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January 06, 2010
Predators' lease to blow up on Nashville?
I can only partly make head or tail of what's going on here, but: Nashville Predators executives are scheduled to meet with city officials this week to discuss whether the team is in default of its brand new lease on the Sommet Center. At issue is apparently a lien the federal government has placed on principal owner David Freeman for non-payment of taxes, and a lawsuit the team has filed against The Sommet Group to get out of its naming-rights agreement on the arena.
It doesn't exactly make sense that the city would declare the Predators in default of their lease at a time when they're trying to hold them to it, but the Nashville Business Journal has a bit more of an explanation:
Authority members are adamant that they do not want to force a showdown with the team by declaring a default, seeking $50 million in liquidated damages and eliminating the city's National Hockey League franchise. The issue is complicated, however, by the fact that the team may have the ability to exercise an early termination clause later this year, which would require a payment of just $20 million.
In short, if the authority does not declare a default and team decides to leave Nashville anyway, taxpayers would be out $30 million.
Two lessons here: One, don't give teams out clauses in their leases unless you want them to be held over your heads as negotiating threats (as we've seen before). Two, the NHL really will let just anybody become a team owner.