy, but they're not too worried about the threat. That makes me not too worried.
> 
> The Blazers aren't moving. The worst part is that we may be stuck in neutral, not making any moves other than cap clearing ones while Allen waits to get his price. Allen needs to look in the mirror, acknowledge his moves have killed the value of this team and sell it for market value.


Neutral this summer is not ideal. Opportunities can be missed. But, it might not be the worst thing in the long run.

Though the team did not follow my advice on the Masbee Plan (c) from over a year ago, they can still run a modified, inferior version of it. The 2007 draft looks terrific and 2008 should be good too. With the ownership and management in turmoil, there is no need for older vets, expensive free agents or sacrificing development to win games. 

Telfair, Webster, Jack, Outlaw, etc. still are all very raw and will be better sooner if they get more playing time next season. Another year like last season will be painful, but the Blazers are kidding themselves if they think "veterans" brought in can overcome ownership turmoil and bring us more than a few extra wins. Continue to develop what we have got, choke on another terrible year, make big moves next summer after ownership/arena issues are settled.


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## It's_GO_Time (Oct 13, 2005)

maxiep said:


> It's business as usual. Declaring bankruptcy is like having your mom settle a disagreement. Basically you can't agree with your siblings so you air your grievances in front of a judge and ask for relief. Sometimes they give you a break, sometimes they don't.


 I don't understand that. When PA declared BK with the Rose Garden, an entirely different entity took over (the creditors?) and Allen had nothing to do with it. The BK code is lenghty and complex and doesn't come down to a judge having all the discretion to do whatever they want. Also, BK must have some legal impact on exsisting contracts. On top of that there are several types of BKs . . . I really don't think it is as simplistic as having mom settle a dispute.


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## Dan (Dec 30, 2002)

yakbladder said:


> Only when those companies either have A) huge assets that can piece-mealed off for money or B) the person buying the company has some sort of inside lead on the negotiations.
> 
> Unless someone talks with PAM on the sidelines first they would be ABSOLUTELY NUTS to buy this team separately. No investor with that kind of money is his or her right mind would walk in there without something in their back pocket to save the day.


I'm sure that if the people interested in buying the team, buy just the team, it'll be because they know that they cna negotiate with PAM, and that # that PAM is offering is just outside of what Paul Allen wants, and not necessarily what a new ownership group wants to pay.

As in, if Paul wants to sell the team for a combined 300 million, maybe he wants it 50/50...but Pam wants it 60-40 and Paul doesn't...hm...but than again, why wouldn't the new ownership just say 'ok, we'll foot the difference'...so nevermind.


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## maxiep (May 7, 2003)

Kiss_My_Darius said:


> I don't understand that. When PA declared BK with the Rose Garden, an entirely different entity took over (the creditors?) and Allen had nothing to do with it. The BK code is lenghty and complex and doesn't come down to a judge having all the discretion to do whatever they want. Also, BK must have some legal impact on exsisting contracts. On top of that there are several types of BKs . . . I really don't think it is as simplistic as having mom settle a dispute.


OAC didn't declare bankruptcy. They defaulted on their debt, which was secured by the Rose Garden. In any asset-backed financing deal with no personal recourse, a bankruptcy remote entity is created with the sole line of business being that asset. It turns out to be merely a official transfer. The mortgage gives you a right to control as asset until you no longer pay it. At that point the asset falls under the control of the lender. Until the note is fully paid, the note remains in the hands of the lender.

There's a difference between bankruptcy and default. OAC defaulted on their note. Trail Blazers, Inc. would be seeking bankruptcy protection for their creditors and obligations. They would be going to a judge and that judge would decide what the Blazers would get out of and what they would have to live up to. Allen also loses significant control over the business until TBI emerges from it.

bankruptcy is complex with arcane rules that most attorneys don't fully understand, that's why bankruptcy is a speciality all its own. Take Bobby McFerrin's advice and don't worry too much about it. Most of this stuff is posturing anyway. If there were a real benefit to Allen declaring bankruptcy, he would have done it already.


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## Samuel (Jan 1, 2003)

Masbee said:


> Neutral this summer is not ideal. Opportunities can be missed. But, it might not be the worst thing in the long run.
> 
> Though the team did not follow my advice on the Masbee Plan (c) from over a year ago, they can still run a modified, inferior version of it. The 2007 draft looks terrific and 2008 should be good too. With the ownership and management in turmoil, there is no need for older vets, expensive free agents or sacrificing development to win games.
> 
> Telfair, Webster, Jack, Outlaw, etc. still are all very raw and will be better sooner if they get more playing time next season. Another year like last season will be painful, but the Blazers are kidding themselves if they think "veterans" brought in can overcome ownership turmoil and bring us more than a few extra wins. Continue to develop what we have got, choke on another terrible year, make big moves next summer after ownership/arena issues are settled.


If Portland follows that plan, they'll lose any remaining season ticket holders they have. This is an extremely fragmented group of fans still doling out a few grand a year for seats.


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## barfo (Jan 2, 2003)

Just had a funny thought. Suppose Paul actually dumps the Blazers in bankruptcy - similar situation as the arena. So, who are the creditors in this case? Arguably, the biggest creditors could be Zach, Theo, Darius - each of them is owed tens of millions by the franchise. 

Can you picture Zach, Theo, and Darius as owners of the Blazers? 

barfo


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## SodaPopinski (Aug 10, 2004)

All posturing by the Vulcans to get the arena lenders to come to the table with a lower asking price for the arena.

I'm not worried about it.

-Pop


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## Kmurph (May 7, 2003)

This whole thing just pisses me off...

I don't care about Allen, I certainly don't care about Vulcan, and I don't care about PAM...

What I DO care about is the Blazers staying in POR...and anytime you have a bunch of bean counters involved...where the team is located or what impact the team has on the city MEAN nothing...


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## It's_GO_Time (Oct 13, 2005)

maxiep said:


> OAC didn't declare bankruptcy. They defaulted on their debt, which was secured by the Rose Garden. In any asset-backed financing deal with no personal recourse, a bankruptcy remote entity is created with the sole line of business being that asset. It turns out to be merely a official transfer. The mortgage gives you a right to control as asset until you no longer pay it. At that point the asset falls under the control of the lender. Until the note is fully paid, the note remains in the hands of the lender.
> 
> There's a difference between bankruptcy and default. OAC defaulted on their note. Trail Blazers, Inc. would be seeking bankruptcy protection for their creditors and obligations. They would be going to a judge and that judge would decide what the Blazers would get out of and what they would have to live up to. Allen also loses significant control over the business until TBI emerges from it.
> 
> bankruptcy is complex with arcane rules that most attorneys don't fully understand, that's why bankruptcy is a speciality all its own. Take Bobby McFerrin's advice and don't worry too much about it. Most of this stuff is posturing anyway. If there were a real benefit to Allen declaring bankruptcy, he would have done it already.


That makes more sense . . . although I'm still lost on how a Bk would effect the Blazers staying or going. At the very least, I hate the idea that a BK court would be controlling th Blazer organization . . . talk about only being concerned with making money. 

I like your last point best, that if it would benefit Allen he would have already done it. Personally I don't think the Blazers will declare bankruptcy, but then again I didn't think a lot of things that have happened with the Blazers would happen.

At some point this Blazer downfall has to turn around right?


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## Schilly (Dec 30, 2002)

A couple notes...

Not only does PAM think the Lease "unbreakable", there is another key factor. The league has to approve relocation. If Paul wants to relocate and the NBA doesn't want the team to relocate, then the NBA essentially can force PA to sell the franchise to an entity who will abide by what the NBA wants.


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## barfo (Jan 2, 2003)

maxiep said:


> OAC didn't declare bankruptcy.


OAC did declare bankruptcy.

barfo


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## It's_GO_Time (Oct 13, 2005)

Schilly said:


> A couple notes...
> 
> Not only does PAM think the Lease "unbreakable", there is another key factor. The league has to approve relocation. If Paul wants to relocate and the NBA doesn't want the team to relocate, then the NBA essentially can force PA to sell the franchise to an entity who will abide by what the NBA wants.


 Good point. But Stern has come out pubically on several occasions expressing his frustrations with PAM. Is that an early indication he will allow the organization to leave Ptd (if it can be done legally)?


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## Schilly (Dec 30, 2002)

Kiss_My_Darius said:


> Good point. But Stern has come out pubically on several occasions expressing his frustrations with PAM. Is that an early indication he will allow the organization to leave Ptd (if it can be done legally)?


He also said that the reason he got involved in talks is he wants the NBA to stay in Portland.


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## Trader Ed (Jun 17, 2002)

If we get new owners and the Blazers play in the MC.. I am going to say.. I told you so :rofl:


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## maxiep (May 7, 2003)

barfo said:


> OAC did declare bankruptcy.
> 
> barfo


You are correct. I had forgotten that they had to do so to default on the note. Thanks for the clarification, correction and update. My bad.


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## It's_GO_Time (Oct 13, 2005)

Schilly said:


> He also said that the reason he got involved in talks is he wants the NBA to stay in Portland.


 That is my concern. He said that and got invovled, and then pulled out of talks with a sort of frustrated tone about how he is done with it because of PAM. I was concerned that meant, "to hell with trying to keep the Blazers in Ptd, you do what you have to do Paul"


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## maxiep (May 7, 2003)

Kiss_My_Darius said:


> That is my concern. He said that and got invovled, and then pulled out of talks with a sort of frustrated tone about how he is done with it because of PAM. I was concerned that meant, "to hell with trying to keep the Blazers in Ptd, you do what you have to do Paul"


Don't forget who Stern represents. He's involved in these negotiations to protect the NBA and to schill for Paul Allen. Don't expect him to be a fair arbiter. He wants the best outcome for Allen or any new owner. If it's best for the league to stay in Portland, he'll be for it. If there's a more attractive market and and we're in the worst shape, he'll work to move us in a heartbeat.


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## sa1177 (Feb 18, 2005)

Trader Bob said:


> If we get new owners and the Blazers play in the MC.. I am going to say.. I told you so :rofl:


Not going to happen...the mC is garbage these days even with the history of the place it would be downright disgraceful to play a NBA season there now days. It would also guarantee a loss of $$ since it lacks, luxury suites, food concessions, merchandise locations etc. All of which generate $$.


