Suit Against Goodwill Games Officials Settled Out of Court

Goodwill Games organizers are in imminent danger of going broke, a Carlsbad, Calif., company contended in documents filed shortly before settling a lawsuit seeking $800,000 for work at the Olympic-style event.

The settlement was reached Thursday night, hours after lawyers for International Events Management Ltd. released documents that contended the Seattle Organizing Committee had underestimated its debt by more than $1.18 million.

Terms of the settlement were withheld.

Jim Greenfield, a lawyer for the organizing committee, would not say whether the settlement left the group in a stronger financial position than when the suit was pending.

In financial records released with Thursday’s filing in King County Superior Court, organizers said the committee was $66,000 in the black and had the rest of the year to raise any additional funds needed.

IEM said the committee’s figures were “highly speculative and misleading” and accused organizers of minimizing outstanding debts and overstating potential revenues.

The committee is “in imminent danger of insolvency,” IEM documents said.

The settlement preempted an IEM move to place the committee in receivership to ensure that any remaining funds go to creditors.

IEM’s Thursday filing said the company had no guarantee of collecting commissions it claimed for lining up corporate sponsors.

According to the IEM documents:

--The Seattle Organizing Committee had to borrow $1 million last spring to keep the games afloat. The loan from Turner Broadcasting Systems of Atlanta, the games’ corporate parent, remains unpaid.

--The committee’s claim of solvency depends on Turner waiving a debt of $300,000, a third of the royalties from souvenir sales. Organizers conceded they had yet to ask for a waiver.

--Tickets sales were $2 million less than the estimated $17.2 million needed to break even.

--The committee’s finance director did not know if organizers could pay all bills now due, and the games’ board of directors was advised that more fund-raising efforts would be needed.

Games officials contend they will end up in the black on their $68.5-million operating budget. A statement of the committee’s finances showed remaining debts of $4.59 million with revenues of $4.66 million.