SAN FRANCISCO - A superior court judge has ruled that a lawsuit by the Oakland Raiders seeking to break the team's lease with the Oakland-Alameda County Coliseum Authority can proceed to trial.
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The ruling comes during a week of bad news for the authority. Another tenant, the Golden State Warriors, warned it is facing a significant loss of revenue due to the National Basketball Association strike, and baseball's Oakland Athletics are nearing an option to terminate their lease and leave the facility.
The Raiders' lawsuit seeks permission for the team to break its 16-year contract to play at the coliseum. Team lawyers say they want to renegotiate the contract and have not made any decision on whether the Raiders would leave Oakland if they prevail.
The team contends that the city and county fraudulently promised sellout crowds if the team would move from Los Angeles to Oakland in 1995. The Coliseum Authority, a joint-powers agency, sold $200 million of debt to refurbish the coliseum and lure the Raiders.
But a poorly organized marketing scheme of so-called personal-seat licenses has left many seats empty during game days, requiring both municipalities to divert money from their general funds to pay debt service.
The PSLs were expected to cover much of the Raiders' share of debt service. Officials say they will have to shell out $21 million to cover debt service and operating costs this year alone. The cost will be split between the city and county.
The two-series debt was backed by a five-year letter of credit from Canadian Imperial Bank of Commerce with a 10-year swap, and was sold through negotiation to book-runner Grigsby Brandford & Co. and co-senior manager Goldman, Sachs & Co.
The coliseum complex is jointly owned by Oakland and Alameda County. It includes an arena for the Warriors as well as the stadium where the Raiders and the Athletics play.
The city sued the Raiders last year, arguing that the team was threatening to break its contract and was blocking the sale of the coliseum's naming rights.
The team then countersued, saying that it has suffered financial losses because it counted on authority promises that the coliseum would be filled with fans during home games. That allegedly false promise nullified the team's contract to play in Oakland, the team's lawyers say.
Two weeks ago, Sacramento County Superior Court Judge Joe Gray issued a tentative ruling that the core of the Raiders' lawsuit had been filed nearly two years too late. On Monday, however, Gray reversed that decision, allowing the case to move closer to trial but limiting possible damages.
Authority officials said they are "very pleased" with the ruling, even though it differed on several aspects from Gray's first decision. Raiders lawyers called the decision a victory even though it stipulated the Raiders would have to pay the authority if the team were allowed to leave prior to the end of its contract.
No trial date has been set.
"City and county politicians lied to the Raiders, lied to the fans, and lied to the public, and apparently they are fooling themselves with the economics," said Raiders trial lawyer Ken Hausman. "City and county politicians need to get out of the stadium business."
Authority officials are also closely watching the NBA's player lockout, which has forced the Warriors to cancel their first three home games.
The authority sold $130 million of additional debt to renovate the Warriors' arena. Those bonds were supposed to be secured partly by PSL sales, but the Warriors have instead opted to pay their portion of debt service with cash.
The Warriors' lease to play in Oakland reportedly includes a clause that the team says releases it from its obligation to make payments to the authority in the event of a strike or labor dispute.
Prior to the lockout, the team warned Alameda County auditor Patrick O'Connell that it intended to withhold $1.6 million this year because of the labor dispute between the league and the players.
O'Connell told reporters that if the entire season is canceled, the authority could be as much as $8.4 million short for bond payments, in addition to the $21 million already being footed by taxpayers because of the Raiders' troubles.
And if that were not enough problems for the beleaguered authority, the Athletics could decide as early as Friday to exercise an option that would allow the baseball franchise to break its lease and move or put the team up for sale.
The authority has extended the deadline for the one-time option three times since July, hoping the team will accept a settlement in the $48 million lawsuit the team filed against the authority last year.
The team claims it lost revenues and was inconvenienced by the football-oriented renovations. Some projects fell behind schedule and ran over budget, and became bogged down in debate among the three sports teams.
The option to break the contract would let the Athletics leave Oakland six years earlier than their nine-year contract allows. However, if the team does exercise the option, it must allow the authority four months to find a suitable local buyer who would be willing to purchase the team and keep it in the city.
The authority has proposed a settlement, which is still under consideration. The proposal reportedly includes a provision that would keep the Athletics in Oakland until 2001, when the contract reverts to a year- by-year lease.