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## tlong (Jan 6, 2003)

maxiep said:


> Not to worry. It's a nothing story. Allen couldn't get PAM to budge on their price and he's saber rattling, hopeing to get them to lower their price by the threat of bankruptcy.
> 
> PAM's lawyers have reviewed the lease in detail and are perfectly comfortable if the Blazers declare bankruptcy. They believe the lease can't be broken. Of course, any judge can be completely crazy, but they're not too worried about the threat. That makes me not too worried.
> 
> The Blazers aren't moving. The worst part is that we may be stuck in neutral, not making any moves other than cap clearing ones while Allen waits to get his price. Allen needs to look in the mirror, acknowledge his moves have killed the value of this team and sell it for market value.


I believe it wouldn't take much to convince a judge that the lease could be broken after a bankruptcy filing.


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## barfo (Jan 2, 2003)

Kiss_My_Darius said:


> I like your last point best, that if it would benefit Allen he would have already done it.


I don't think that is necessarily correct. Certainly, if it was a slam-dunk no brainer, he would have already done it. It clearly isn't that, but that doesn't mean that it won't, in the end, turn out to be the best of a bad lot of options. If he isn't happy with his options, it makes some sense to wait awhile in hopes of something better rather than jump into bankruptcy. Of course, how long 'awhile' it makes sense to wait is unclear without knowing what the options actually are. 

barfo


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## barfo (Jan 2, 2003)

maxiep said:


> PAM's lawyers have reviewed the lease in detail and are perfectly comfortable if the Blazers declare bankruptcy. They believe the lease can't be broken. Of course, any judge can be completely crazy, but they're not too worried about the threat. That makes me not too worried.


Well, they should be confident, since they are betting a very large sum of money on the outcome.

Should be interesting - I am not at all confident they are correct, but I have not examined the lease, in detail or otherwise. I presume Vulcan has, though. 

barfo


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## Tince (Jul 11, 2004)

I haven't had a chance to read through the entire thread, but the option of buying the Blazeres w/out the Rose Garden isn't going to happen.

In today's NBA, it's near impossible to turn a profit without the large revenues that come in through sky boxes, suites, and top quality seating. If you simply owned the Blazers you wouldn't be getting any of that revenue and would have to sell out the place every night in hopes of breaking even. 

This is an issue I've studied in great depth in my financing sports class, so if anyone really wants details I can go more in-depth. Overall, an NBA teams financial success is based more on their arena lease deal more than anything else, with a few exceptions.


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## barfo (Jan 2, 2003)

Tince said:


> I haven't had a chance to read through the entire thread, but the option of buying the Blazeres w/out the Rose Garden isn't going to happen.


Agree, with the caveat that if the lease was broken, then it would make a lot of sense to buy the team w/o the arena.

barfo


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## tlong (Jan 6, 2003)

We need Ed O. to freshen up on his contract law and give his opinion on the possibility of a lease being broken after a bankruptcy is declared.


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## Utherhimo (Feb 20, 2005)

thats what maxiep is in real life used to deal with the rg and the lease


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## tlong (Jan 6, 2003)

Utherhimo said:


> thats what maxiep is in real life used to deal with the rg and the lease


I believe mixiep has some expertise in the financial matters associated with the RG and Lease, but I don't believe he is an attorney. I could be wrong though.


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## Boob-No-More (Apr 24, 2006)

All this talk of TBI filing bankruptcy is just more bluffing from the idiots at Vulcan. You think Paul would learn. He tried the same nonsense with OAC to bluff his creditors into lowering the interest rate on OAC's debt - and we all know how that worked out.

All this talk of the Blazers moving is also nonsense and ignores the 30-year "exclusive site agreement" *Paul Allen personally signed* with the city of Portland back in 1993. This means if he moves the team, or if he sells the team to someone else and they move the team, Mr. Paul Allen *personally*, not Trailblazers, Inc. will be paying the city of Portland for lost revenues for the next 17 years. It also permits the city of Portland to seek an injunction should Paul Allen, or anyone he sells the team to, attempt to move the team to another city. Trailblazers Inc. may well file bankruptcy (I doubt it), but Paul Allen, the world's sixth richest man isn't about to. That "exclusive site agreement" he personally signed with the city of Portland has his hands tied and that's why Tom Potter and the city of Portland isn't in any big hurry to give the world's sixth richest man "public assistance" (aka: welfare) in spite of the so-called "broken economic model". 

So the whole TBI bankruptcy is just another lame, transparent bluff in an attempt to gain leverage where they have none and turn public opinion against PAM to make them look like the bad guys in this whole situation. Heck, since they were smart enough to see right through Paul's last bankruptcy bluff, they hold all the cards. PAM is actually *making money* under the current "broken" financial model. Why *should* they want to cut a deal with Paul Allen on a joint sale of the team/RG? Where's the incentive for them to do so? Unless someone is willing to give them fair market value (or maybe a little more) for the RG, they have absolutely no reason to sell it. This is just Paul/Vulcan's latest attempt to get them to lower their asking price for the RG.

So, Paul/Vulcan are making hollow threats against both the city of Portland and PAM, and both parties see right through those threats. Paul should just step up to the plate and pay PAM fair market value for the RG. He would once again control both, and any money TBI is losing would be partially offset by the profits the arena is making - taking money out of one pocket to line the other. I suspect this has been Paul's real goal through this whole process. All this "broken economic model", bankruptcy bluffing and threats to move the team is just posturing to get the best deal possible - and to try to save some face for the bungled way the OAC bankruptcy/default was handled.

BNM


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## Boob-No-More (Apr 24, 2006)

tlong said:


> We need Ed O. to freshen up on his contract law and give his opinion on the possibility of a lease being broken after a bankruptcy is declared.


Acording to the exclusive site agreement signed by both Paul Allen and Trailblazers, Inc. in 1993:

_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 … 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.”_

BNM


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## Dan (Dec 30, 2002)

Boob-No-More said:


> Acording to the exclusive site agreement signed by both Paul Allen and Trailblazers, Inc. in 1993:
> 
> _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 … 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.”_
> 
> BNM


is that from the ACTUAL agreement? do you have a link to that so we can read other parts?


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## Boob-No-More (Apr 24, 2006)

SMiLE said:


> is that from the ACTUAL agreement? do you have a link to that so we can read other parts?


It's a quote from an aticle Kerry Eggers did for the Portland Tribune a couple months ago. It doesn't include the entire document, but does quote several relevant passages. Here's the link.

BNM


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## tlong (Jan 6, 2003)

Boob-No-More said:


> Acording to the exclusive site agreement signed by both Paul Allen and Trailblazers, Inc. in 1993:
> 
> _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 … 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.”_
> 
> BNM


I don't believe that would mean much in a bankruptcy hearing.


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## Dan (Dec 30, 2002)

Boob-No-More said:


> It's a quote from an aticle Kerry Eggers did for the Portland Tribune a couple months ago. It doesn't include the entire document, but does quote several relevant passages. Here's the link.
> 
> BNM


rock on..I guess the people who figured this was just a move to get the team to move have egg on their face, eh?


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## Dan (Dec 30, 2002)

tlong said:


> I don't believe that would mean much in a bankruptcy hearing.


how do you figure? It basically says if the team files for bankruptcy, they still have to abide by the initial agreement. 

how could that not mean much in a hearing?


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## Boob-No-More (Apr 24, 2006)

tlong said:


> I don't believe that would mean much in a bankruptcy hearing.


Umm... section 3.2 of that contract between Paul Allen, Trailblazers, Inc. and the city of Portland was included *specifically* to protect the city of Portland's financial interests in the event of a bankruptcy by TBI. Why in the world wouldn't it mean much in a bankruptcy hearing?

According to the Portland Trib article by Eggers:

"_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._"

The wording sounds pretty cut and dried to me. No matter if TBI files bankruptcy, Paul Allen moves the team, or sells to someone else who moves the team, he is personally responsible for any lost revenue incurred by the city of Portland caused by any of these actions. Basically, the city of Portland gets their money no matter what happens - and if the team pulls out or collapses, Paul Allen is paying the city of Portland out of his own pocket for the remainder of that 30-year exclusive site agreement. 

Paul may be dumb, but he ain't stupid. He's not going to end up paying the city of Portland millions of dollars a year for the next 17 years for a team he no longer owns or controls. Repeat after me: *The Trailblazers aren't leaving Portland!* 

BNM


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## Oldmangrouch (Feb 11, 2003)

SMiLE said:


> how do you figure? It basically says if the team files for bankruptcy, they still have to abide by the initial agreement.
> 
> how could that not mean much in a hearing?


Because under the right circumstances the judge could declare the agreement null and void.

If Bankruptcy courts did NOT have that power, everyone who signs a contract/lease/rental agreement would get stuck with a clause declaring that *this* agreement is exempt from the law.

WILL the judge void the agreement? That I can't answer. In general, judges take a dim view of contracts that try to put themselves above the reach of the courts/law.


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## Oldmangrouch (Feb 11, 2003)

Boob-No-More said:


> Umm... section 3.2 of that contract between Paul Allen, Trailblazers, Inc. and the city of Portland was included *specifically* to protect the city of Portland's financial interests in the event of a bankruptcy by TBI. Why in the world wouldn't it mean much in a bankruptcy hearing?
> 
> According to the Portland Trib article by Eggers:
> 
> ...




The part about the Blazers not leaving sounds all well and good. Sadly, there is another side to this. 

If you are correct and Allen has zero leverage, the team is screwed. PAM is too vindictive to make a deal with Allen. No one (with half a brain) will buy the team as is. That leaves 2 scenarios.

First, Allen could do a 180 and start pouring money into the team again.

Second, Allen could cut his losses. That means running the team on a shoe-string ala the Clips.


My money is on "2". We may still have a team, sort of like Montreal still had a team in MLB, but it will be a hopeless joke.


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## Masbee (Dec 31, 2002)

Oldmangrouch said:


> Because under the right circumstances the judge could declare the agreement null and void.
> 
> If Bankruptcy courts did NOT have that power, everyone who signs a contract/lease/rental agreement would get stuck with a clause declaring that *this* agreement is exempt from the law.
> 
> WILL the judge void the agreement? That I can't answer. In general, judges take a dim view of contracts that try to put themselves above the reach of the courts/law.


Yep. Bankruptcy courts are their own world.

They sure as heck don't get caught up in clauses like this. "oh gee, that settles it then, I the judge am going to put all other stakeholders interests aside, torpedo the viabilty of this entity to continue to even exist, for the sole purpose of enforcing this one, single clause on a piece of paper almost 15 years old."

