April 29 (Bloomberg) -- The Golden State Warriors professional basketball team says it isn’t obligated to keep paying debt service on $140 million of bonds to upgrade their arena in Oakland, California, after the team moves in 2018.
The team’s 20-year lease with the Oakland-Alameda County Coliseum Authority, a joint-powers authority that is a partnership between the city of Oakland and Alameda County, expires in 2017. The authority sold $140 million of 30-year bonds in 1996 to upgrade and refurbish what’s now known as Oracle Arena for the Warriors. That leaves nine years of debt service, or about $60 million, in question until the bonds mature in 2026.
“We have every intention to completely fulfill our obligations in the agreement with the JPA and live up to the terms of the contract that were negotiated between the two parties,” Raymond Ridder, a team spokesman, said in a statement, referring to the joint powers authority. The team says it’s only obligated to pay debt service until the lease expires.
The authority’s interim director, Deena McClain, was unavailable for comment, said a person who answered the telephone at her office. A spokesman for the authority, Dan Cohen, didn’t immediately respond to a telephone call seeking comment on the bonds.
The authority contends that the lease agreement requires the team to continue to pay debt service not covered by other arena revenue such as concerts even after the lease expires, according to the Oakland Tribune.
The team announced April 22 that it will build an 18,000-seat privately financed arena and concert venue in San Francisco to open for the 2018-19 season.
Oakland has been the home of the Warriors since 1971. The team is owned by an investor group led by Joe Lacob, a partner at Kleiner Perkins Caufield & Byers, and Peter Guber, chairman of Mandalay Entertainment Group.
The Warriors won two championships playing in Philadelphia from 1946 to 1962, with Wilt Chamberlain setting an NBA record by scoring 100 points in a game against the New York Knicks. The franchise relocated in 1962 to San Francisco and nine years later to Oakland, where the 1975 team won a championship with Hall of Famers Rick Barry and Jamaal Wilkes.
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