Healthy return for Schultz's group

Although Howard Schultz last week announced a $350 million deal to sell the Sonics and Storm, he and his fellow investors will receive just $247 million of that in cash, according to one of the owners.

The main reason is debt. Schultz's ownership group racked up $93 million in debt via a line of credit available to NBA teams, according to the owner, who was briefed on details of the sale that have not been made public.

That $93 million debt will be assumed by the teams' new owners, a group of Oklahoma City businessmen led by Clay Bennett, according to the owner, who asked not to be identified as a source because of his relationship with other Sonics investors.

Schultz's group made a healthy return on its five-year investment. Some team owners were told they would be earning a profit of about 38 percent on the deal. Team officials would not confirm that percentage, and it was not known whether all owners would get the same percentage.

Before settling on the Oklahoma City group, the Sonics had attracted 10 potential buyers, according to information provided to the owner. The field was narrowed to three finalists.

Also subtracted from the cash Schultz's group will receive is $3 million in transaction fees and another $7 million in debt that the new owners will not assume, according to the source.

When that $10 million plus the $93 million in debt is subtracted from the $350 million sale price, $247 million in cash remains to be distributed to Schultz and the other 57 investors with stakes in the Sonics and Storm.

After the deal closes in late October, owners are scheduled to receive a wire transfer of $221 million, with the remaining $26 million held as security for an additional nine months, according to the source.

The deal still requires approval from the NBA and from Sonics owners holding a majority interest in the team. Schultz, chairman of Starbucks, and telecommunications billionaire John Stanton are believed to own or control the largest stakes in the team, but they have not disclosed their precise investments.

Team president Wally Walker declined to comment on the deal Monday, citing the confidentiality of the negotiations. Brent Gooden, a spokesman for the Oklahoma City buyers, also would not comment. "We simply believe it is out of place to discuss the details of the transaction," Gooden said Monday.

The Sonics source also provided some new details on how the deal came together.

Of the three finalists bidding for the teams, two groups were from the Silicon Valley, with one led by Oracle CEO Larry Ellison. Those two groups eventually merged into one potential buyer. It has been previously reported that a group led by Ellison offered $425 million for the Sonics.

Sonics investors were told the Oklahoma businessmen came out on top because their offer was more straightforward or "clean" and promised to try to keep the Sonics and Storm in Seattle, according to the source.

Despite a longstanding desire to bring professional basketball to their hometown, the Oklahoma City owners have said they'll give Seattle and Washington state a year to come up with an acceptable arena deal before trying to the move the Sonics and Storm. The Sonics have a lease at KeyArena until September 2010.

Schultz's group, which bought the Sonics in 2001 for $200 million, tried unsuccessfully for more than two years to persuade state legislators and Seattle politicians to provide tax money for a major expansion of KeyArena or a new arena. Sonics officials blame the lease — which requires the team to split luxury-suite and other revenue with the city — for losses of $60 million over the last five years.

Jim Brunner: 206-515-5628 or jbrunner@seattletimes.com