Not gonna happen. Besides, the City got a SWEET deal, as I posted a while back in more detail. If a stink is made about this in a bankruptcy court, I could easily see a judge rule that the City made out like bandits, and have more than been made whole already. Thus freeing the judge to disregard future claims of the City.

Additionally, the clause by itself is fishy. Seems like the type of junk put in contracts, to send a message, for PR purposes, or other reasons, despite being legally suspect. I wouldn't be surprised if it got thrown out as unenforceable or void.


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## Dan (Dec 30, 2002)

Masbee said:


> Yep. Bankruptcy courts are their own world.
> 
> They sure as heck don't get caught up in clauses like this. "oh gee, that settles it then, I the judge am going to put all other stakeholders interests aside, torpedo the viabilty of this entity to continue to even exist, for the sole purpose of enforcing this one, single clause on a piece of paper almost 15 years old."
> 
> Not gonna happen. Besides, the City got a SWEET deal, as I posted a while back in more detail. If a stink is made about this in a bankruptcy court, I could easily see a judge rule that the City made out like bandits, and have more than been made whole already. Thus freeing the judge to disregard future claims of the City.


it's not just one claus, and also if people who are experts on this (as thats who the tribune asked) said that it's highly unlikely that they could get out of the deal, why would (or better yet, should) we believe a fan on an internet posting board who thinks they can because afterall, "courts are their own world"?



> Additionally, the clause by itself is fishy. Seems like the type of junk put in contracts, to send a message, for PR purposes, or other reasons, despite being legally suspect. I wouldn't be surprised if it got thrown out as unenforceable or void.


yep, because Im sure that the city just went "gee golly hyuck meester allen, if you-in-a-say so! "

they had their lawyers look at it too, so it's not like they just were dumb enough to have some hollow promise made to look good for the fans.


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## maxiep (May 7, 2003)

Why does everyone assume that Chapter 11 would mean that all these agreements are likely to be tossed? I look at the situation and come to the opposite conclusion.

Regardless of what my former colleagues at Pru (and their lawyers) think, I look to what's going on with Vulcan. If Allen's side felt there was even a modest chance they could get the RG lease voided, they would be nuts not to declare bankruptcy. There's little other downside for them other than that they have restrictions placed on their management decisions and they have to open their books. The fact they haven't done so speaks volumes.

Also, we need to realize that Allen signed this agreement with himself, TBI to OAC. To me that would be a horrible precedent to let him out it, even if I wasn't emotionally invested in the Blazers to stay. It would allow anyone to create phantom entities and dump their losses there. To me that's like a return to the pre-1986 days of passive loss.

Finally, if he can get out of a personal guarantee to a governmental entity, it will provide a disincentive to future public entities to enter into agreements with owners of private businesses that wished to build properties.

There seems to me to be enough evidence to show it's highly unlikely that bankruptcy would be a positive outcome for Allen.


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## Dan (Dec 30, 2002)

maxiep said:


> Why does everyone assume that Chapter 11 would mean that all these agreements are likely to be tossed? I look at the situation and come to the opposite conclusion.
> 
> Regardless of what my former colleagues at Pru (and their lawyers) think, I look to what's going on with Vulcan. If Allen's side felt there was even a modest chance they could get the RG lease voided, they would be nuts not to declare bankruptcy. There's little other downside for them other than that they have restrictions placed on their management decisions and they have to open their books. The fact they haven't done so speaks volumes.
> 
> ...


very good points. In addition to this, altho not "legal" centric, this opens a HUGE kettle of fish for the NBA. 

If they A: allow the team to file bankruptcy (please, if the NBA doesn't want him to, they can make him not do it.) or B: move it'd basically mean that Seattle could then weasle out, as could Sacramento and any other city/team (in other leagues) too. Plus, we all know it's much more fun to believe the NBA doesn't want us to be a team, and Paul Allen wants to own the Sonics, and Paul Allen hates Portland, and the NBA wants to move the team to Vegas, and Vancouver (BC) stands a snowballs chance in hell at getting a team OR the Blazers. 

not to mention that this was all allen's own doing, with the contract being made to benefit himself (the team) and basically make it so his left hand was paying his right hand.

oh well. it's always more fun to be paranoid and think the team is moving because you heard someone say on a message board that bankruptcy viods deals with city governments, etc.

I mean, the Oregonian reported it..it _must_ be true.


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## Boob-No-More (Apr 24, 2006)

Oldmangrouch said:


> Because under the right circumstances the judge could declare the agreement null and void.
> 
> If Bankruptcy courts did NOT have that power, everyone who signs a contract/lease/rental agreement would get stuck with a clause declaring that *this* agreement is exempt from the law.
> 
> WILL the judge void the agreement? That I can't answer. In general, judges take a dim view of contracts that try to put themselves above the reach of the courts/law.


You've completely missed the point. Paul Allen *personally* signed the 30 year exclusive site agreement with the city of Portland. No court in the land can protect Paul Allen from *his* creditors when he's not the one declaring bankruptcy. If TBI declares bankruptcy, it has no legal bearing on Paul Allen's obligation to the city of Portland. As the sixth richest man in the world, Paul Allen isn't going to declare personal bankruptcy any time soon. TBI can declare bankruptcy if they wish, but the judge in their case would have no legal authority to release a different party (Paul Allen) from his contractual obligations. 

Eggers' article is right, the city of Portland has Paul Allen by the short hairs. Short of Allen declaring personal bankruptcy (which he won't, he's made some bad investments, but he's till one of the richest people in the world), they will get their mony no matter what. So, they have absolutely no incentive to negotiate any kind of public/private arrangement to bale out TBI. They already have a public/personal arrangement with Paul Allen - and they hold all the cards.

BNM


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## Boob-No-More (Apr 24, 2006)

maxiep said:


> Why does everyone assume that Chapter 11 would mean that all these agreements are likely to be tossed? I look at the situation and come to the opposite conclusion.


Especially, since it would be TBI declaring bankruptcy, not Paul Allen. How can an agreement between Paul Allen and the city of Portland be tossed when he's not the one declaring bankruptcy? Simple, it can't.



maxiep said:


> Also, we need to realize that Allen signed this agreement with himself, TBI to OAC.


Actually, this agreement does not involve OAC. It was an exclusive site argeement between Paul Allen, TBI and the city of Portland signed in 1993 - before the Rose Graden was built. This has nothing to do with the Rose Garden, OAC or PAM. In theory, TBI could declare bankruptcy to get out of their lease with PAM and the Blazers could play in the MC for the next 17 years. However, as both Paul Allen and the Trailblazers would lose even more money by doing so, I don't expect this to happen. This may be the exact bluff Vulcan is trying to use to get PAM to negotiate a better deal. Something like: either renegotiate our lease, or TBI will declare bankruptcy and the Blazers will move back to the MC and the RG will be without any major tenant - or, either sell us the RG at a price we like, or TBI will declare bankruptcy and the Blazers will move back to the MC. Given the financial reality, both Paul Allen and PAM would lose money if this happened. The relationship between the two parties seems very contentious, but I doubt if Paul Allen is willing to lose even more money just to screw PAM. The threat of declaring bankruptcy to get out of the RG lease and playing all the Blazers home games at the MC would just be another hollow threat by Vulcan in yet another lame attempt to gain leverage over a party who has absolutely no incentive to bale out TBI.

Paul Allen and Vulcan really have messed up big time. He signed a personal agreement with the city of Portland that he can't get out of short of declaring personal bankruptcy, and his OAC bankruptcy plan backfired miserably when the creditors called his bluff and took possession of the Rose Garden. Paul Allen and TBI are the only ones losing money here. Given the current situation, neither the city of Portland nor PAM have anything to gain financially by baling them out. Paul and the idiots at Vulcan got themselves into this mess and they are desparately trying to dig themselves out of it. Unfortunately, for them their own stupidity in the past has left them absolutely no leverage in the present against any of the other parties involved. The sooner they realize this, and stop making hollow threats, the better off they will be. Right now, all they're doing is lowering the value of the one asset they still have control over - the Portland Trailblazers. Rather than more hollow threats, Paul Allen needs to either offer to by the RG back from PAM at, or slightly above, fair market value (they aren't going to give away a money making business for a below market price), or negotiate a package price favorable to PAM that would allow another buyer to purchase both the Trailblazers and the RG.

BNM


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## Boob-No-More (Apr 24, 2006)

Masbee said:


> They sure as heck don't get caught up in clauses like this. "oh gee, that settles it then, I the judge am going to put all other stakeholders interests aside, torpedo the viabilty of this entity to continue to even exist, for the sole purpose of enforcing this one, single clause on a piece of paper almost 15 years old."


The agreement in question is a legally binding 30-year contract between Paul Allen (the person), TBI and the city of Portland. No judge in the land would have the legal authority to release one of the parties (Paul Allen) from their legal obligation just because one of the other parties (TBI) declares bankruptcy. Until June 24, 2023, the age of that piece of paper is irrelevant.



Masbee said:


> Besides, the City got a SWEET deal, as I posted a while back in more detail. If a stink is made about this in a bankruptcy court, I could easily see a judge rule that the City made out like bandits, and have more than been made whole already. Thus freeing the judge to disregard future claims of the City.


It is not the responsibilty of the court to decide who got the "SWEET deal" and decide when they've made enough money. Too bad, they could void all those guaranteed NBA contracts to underachivers like Darius Miles, etc. Gee if they could do that, they could also say Paul Allen doesn't REALLY deserve all those billions he made off Microsoft stock and force him to give the money back to the other Microsoft share holders. The court's job is to ENFORCE contracts. The only time they release people/companies from their financial obligations is when those people/companies prove they can't pay everything they owe by filing bankruptcy - and since it's not Paul Allen declaring bankruptcy, he's not the one who would be relieved of his financial responsibilities. TBI's bankruptcy would not release Paul Allen from his personal obligations.

BNM


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## zagsfan20 (Dec 24, 2004)

Boob, 

Thanks for dosing some sanity on the pessimists fire.....


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## Dan (Dec 30, 2002)

Boob-No-More said:


> Paul Allen and Vulcan really have messed up big time. He signed a personal agreement with the city of Portland that he can't get out of short of declaring personal bankruptcy, and his OAC bankruptcy plan backfired miserably when the creditors called his bluff and took possession of the Rose Garden. Paul Allen and TBI are the only ones losing money here. Given the current situation, neither the city of Portland nor PAM have anything to gain financially by baling them out. Paul and the idiots at Vulcan got themselves into this mess and they are desparately trying to dig themselves out of it. Unfortunately, for them their own stupidity in the past has left them absolutely no leverage in the present against any of the other parties involved. The sooner they realize this, and stop making hollow threats, the better off they will be. Right now, all they're doing is lowering the value of the one asset they still have control over - the Portland Trailblazers. Rather than more hollow threats, Paul Allen needs to either offer to by the RG back from PAM at, or slightly above, fair market value (they aren't going to give away a money making business for a below market price), or negotiate a package price favorable to PAM that would allow another buyer to purchase both the Trailblazers and the RG.
> 
> BNM


it's interesting that if Paul Allen were to just buy back the Arena at say...180 million (more than it's worth), and then try to sell the *TEAM* with the Arena, he'd make more than the 180 million back in the difference between him selling the team (probably for 130-150 million) without the arena.

Why?

well, owning the arena again would mean that the TBI would then be making all the money back they used to make..

good gosh, that must mean he's trying to move the team.


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## e_blazer1 (Feb 3, 2004)

I don't claim to be any kind of legal expert, but one thing that needs to be considered regarding the agreement between the City and Mr. Allen is that if both sides agree to some form of settlement, the original agreement can be modified or voided. If the Blazers were to get a very good offer to move the franchise to another city and came to the City of Portland with an offer to provide say $50 million to the City coffers for school funding or any other purpose the council saw fit in exchange for being released from the earlier agreement, things could change dramatically. Given that, as things stand, the Blazers purportedly stand to lose $100 million over the next three years such an offer could well make excellent business sense. For the City of Portland, a big lump sum of cash could be pretty attractive right now...especially if David Stern were to make some assurances about bringing a new franchise here in a few years as they did in Charlotte.

Obviously, all of the above is purely conjecture on my part. I certainly hope that the Blazers and the arena group can come to an agreement and clear the way for the Blazers to stay here either under Paul Allen's ownership or under a new group. That said, I doubt very much that we can expect things to go on exactly as they are now simply because there's a piece of paper out there that would seem to guarantee it. Losing $30 to $40 million a year tends to cause even very rich people significant heartburn and to look for ways to stop the financial bleeding.


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## Dan (Dec 30, 2002)

e_blazer1 said:


> I don't claim to be any kind of legal expert, but one thing that needs to be considered regarding the agreement between the City and Mr. Allen is that if both sides agree to some form of settlement, the original agreement can be modified or voided. If the Blazers were to get a very good offer to move the franchise to another city and came to the City of Portland with an offer to provide say $50 million to the City coffers for school funding or any other purpose the council saw fit in exchange for being released from the earlier agreement, things could change dramatically. Given that, as things stand, the Blazers purportedly stand to lose $100 million over the next three years such an offer could well make excellent business sense. For the City of Portland, a big lump sum of cash could be pretty attractive right now...especially if David Stern were to make some assurances about bringing a new franchise here in a few years as they did in Charlotte.
> 
> Obviously, all of the above is purely conjecture on my part. I certainly hope that the Blazers and the arena group can come to an agreement and clear the way for the Blazers to stay here either under Paul Allen's ownership or under a new group. That said, I doubt very much that we can expect things to go on exactly as they are now simply because there's a piece of paper out there that would seem to guarantee it. Losing $30 to $40 million a year tends to cause even very rich people significant heartburn and to look for ways to stop the financial bleeding.


the thing is, 50 million would be cutting the city short at a bare min. The parking *alone* is about 3 million a year..and the majority of that would be Blazer games. So over 17 years thats 50 million itself. And thats implying that the price of parking doesn't go up.

That also doesn't take into account the income taxes that the employees pay, the players pay, and the property taxes that the Blazers pay on their practice facility that Tualatin gets.

Not to mention the other $$ that the city reaps from the team just being here.

There's a simple way to "stop the bleeding" that'll actually make Paul money. Buy the arena back, and then sell the team.

Even if it's 180 million for the RG, thats only 80 million more than the team will "lose" over the next 3 years. Which if he bought the arena back and the team, he could then sell the team and the arena combined for more than what they were going to get seperately AND what he was going to sell his portion of the situation for.

THe price of the franchise is low because of the fact that the team is hemmoraging money..but once it's one entitiy, that hemmorage slows down a *ton*. 

it'll be cheaper for paul to settle his self induced issues, than to try to move.


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## barfo (Jan 2, 2003)

Boob-No-More said:


> The wording sounds pretty cut and dried to me. No matter if TBI files bankruptcy, Paul Allen moves the team, or sells to someone else who moves the team, he is personally responsible for any lost revenue incurred by the city of Portland caused by any of these actions.


I don't know. The quoted section doesn't say he's responsible for lost revenue, or how that lost revenue might be computed. It just says the city will suffer damages. Unless the damages are explicitly spelled out, it would once again be up to a court to determine what Allen might have to pay. 



> Basically, the city of Portland gets their money no matter what happens - and if the team pulls out or collapses, Paul Allen is paying the city of Portland out of his own pocket for the remainder of that 30-year exclusive site agreement.
> 
> Paul may be dumb, but he ain't stupid. He's not going to end up paying the city of Portland millions of dollars a year for the next 17 years for a team he no longer owns or controls. Repeat after me: *The Trailblazers aren't leaving Portland!*
> 
> BNM


Maybe.

barfo


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## barfo (Jan 2, 2003)

The prevailing theory on this board seems to be that Allen is "bluffing", and that the eventual outcome is that he will give in and either buy the RG at full price and/or sell the team a big discount.

There's no way to know for sure, but that seems a little bit wishful thinking to me. If the agreements were absolutely ironclad, what would be the point of "bluffing"? How does it save face for Allen to publicly play a losing hand? If he's going to give in eventually and give PAM everything it wants, how does it make sense for him to make his capitulation more obvious?

Now, you can say that he's stupid and doesn't realize that the agreements are ironclad. But he's got lawyers who have gone through those contracts, and we don't, so it seems a big stretch to suggest that we know better what's in the contracts than he does.

barfo


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## Dan (Dec 30, 2002)

barfo said:


> The prevailing theory on this board seems to be that Allen is "bluffing", and that the eventual outcome is that he will give in and either buy the RG at full price and/or sell the team a big discount.
> 
> There's no way to know for sure, but that seems a little bit wishful thinking to me. If the agreements were absolutely ironclad, what would be the point of "bluffing"?


my guess is that he's making it so no other "serious" offer could be made, and that he'd be able to then scare PAM into thinking he's willing to pay the penalties to move, since he's not given a "fair shake". 



> How does it save face for Allen to publicly play a losing hand? If he's going to give in eventually and give PAM everything it wants, how does it make sense for him to make his capitulation more obvious?
> 
> Now, you can say that he's stupid and doesn't realize that the agreements are ironclad. But he's got lawyers who have gone through those contracts, and we don't, so it seems a big stretch to suggest that we know better what's in the contracts than he does.
> 
> barfo


I think he's hoping that PAM will just renegoiate before he tries to make it so the agreement on the Blazers part of the deal (which is different from his deal with the city, right?) can be adjusted and re-done.

I remember hearing (tho I can't say from who) that the team wouldn't be opposed to getting the agreement voided with PAM via the RG, and play in the MC. Sure, the team would lose money, but PAM would have no major tennant. 

Doesn't seem to flow right, from what I remember hearing tho, so I might be remembering it wrong.


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## Masbee (Dec 31, 2002)

As a businessman with several experiences traversing the legal system, I find the contention that "legally binding contracts" will be staunchly defended by the courts to be nothing less than a sick joke.

Every time I was involved in litigation, I said to the lawyers, "but what about the contract? Doesn't it mean anything?". "Yes, but only as a guide, not all clauses may be enforced, and may be tossed out alltogether if certain conditions are met."

As to bankruptcy court, I was informed our contracts meant absolutely ZERO to them, and they would and could toss them out and require us to pay huge refunds for work rendered, through no fault, error or bad intention on our part. They are federal courts, and don't care much about state laws. Contracts legal and binding under Oregon law have what standing to a federal court?

Those posting here that have this strong faith that these pieces of paper are ironclad, or anything close to it, likely have little personal experience with the process and the system.

As to why PA hasn't already run to the courts? Because litigation, courts and judges are UNPREDICTABLE - especially bankrutpcy courts. On top of unpredictable, it is very expensive and painfully slow. All good reasons for all sides to try to avoid it if they can.

I have never said that a bankruptcy court would rule Allen's way. I have only said they are unlikely to be bound by old pieces of paper shoved in their face with an attorney's plea, "you honor, it is a legally binding CONTRACT, you must enforce the provisions!". 

Maybe they will. Maybe they won't. Maybe they split the middle. Maybe they come up with some crazy ruling(s) that everybody hates. Or, maybe the judge hates Vulcan or Allen or both and slams them to the wall. No way to really know for sure. There are no guarantees. Which is why Vulcan would be afraid of court. NOT that they have no case whatsoever. That they don't know the outcome in advance.

But, if the economics of the team are bad enough, and they are painted in a corner, who knows what they might do.


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## Oldmangrouch (Feb 11, 2003)

Why haven't the Blazers filed for bankruptcy already? A fair question. 

A) Cost
B) Delays
C) Uncertainty of outcome.
D) Does Allen ever want to buy another team? If Stern is "advising" him to wait, of course he will wait. The alternative is to burn his bridges with the league.

There is a big difference between a bankruptcy being a last resort, and just being a bluff.


One other point: some of you are so hostile towards Allen, you are missing the bigger picture. It doesn't matter who owns the team - if you want the team to stay in Portland and be a success, PAM is the major roadblock. Until they are removed from the equation, there is no good outcome.


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## Boob-No-More (Apr 24, 2006)

Masbee said:


> I have never said that a bankruptcy court would rule Allen's way. I have only said they are unlikely to be bound by old pieces of paper shoved in their face with an attorney's plea, "you honor, it is a legally binding CONTRACT, you must enforce the provisions!".
> 
> Maybe they will. Maybe they won't. Maybe they split the middle. Maybe they come up with some crazy ruling(s) that everybody hates. Or, maybe the judge hates Vulcan or Allen or both and slams them to the wall. No way to really know for sure. There are no guarantees. Which is why Vulcan would be afraid of court. NOT that they have no case whatsoever. That they don't know the outcome in advance.


You have once again ignored the most basic point I have been trying to make - Yes, the court can rule any contract null and void between TBI and the city of Portland should TBI file for bankruptcy, *but that would have absolutely no affect on any contract between Paul Allen and the city of Portland*. Legally, Paul Allen and TBI are seperate entities - just like Paul Allen and OAC were separate entities when OAC declared bankruptcy and defaulted on their loan. In that case, the court couldn't force Paul Allen, in spite of all his billions and the fact he was the sole share holder in OAC, to honor the agreement between OAC and their creditors. 

Allen sets up all his corporations as separate legal entities so that when one fails the people that one owes money can't come after his other corporations or, most importantly, his personal vast wealth. In this one instance he slipped up and put his personal wealth on the line by signing a contract between Paul Allen and the city of Portland.

Whether or not TBI is a viable economic concern has no bearing on Paul Allen's agreement with the city of Portland. Unless Paul Allen personally becomes economically unviable and files for personal bankruptcy, he can't seek relief from his debts and court ordered protection from his creditors.

So again, please remember TBI is the entity threatening bankruptcy, but the agreement in question was signed by a different entity, the very economically viable Paul Allen.

BNM


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## Boob-No-More (Apr 24, 2006)

Masbee said:


> Every time I was involved in litigation, I said to the lawyers, "but what about the contract? Doesn't it mean anything?". "Yes, but only as a guide, not all clauses may be enforced, and may be tossed out alltogether if certain conditions are met."


Yes, but in all those cases, you were actually involved in the litigation. In this case, Paul Allen the person would NOT be a party to the litigation - the case would be between TBI and their creditors. Contracts between TBI and their creditors could be voided by the court, but not contracts between a separate legal enitity that is not a party to the litigation. Has any court ever voided one of your contracts when you weren't actually one of the litigants? I seriously doubt it as they would have no authority to do so.



Masbee said:


> As to bankruptcy court, I was informed our contracts meant absolutely ZERO to them, and they would and could toss them out and require us to pay huge refunds for work rendered, through no fault, error or bad intention on our part. They are federal courts, and don't care much about state laws. Contracts legal and binding under Oregon law have what standing to a federal court?


Again, the contracts they can void are only those between parties involved in the litigation. So yeah, they can void all contracts ever signed by TBI, restructure or eliminate their debts and offer them protection from their creditors. That's how bankruptcy works, but it doesn't allow those courts to void contracts and cancel debts of separate third partities that are not part of the bankruptcy proceedings.

I feel like I'm beating a dead horse, but you still seem to be missing the very basic point that Paul Allen and TBI are separate legal entities and it is TBI that is threatening bankruptcy to seek relief from their financial obligations, not Paul Allen - and it was Paul Allen who would be personally responsible for paying the city of Portland for lost revenues for the next 17 years if the Trailblazers leave town for any reason what-so-ever. He can't get out of that contract just because some other company, a totally separate legal entity, files for bankruptcy. In fact, the exclusive site agreement specifically covers this exact scenario. If TBI files bankruptcy and can't meet their obligations then Paul Allen is personally responsible to the city of Portland for all lost revenues.

BNM


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## Boob-No-More (Apr 24, 2006)

barfo said:


> I don't know. The quoted section doesn't say he's responsible for lost revenue, or how that lost revenue might be computed. It just says the city will suffer damages. Unless the damages are explicitly spelled out, it would once again be up to a court to determine what Allen might have to pay.


The quoted section was just the paragraph specifically about TBI filing bankruptcy. There's additional sections quoted in the article. And, since these were just cut-n-pasted into the Eggers' article, not even they give all the details. Supposedly, the Trib had some lawyers look at the entire document and they determined it's solidly in favor of the city of Portland.

And remember, the courts can't overturn this contract, unless a case between Paul Allen and the city of Portland is brought before them. That could happen in one of two ways:

1) Paul Allen declares personal bankruptcy

2) The Blazers move and Paul Allen refuses to pay the city of Portland for 100% of their lost revenues. In that case, the real issue would be exactlty how much revenue the city of Portland would lose over the next 17 years. Ultimately, if such a suit were filed, both sides would present their own financial experts to support their cases, but a jury would actually decide the amount awarded. If it actually did go to court, Paul Allen could end up paying even more (juries have a tendancy to side with the "little guy" over the guy with "deep pockets") including all legal fees and court costs.

BNM


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## Boob-No-More (Apr 24, 2006)

barfo said:


> There's no way to know for sure, but that seems a little bit wishful thinking to me. If the agreements were absolutely ironclad, what would be the point of "bluffing"? How does it save face for Allen to publicly play a losing hand? If he's going to give in eventually and give PAM everything it wants, how does it make sense for him to make his capitulation more obvious.


The point of bluffing is to scare the crap out of PAM. The so-called ironclad agreement is between Paul Allen and the city of Portland - not the one between TBI and PAM. 

In theory, TBI could file bankruptcy to get out of their lease with PAM and then play all their home games at the MC for the next 17 years. That's a bad solution for Paul Allen and the Portland Trailblazers, but it's even worse, far worse, for PAM. Yes, Paul Allen would lose more money than he is now, but PAM would be absolutely screwed. They would have this big empty building and no major tenant. They can only host so many Neal Diamond concerts a year and best case they could land the Winterhawks and their three or four thousand die hard fans. Without the Blazers, they not only lose their major tenant, but also their major source of peripheral income (advertising and other sponsorhips, concessions, etc.) If Paul Allen *REALLY* wants to screw PAM, he can - even if it would mean he'd lose a little more money in the process. He can afford it better than PAM. Without a major tenant, PAM is not economically viable. So, are relations that bad between Paul Allen that he'd risk losing a little more money just to totally screw PAM? Who knows, but the threat is certainly a possibility.

So, I don't think he will actually end up following through on this, but at the very least it makes PAM nervous - and the threat of the team declaring bankruptcy to get out of their lease makes the whole package less attractive to potential buyers (not that their lining up at the door as it is). If TBI does declare bankruptcy, it ultimately hurts PAM by either leaving them without a tenant, or at the very least devauling their asset. Would anyone in their right mind by the RG when it's only major tenant could get out of their lease by filing bankruptcy? That's one very important reason that *if* the Blazers are sold it will almost certainly have to be a package deal that includes the RG. The only way it makes sense to buy the team is if you also get control of the arena and the income it produces and the onl way you buy the RG is if you can guarantee you have a mojor tenant to play there. It makes little sense to buy one without the other.

And keep in mind none of this has anything to do with the so-called ironclad 30-year exclusive site agreement between Paul Allen and the city of Portland. If the Blazers do end up playing at the MC, Paul Allen lives up to his agreement. Remember, that agreement was signed before the RG was built. It's simply a guarantee by Paul Allen that the team will play in Portland through the 2023 season - not in any specific building.

BNM


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## Masbee (Dec 31, 2002)

Boob-No-More said:


> The quoted section was just the paragraph specifically about TBI filing bankruptcy. There's additional sections quoted in the article. And, since these were just cut-n-pasted into the Eggers' article, not even they give all the details. Supposedly, the Trib had some lawyers look at the entire document and they determined it's solidly in favor of the city of Portland.
> 
> And remember, the courts can't overturn this contract, unless a case between Paul Allen and the city of Portland is brought before them. That could happen in one of two ways:
> 
> ...


I discussed the #2 scenario a while back, but search is down. And part of what you said is exactly what I discussed. If the team were to move, the City would wine, PA would point out he BEGGED them to help and they did NOTHING, would point how the City has the sweetest deal in all the NBA and they did NOTHING, point out how the Rose Garden only got built due to his money and they contributed NOTHING (when you boil it down), point out the Rose Garden still exists to be used to the general benefit of the City, and tell them to sod off.

City Sues. PA say eat my shorts. They go to court.

See all of my comments about contracts to apply to #2. You are assuming that PA will get reamed. He might. Then again, he might not. Remember, litigation is UNCERTAIN, expensive and slow. Bottom line - what are the DAMAGES?

If the City has a hard time proving extensive damages due to the actions of PA, the award could be (relatively) small. The damages must be real, not in theory. The City must work to mitigate their damages. If they sit on their hands or block efforts that might mitigate, that can be used against their case. PA's attorneys could stall the case for years, waiting to tabulate the damages that in fact occur. Then they get to argue over the numbers for years more.

PA signing the agreement personally makes it tougher on him that is true. And I have never looked at the contract or read up on it, cause its his problem, not mine. But, unless there is a legally defensible liquidated damages provision (ie, "PA promises to pay $30mil immediately upon any significant breach of these terms..."), the argument over damages will be key.

City of Oakland sued Al Davis. How did that turn out for them?

PA weighs the estimated costs of dealing with the City against the estimated savings by bankrupting the team. Maybe he thinks it will be worth it. Maybe he gets so fed up with the City - the bad press, the whining fans, PAM, the City government - he does it just to say F you. Kinda like he did to PAM already.


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## barfo (Jan 2, 2003)

Boob-No-More said:


> I feel like I'm beating a dead horse, but you still seem to be missing the very basic point that Paul Allen and TBI are separate legal entities and it is TBI that is threatening bankruptcy to seek relief from their financial obligations, not Paul Allen - and it was Paul Allen who would be personally responsible for paying the city of Portland for lost revenues for the next 17 years if the Trailblazers leave town for any reason what-so-ever. He can't get out of that contract just because some other company, a totally separate legal entity, files for bankruptcy. In fact, the exclusive site agreement specifically covers this exact scenario. If TBI files bankruptcy and can't meet their obligations then Paul Allen is personally responsible to the city of Portland for all lost revenues.
> 
> BNM


If I sign a contract with SMiLE saying that you'll wear a dress every Thursday, and you don't, and SMiLE sues me for breach of contract, I think there's a good chance he doesn't win, because the contract was bogus to begin with. As you point out, TBI and Paul Allen are two different legal entities, and so Paul Allen can't be expected to make guarantees about what TBI will or won't do.

barfo


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## Oldmangrouch (Feb 11, 2003)

Boob-No-More said:


> You have once again ignored the most basic point I have been trying to make - Yes, the court can rule any contract null and void between TBI and the city of Portland should TBI file for bankruptcy, *but that would have absolutely no affect on any contract between Paul Allen and the city of Portland*. Legally, Paul Allen and TBI are seperate entities - just like Paul Allen and OAC were separate entities when OAC declared bankruptcy and defaulted on their loan. In that case, the court couldn't force Paul Allen, in spite of all his billions and the fact he was the sole share holder in OAC, to honor the agreement between OAC and their creditors.
> 
> Allen sets up all his corporations as separate legal entities so that when one fails the people that one owes money can't come after his other corporations or, most importantly, his personal vast wealth. In this one instance he slipped up and put his personal wealth on the line by signing a contract between Paul Allen and the city of Portland.
> 
> ...


I understand your point BNM, and it is a good one.

OTOH, I am not sure this is *good* news. It may keep the team in Portland, but it will make it harder for the team to be financially viable.

It doesn't matter who owns the team, as long as PAM has them by the throat. This agreement, if enforced, puts city government on PAM's side.


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## barfo (Jan 2, 2003)

Boob-No-More said:


> 2) The Blazers move and Paul Allen refuses to pay the city of Portland for 100% of their lost revenues. In that case, the real issue would be exactlty how much revenue the city of Portland would lose over the next 17 years. Ultimately, if such a suit were filed, both sides would present their own financial experts to support their cases, but a jury would actually decide the amount awarded. If it actually did go to court, Paul Allen could end up paying even more (juries have a tendancy to side with the "little guy" over the guy with "deep pockets") including all legal fees and court costs.
> 
> BNM


Would that be a jury trial? I'm asking; I'm not clear on which types of trials are decided by jury and which by judge.

To the larger point, suppose Paul claims the alternative to moving was to liquidate? Zero revenue to Portland either way.

barfo


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## barfo (Jan 2, 2003)

Boob-No-More said:


> Supposedly, the Trib had some lawyers look at the entire document and they determined it's solidly in favor of the city of Portland.





Eggers said:


> 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.


Who knows what 'a legal opinion' means in this case. Given the high standards of sportswriting in this city, it most likely means that Eggers' neighbor's cousin is a divorce lawyer and Eggers asked him at the neighborhood barbeque about this.

I suspect that the PAM and Vulcan lawyers, who have access to all the relevant documents, have a more informed view than whoever the Trib had review this one document.

barfo


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## barfo (Jan 2, 2003)

Boob-No-More said:


> The point of bluffing is to scare the crap out of PAM. The so-called ironclad agreement is between Paul Allen and the city of Portland - not the one between TBI and PAM.
> 
> In theory, TBI could file bankruptcy to get out of their lease with PAM and then play all their home games at the MC for the next 17 years. That's a bad solution for Paul Allen and the Portland Trailblazers, but it's even worse, far worse, for PAM. Yes, Paul Allen would lose more money than he is now, but PAM would be absolutely screwed. They would have this big empty building and no major tenant. They can only host so many Neal Diamond concerts a year and best case they could land the Winterhawks and their three or four thousand die hard fans. Without the Blazers, they not only lose their major tenant, but also their major source of peripheral income (advertising and other sponsorhips, concessions, etc.) If Paul Allen *REALLY* wants to screw PAM, he can - even if it would mean he'd lose a little more money in the process. He can afford it better than PAM. Without a major tenant, PAM is not economically viable. So, are relations that bad between Paul Allen that he'd risk losing a little more money just to totally screw PAM? Who knows, but the threat is certainly a possibility.
> 
> BNM


Actually, there's an even better scenario here. What if Paul builds a brand-new, state-of-the-art arena in Portland for the Blazers? That would _really_ **** PAM, because a lot of the other events would migrate to the new building as well. 

Not that I'm expecting that. But it actually makes more sense than playing in the MC long-term.

barfo


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## Boob-No-More (Apr 24, 2006)

barfo said:


> If I sign a contract with SMiLE saying that you'll wear a dress every Thursday, and you don't, and SMiLE sues me for breach of contract, I think there's a good chance he doesn't win, because the contract was bogus to begin with. As you point out, TBI and Paul Allen are two different legal entities, and so Paul Allen can't be expected to make guarantees about what TBI will or won't do.


Your scenario isn't applicable because *I* did sign the contract agreeing to wear a dress every Tuseday. The exclusive site agreement was signed by all three parties - not just two of the three. If you read the entire Eggers' article (and yes, it contains actual quotes from the agreement, not just Egggers' interpretation of the contract), you'll see that it was a three party contract. In a nutshell, TBI guarantees the Blazers will play their home games in Portland through June 23, 2023, and if they don't for any reason (Allen moves the team, Allen sells the team to somebody else and they move the team, or TBI declares bankruptcy) then Paul Allen personally agrees to compensate the city of Portland for all lost revenues.

For your scenario to apply, I'd have to sign a contract guaranteeing SMiLE that I'd wear a dress every Tuesday, and you'd have to sign the same agreement stating that if I fail to wear a dress each and every Tuesday for any reason for the length of the contract that you will personally monetarily compensate SMiLE for every instance when I fail to live up to my part of the contract - even if I file bankruptcy and can't afford any new dresses. Believe me, if you think the Blazers leaving town is a scary thought, it's nothing compared to the image of me in a dress.

BNM


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## Boob-No-More (Apr 24, 2006)

barfo said:


> Would that be a jury trial? I'm asking; I'm not clear on which types of trials are decided by jury and which by judge.


Since it would be a civil suit, most likely decided by a jury unless BOTH parties agree to allow the judge to decide the case and issue a ruling on the damages. Another possibility would be both parties agreeing to legally binding arbitration.



barfo said:


> To the larger point, suppose Paul claims the alternative to moving was to liquidate? Zero revenue to Portland either way.


That would mean Paul Allen would have to liquidate ALL of his personal assets and that's not going to happen. He's not going to give up tens of billions of dollars just to save the hundred million or so he'd owe the city of Portland.

BNM


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## barfo (Jan 2, 2003)

Boob-No-More said:


> If you read the entire Eggers' article (and yes, it contains actual quotes from the agreement, not just Egggers' interpretation of the contract), you'll see that it was a three party contract. In a nutshell, TBI guarantees the Blazers will play their home games in Portland through June 23, 2023, and if they don't for any reason (Allen moves the team, Allen sells the team to somebody else and they move the team, or TBI declares bankruptcy) then Paul Allen personally agrees to compensate the city of Portland for all lost revenues.


Again, I'm not sure where you are getting the 'all lost revenues' clause. I've read the article, which is the usual shoddy reporting (for example, it says that Allen's liability is limited to sections 3.4, 3.5, and 3.7, but it never tells us what those sections say). 

So, we know there is a contract. It says some stuff. Some lawyer says it is 'unusually strong' on the city's side. All of that amounts to not much.

Maybe someone needs to email Eggers and ask for a copy of the document.

barfo


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## barfo (Jan 2, 2003)

Boob-No-More said:


> That would mean Paul Allen would have to liquidate ALL of his personal assets and that's not going to happen. He's not going to give up tens of billions of dollars just to save the hundred million or so he'd owe the city of Portland.
> 
> BNM


No, I didn't mean Paul liquidating. I meant the Trailblazers liquidating. If the Blazers liquidate, Paul has not violated his contract, and there is no revenue to the city.

Edit: let me try to be more clear. The scenario here is that Paul has moved the team to Las Vegas and Portland is suing him for breach of contract. Paul's defense is (I'm suggesting) "I had two choices. I could move the team, or I could just dissolve it. Either way, Portland would have gotten nothing. Therefore, the damages to Portland from my moving the team are zero."

barfo


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## Boob-No-More (Apr 24, 2006)

Masbee said:


> I discussed the #2 scenario a while back, but search is down. And part of what you said is exactly what I discussed. If the team were to move, the City would wine, PA would point out he BEGGED them to help and they did NOTHING, would point how the City has the sweetest deal in all the NBA and they did NOTHING, point out how the Rose Garden only got built due to his money and they contributed NOTHING (when you boil it down), point out the Rose Garden still exists to be used to the general benefit of the City, and tell them to sod off.


Doesn't matter. The city of Portland is under no obligation to do anything to help TBI avoid bankruptcy, and if they do declare bankruptcy, then Paul Allen, who has a lot more liquid capital than the city of Portland is obligated to pay them for the lost revenue for every single home game the Blazers don't play in Portland. Just because Paul Allen begged the city to help bale out TBI doesn't mean they have any obligation to do so. And of course Paul Allen is begging them for a hand out because he's the one responsible for the lost revenues if TBI declares bankruptcy and/or the team leaves town. The act of begging isn't adaquate grounds to void a contract, especially since Paul Allen can easily meet his obigations in this case. In fact, those obligations are a mere drop in the bucket compared to his net worth.



Masbee said:


> See all of my comments about contracts to apply to #2. You are assuming that PA will get reamed. He might. Then again, he might not. Remember, litigation is UNCERTAIN, expensive and slow. Bottom line - what are the DAMAGES?


Keep in mind that juries like to side with the "victim" and in the case of a civil suit, the verdict doesn't have to be unanimous and the burden of proof is "the preponderance of the evidence" NOT "beyond a reasonable doubt". So, in the civil suit you'd only need to convince 9 out of 12 jurors that 51% of the evidence favors the city of Portland.

As far as damages goes, there is already a 13 year track record established under this agreement. It would be simple for any average bean counter to extrapolate that forward, taking into account recent trends, inflation, etc. Naturally the city's bean counters would come up with a higher number than Paul's, but that's where the jury comes in. In a federal civil suit, ultimately it is the jury who hears testimony from both sides' experts and decides on the amount of damages, if any, to be awarded.

While juries can be unpredictable, this scenario doesn't favor Paul Allen. Remember the case where the little old lady sued McDonald's because she spilled coffee in her own lap. I don't remember the exact amount she was rewarded, but it was multiple millions. The little old lady was the sympathetic "victim" even though it was her own clumsiness that caused her injuries. And McDonalds was the faceless big corporation with the deep pockets who wouldn't really miss a few million bucks in the grand scheme of things. In this case, the city of Portland and its financially strapped school system is the sympathetic victim (little old lady) and Paul Allen is Mr. Deep Pockets (McDonalds) who won't even miss a few hundred million. Believe me, if I was Paul Allen, I would NOT want this case to end up before a jury. Especially since the jury can award even more than the city would ask for if they felt Paul acted maliciously or otherwise caused undue pain and suffering to the poor little school kiddies who attend Portland public schools. In the long run, of he does breach this contract, he'd be better off negotiating an out-of-court settlement with the city and paying them off.



Masbee said:


> City of Oakland sued Al Davis. How did that turn out for them?


They had a MUCH weaker case. I actually have a friend who worked on that case.



> PA weighs the estimated costs of dealing with the City against the estimated savings by bankrupting the team. Maybe he thinks it will be worth it. Maybe he gets so fed up with the City - the bad press, the whining fans, PAM, the City government - he does it just to say F you. Kinda like he did to PAM already.


Well, he may have said F you to PAM, but right now, he's the one being F'ed, not the other way around. He tried playing the bankruptcy card once with OAC and that's exactly what got him in this mess. I doubt if he's eager to try that again. If not for the OAC bankruptcy and default, PAM would not even exist. So, as much as he hates them, PAM is Paul's own ******* child. He created them through his actions and now has to live with the consequences.

BNM


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## Dan (Dec 30, 2002)

Boob-No-More said:


> While juries can be unpredictable, this scenario doesn't favor Paul Allen. Remember the case where the little old lady sued McDonald's because she spilled coffee in her own lap. I don't remember the exact amount she was rewarded, but it was multiple millions. The little old lady was the sympathetic "victim" even though it was her own clumsiness that caused her injuries.


well...I do like your side of the blazers/paul allen/put on my tin foil hat they're moving stuff...your analogy here is bad.

if by clumsiness you mean putting a cup of coffee that was heated to such a high degree that it burned her to the pubic bone (heated so they could get more coffee out of the grounds) than yes, she was clumsy. 

the amount she "sued" for and the amount she ACTUALLY sued for, are different (as is the whole story) 

another cite 



> 79 year old Stella Liebeck suffered third degree burns on her groin and inner thighs while trying to add sugar to her coffee at a McDonalds drive through. Third degree burns are the most serious kind of burn. McDonalds knew it had a problem. There were at least 700 previous cases of scalding coffee incidents at McDonalds before Liebeck's case. McDonalds had settled many claim before but refused Liebeck's request for $20,000 compensation, forcing the case into court. Lawyers found that McDonalds makes its coffee 30-50 degrees hotter than other restaurants, about 190 degrees. Doctors testified that it only takes 2-7 seconds to cause a third degree burn at 190 degrees. McDonalds knew its coffee was exceptionally hot but testified that they had never consulted with burn specialist. The Shriner Burn Institute had previously warned McDonalds not to serve coffee above 130 degrees. And so the jury came back with a decision- $160,000 for compensatory damages. But because McDonalds was guilty of "willful, reckless, malicious or wanton conduct" punitive damages were also applied. The jury set the award at $2.7 million. The judge then reduced the fine to less than half a million. Ms. Liebeck then settled with McDonalds for a sum reported to be much less than a half million dollars. McDonald's coffee is now sold at the same temperature as most other restaurants.


I'll let you go back to your dismantling of the conspiracies.


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## Boob-No-More (Apr 24, 2006)

barfo said:


> No, I didn't mean Paul liquidating. I meant the Trailblazers liquidating. If the Blazers liquidate, Paul has not violated his contract, and there is no revenue to the city.
> 
> Edit: let me try to be more clear. The scenario here is that Paul has moved the team to Las Vegas and Portland is suing him for breach of contract. Paul's defense is (I'm suggesting) "I had two choices. I could move the team, or I could just dissolve it. Either way, Portland would have gotten nothing. Therefore, the damages to Portland from my moving the team are zero."


Did you read the Egger's article? This exact scenario is covered under section 3.2 of the exclusive site agreement. If TBI declares bankruptcy, Paul Allen personally still has to pay the city of Portland the revenue they would have received from TBI had they remained solvent and continued to play their home basketball games in the city of Portland. So, even if the Trailblazers liquidate, Paul Allen has to continue to pay the city of Portland the revenues they would have received though the end of the 2023 season, whether the team plays here or not, or even if the team no longer exists. The city is covered and guaranteed their money whether the team moves, declares bankruptcy, or both. Paul can't get out of his obligations just because TBI collapses - in fact, just the opposite, he's the one personally and soley responsible to see that the city of Portland gets their money no matter what happens - move or stay, bankrupt or not. Unless he declares personal bankruptcy (yeah, right), he can't get out of this one. He can always refuse to pay, but then he ends up in court, which could be even worse than just settling with the city.

For whatever reason, the wording of this agreement seems to be unusually favorable to the city of Portland. I suspect when Paul Allen signed this agreement he never envisioned how this could possibly evolve into the mess he has on his hands today. Keep in mind, back in 1993 the Blazers had been to the NBA finals twice in the last four years, a year earlier the city of Portland had hosted both the NBA draft lottery AND the original (only) Dream Team and the Tournament of the Americas (qualifying round for the 1992 Olympics). Portland was the darling of the NBA and the love affair between the Trailblazers and the City of Portland was at an all-time high. What looked like a non-issue in 1993 has now come back to bite him in the rear. So, he agreed to a bunch of stuff back then that he never thought would happen. Unfortunately for Paul Allen (and all Blazer fans), the worst case scenario the city of Portland envisioned back in 1993 has now come true. That's pretty scarey as I never thought our city government was good at planning anything. They sure nailed this one and made sure all their bases were covered.

BNM


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## barfo (Jan 2, 2003)

Boob-No-More said:


> Did you read the Egger's article?


I think this is the third time you've suggested that I haven't read the article. Yes, I've read the article. Have you read the article? 



> This exact scenario is covered under section 3.2 of the exclusive site agreement.


Which neither of us has read.



> If TBI declares bankruptcy, Paul Allen personally still has to pay the city of Portland the revenue they would have received from TBI had they remained solvent and continued to play their home basketball games in the city of Portland.


That's just nonsense. Egger's article doesn't say that, and neither does anything else I've read on this subject. 

barfo


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## Boob-No-More (Apr 24, 2006)

SMiLE said:


> well...I do like your side of the blazers/paul allen/put on my tin foil hat they're moving stuff...your analogy here is bad.
> 
> if by clumsiness you mean putting a cup of coffee that was heated to such a high degree that it burned her to the pubic bone (heated so they could get more coffee out of the grounds) than yes, she was clumsy.


Yeah, my bad. I should have looked it up. Even though the "clumsiness" reference was totally innacurate, my basic premise that juries tend to favor sypmathetic victims and award them favorable settlements against wealthy entities is still accurate. After all, the jury did award her $2.7 million - and the vast majority of that was for pain and suffereing far above just her medical costs and actual financial damages. Even after the judge reduced the award and she settled with McDonalds she still got >20x her actually monetary damages.

So, if the city sues Paul for $100 million, do you think they'd be disappointed to get ONLY 20x their actual damages? Even if they didn't get a penny for "pain and suffering", they'd still get a very handsome award (17 years lost revenue) if they won the case - which I think is pretty much a slam dunk. Keep in mind that not only is the exclusive site agreement worded heavily in their favor, the collapse and failure of TBI is no fault of theirs. It is the direct result of BAD decisions by Paul Allen and his advisors. It wouldn't take a lot to convince a jury that TBI is losing money due to multiple bad player contracts, alienating the local community by signing players of poor character (insert laundry list of player arrests and suspensions here) and finally the bankruptcy and default of OAC that has lead the the current "broken financial model".

BNM


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## VancouverBall (Apr 29, 2006)

If the Blazers move to Vancouver, a lawsuit against Paul Allen might be more difficult cause you've crossed the border. Litigation across the Canada/U.S. border can be more difficult.

Paul Allen may like the idea of Vancouver as he may be able to hide from lawsuits considering the team will be playing in another country.


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## Dan (Dec 30, 2002)

VancouverBall said:


> If the Blazers move to Vancouver, a lawsuit against Paul Allen might be more difficult cause you've crossed the border. Litigation across the Canada/U.S. border can be more difficult.
> 
> Paul Allen may like the idea of Vancouver as he may be able to hide from lawsuits considering the team will be playing in another country.


this one goes out to Vancouver Ball...who's a dreamer and a schemer..



> Stars shining bright above you
> Night breezes seem to whisper "I love you"
> Birds singing in the sycamore tree
> Dream a little dream of me
> ...


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## Tince (Jul 11, 2004)

VancouverBall said:


> If the Blazers move to Vancouver, a lawsuit against Paul Allen might be more difficult cause you've crossed the border. Litigation across the Canada/U.S. border can be more difficult.
> 
> Paul Allen may like the idea of Vancouver as he may be able to hide from lawsuits considering the team will be playing in another country.


 The guy who would be breaking his contract would be living in the US, so I don't see the problem.


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## Ed O (Dec 30, 2002)

Boob-No-More said:


> Doesn't matter. The city of Portland is under no obligation to do anything to help TBI avoid bankruptcy, and if they do declare bankruptcy, then Paul Allen, who has a lot more liquid capital than the city of Portland is obligated to pay them for the lost revenue for every single home game the Blazers don't play in Portland. Just because Paul Allen begged the city to help bale out TBI doesn't mean they have any obligation to do so.


This isn't necessarily true. Mitigation can play a big role in the enforcement of contracts. An utter unwillingness to mitigate damages (in this case, by reworking the terms of the agreement or facilitating an agreement that helps keep the Blazers afloat) can weigh against the city of Portland.

Ed O.


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## barfo (Jan 2, 2003)

Tince said:


> The guy who would be breaking his contract would be living in the US, so I don't see the problem.


Vancouver, British Columbia (AP) Today fugitive billionaire Paul Allen and his migrant basketball team, the Blazers, decamped from Vancouver and flew to Santiago, Chile, ending a single-season stay in this city, where the team set a new NBA record for fewest wins (4). Allen says the team will play in a different city every year as long as "the economic model is broken". An average of 300 people attended games in Vancouver this year, and Allen is hoping for a better turnout in Santiago. Allen cannot return to the USA without facing lawsuits over the team's departure from Portland (Oregon), a small community south of Seattle. Allen seems unconcerned by legal actions, telling the press that "if Bobby Fischer can take his chessboard to Iceland and Japan, I can take my team to Canada, Chile, and next year, to the Canary Islands. As long as my yacht can sail there, and it starts with a "C", then it is an NBA-ready locale and we'll give it a fair chance."

barfo


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## Boob-No-More (Apr 24, 2006)

Ed O said:


> This isn't necessarily true. Mitigation can play a big role in the enforcement of contracts. An utter unwillingness to mitigate damages (in this case, by reworking the terms of the agreement or facilitating an agreement that helps keep the Blazers afloat) can weigh against the city of Portland.


It's the contract between TBI and PAM that has TBI on the brink of bankruptcy, not the agreement between TBI and the city of Portland. Of course, it was Paul Allen, through his lawyers and financial advisors that drew up the original agreement between TBI and OAC. At the time it was taking money from one big pocket to line the other and since Paul Allen was the one and only shareholder in OAC, it didn't really matter much in the grand scheme of things which of the two was making the profits. After OAC filed bankruptcy and defaulted on their loan, suddenly PAM was the enterprise making money while TBI was hemoraging cash. Yes Paul, the economic model is broken. You broke it and now you want public welfare to save you from yourself. I don't see how the city of Portland can be held responsible for a bad contract between two other parties that did not involve them. Of course, Paul Allen asked the city to bail him out after he messed things up, but it's not the city's fault TBI is on the verge of bankruptcy. It's Paul Allen and Vulcan who created this mess. They need to get themselves out of it. The only way that will happen is if the team and arena are once again owned by one controlling entity.

BNM


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## barfo (Jan 2, 2003)

Boob-No-More said:


> It's the contract between TBI and PAM that has TBI on the brink of bankruptcy, not the agreement between TBI and the city of Portland. Of course, it was Paul Allen, through his lawyers and financial advisors that drew up the original agreement between TBI and OAC. At the time it was taking money from one big pocket to line the other and since Paul Allen was the one and only shareholder in OAC, it didn't really matter much in the grand scheme of things which of the two was making the profits.


Except, of course, that neither of the two was making the profits.



> After OAC filed bankruptcy and defaulted on their loan, suddenly PAM was the enterprise making money while TBI was hemoraging cash.


That's a rather skewed way of looking at it. The bankruptcy of OAC didn't change TBI's finances at all. And if PAM is "making money" now, it is probably because the cost of the building isn't being counted. The cost of the building to PAM was the $15 million/year that Paul was paying them prior to the bankruptcy. Even though they aren't making payments on the building, getting it cost them a signficant revenue stream.

barfo


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## Ed O (Dec 30, 2002)

Boob-No-More said:


> It's the contract between TBI and PAM that has TBI on the brink of bankruptcy, not the agreement between TBI and the city of Portland.
> 
> ...


You seem to be on auto-response irrespective of what you're responding to.

I'm not arguing about any of the things you've said. I'm arguing with your assertion that the city of Portland has no duty to mitigate their damages.

My opinion is that they probably do.

Ed O.


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## Boob-No-More (Apr 24, 2006)

Ed O said:


> You seem to be on auto-response irrespective of what you're responding to.
> 
> I'm not arguing about any of the things you've said. I'm arguing with your assertion that the city of Portland has no duty to mitigate their damages.
> 
> ...


A legal duty or a moral duty?

So, in your opinion, what should the city of Portland have done to give TBI a break? Bought the Rose Garden from PAM and renegotiated a more favorable lease? Acted as an intermediary between PAM and TBI? Let TBI and Paul Allen out of the 30-year exclusive license to make the team more attractive to out-of-state buyers who would then relocate the team to another city?

You say the city of Portland has a duty to mitigate TBI's losses. Exactly what should they do that would help TBI without in turn bankrupting the city of Portland? So far, I think the city has done the right thing. Any public/private partnership (aka: corporate welare) would cost the city millions of dollars a year - and our public school system, is already in dire straights. Personally, I'd rather see Paul Allen loose $100 million over the next three years than the city of Portland. Letting TBI and Paul Allen out of the 30-year exclusive site agreement will virtually guarantee the team will leave Portland. The only card the city holds is that 30-year exclusive site agreement - and it happens to be a trump card. At this point, it's the only thing keeping the Blazers in Portland (in pite of David Stern's assuranes otherwise, if it was possiblt to move the team to a more profitable market, the NBA wouldn't just permit it, they'd encourage it).

Sorry if you think I'm repeating myself, but I really am curious exactly what you think the city of Portland should be doing different in this situation.

BNM


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## Oldmangrouch (Feb 11, 2003)

Boob-No-More said:


> A legal duty or a moral duty?
> 
> So, in your opinion, what should the city of Portland have done to give TBI a break? Bought the Rose Garden from PAM and renegotiated a more favorable lease? Acted as an intermediary between PAM and TBI? Let TBI and Paul Allen out of the 30-year exclusive license to make the team more attractive to out-of-state buyers who would then relocate the team to another city?
> 
> ...


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## Boob-No-More (Apr 24, 2006)

Oldmangrouch said:


> In this case, that means that Allen could defend himself on the grounds that the city (by action or inaction) made it impossible for the team to stay. It might not get him completely off the hook - but it could reduce his payout to the city.


Actually, that's exactly what I'm asking - what could/should the city of Portland reasonably do to minimize their losses/maximize their returns. All the scenarios I listed and have seen elsewhere have the city of Portland giving up millions of dollars to help "save the team". What I'm asking is what they should be doing differently when they have a 30-year exclusive site agreement signed by Paul Allen personally. If the city's goal is simply to "save the team" at all costs, that's one thing, but if their goal is to maximimize their revenues, then their actions will be entirely different. Until it's shot down in court, that exclusive site agreement lets them do both - keep the team in Portland AND continue getting their revenue even though TBI, or any new owners, may be losing money.

So, what exactly should/could the city do to mitigate their losses and/or improve their position if this ever ends up in court should Paul Allen try to breach the contract he signed with them?

BNM


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## Ed O (Dec 30, 2002)

Boob-No-More said:


> A legal duty or a moral duty?


Legal. Who cares about moral duties in this context, really?

Ed O.


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## Boob-No-More (Apr 24, 2006)

Ed O said:


> Legal. Who cares about moral duties in this context, really?
> 
> Ed O.


OK, so legally, what do you think the city of Portland should be doing different?

BNM


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## barfo (Jan 2, 2003)

Boob-No-More said:


> Any public/private partnership (aka: corporate welare) would cost the city millions of dollars a year - and our public school system, is already in dire straights.


The team leaving town will also cost the city millions of dollars per year. The school system is in dire straights because taxpayers don't feel it is worth supporting. They may or may not feel the Blazers are worth supporting either, but that is an entirely separate question. Under our current system of government, the taxpayers can (very indirectly) choose to spend money on basketball rather than schools.



> Personally, I'd rather see Paul Allen loose $100 million over the next three years than the city of Portland.


As a Portland taxpayer, me too. But I don't think that's the choice we have. Well, we don't have _any_ choice, but the options seem to be the city losing the team, or the city ponying up some money to keep it. Or a mystery fairy buying the team and keeping it here. Or Allen deciding that fighting over it isn't worth the bother and just giving up. But the idea that the city can somehow force TBI to continue to lose money, or force Allen to pay for it, is absurd. 

barfo


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## Boob-No-More (Apr 24, 2006)

barfo said:


> But the idea that the city can somehow force TBI to continue to lose money, or force Allen to pay for it, is absurd.


Isn't that exactly what the 30-year exclusive site agreement does?

I know it's all open to interpretation, but from what little I've seen and heard, the city seems to have a pretty solid case should Paul Allen chose to breach that contract. There is language specifically geared to keep the team in Portland, even if PA sells it and to compensate the city if the team leaves or declares bankruptcy. Again whether the city would win in court and how much they would be awarded if they did would be up to the jury. Still, I doubt if the city's attornies would have included those clauses if they didn't think they were legally enforceable.

One thing we haven't really talked about is the possibility of the city getting an injunction should PA or any new owners try to move the team. That could delay any moving of the team for years, even before any breach of contract suit would be filed - and potentially scares away anyone looking to buy the team and move it. Paul Allen's losing money anyway. So, it may be in his best interest to negotiate a buyout with the city. It would certainly open up the market for potential buyers of the team, but I hope the city doesn't cave that easily.

I don't want to give the mistaken impression that I think any good at all could come for the city of Portland should the Blazers move - even if Paul Allen agreed to personally pay every penny of lost revenue. There are many peripheral benefits, both economic and emotional to having a pro sports team in town. I don't think the city will risk that happening. On the other hand, given the supposed strength of the city's position WRT to the 30-year exclusive site agreement, I don't expect them to just cave and give the word's sixth richest man tens of millions of dollars in public assistance (welfare).

So far, I think the city is playing their hand well. They hold the high trump card and they know it. That could change and Tom Potter and company could still screw up, but it hasn't happend so far (IMHO).

BNM


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## barfo (Jan 2, 2003)

Boob-No-More said:


> Isn't that exactly what the 30-year exclusive site agreement does?


Yes, in the same sense that speed limit signs keep teenagers from drag racing.



> There is language specifically geared to keep the team in Portland, even if PA sells it and to compensate the city if the team leaves or declares bankruptcy.


I'd like to see a link or quote for the specific clause that *compensates* the city if the team declares bankruptcy.



> Still, I doubt if the city's attornies would have included those clauses if they didn't think they were legally enforceable.


In my experience, lots of stuff gets included in contracts that isn't legally enforceable. Sometimes it is put in to scare the counterparty, sometimes it is put in for 'what the hell, we might get lucky' reasons.

barfo


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## Boob-No-More (Apr 24, 2006)

barfo said:


> Yes, in the same sense that speed limit signs keep teenagers from drag racing.


There is a difference. Teenagers speed because they think they won't get caught. If Paul Allen breaches this contract, there's zero chance he won't get "caught".



barfo said:


> I'd like to see a link or quote for the specific clause that *compensates* the city if the team declares bankruptcy


Sorry to repeat myself, but you asked:

“_In the event of the liquidation or dissolution of TBI, the covenants and restrictions … 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.”_

Those covenants and restrictions include:

_“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 … will be irreparable.”_

That covers (in theory) the bankruptcy issue. TBI is liquidated and/or Paul Allen breaches the agreement he must compensate the city "by payment of money" for the damages incurred. Keep in mind that not only did Paul Allen sign that document personally he is also the one and only shareholder in TBI.

Moving the team, or selling to to someone who moves it also puts Paul Allen in breach of the contract. Unfortunately, Eggers didn't provide direct quotes from the applicable sections of the agreement. He paraphrases:

_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._

Again, sorry to repeat myself. I know you read the Eggers article, but there may be others follwing this thread that haven't.

BNM


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## barfo (Jan 2, 2003)

Boob-No-More said:


> “_In the event of the liquidation or dissolution of TBI, the covenants and restrictions … 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*.”_
> 
> Those covenants and restrictions include:
> 
> _“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 … will be irreparable.”_


The first quoted phrase says that the covenants and restrictions will be binding upon TBI's successors. It does not say they will be binding upon Paul Allen. Edit: Further, this seems to deal only with chap 7 bankruptcy, not the more likely scenario of chap 11.

The second clause says that the city will suffer damages if either TBI or Allen breaches the agreement. It does not say Allen is responsible for damages if TBI breaches the agreement.

barfo


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