In its day-after coverage of the NBA’s approval of the Seattle Sonics‘ proposed move to Oklahoma City, ESpn included the following:
The only thing keeping the moving trucks from pulling up and emptying the Sonics’ offices is an arena lease, which Stern has called the worst in the league. (The Sonics receive zero revenue from parking, just 40 percent of revenue from suite sales and concessions, and just 60 percent of the revenue from a large swath of thousands of $105 seats in the lower bowl.)
This is the real explanation for why the NBA is set to trade the nation’s 14th media market for its 45th, despite Seattle having an arena that was just renovated 14 years ago. It’s not the arena, it’s the lease.
So, how bad is that lease? Certainly, having to hand over half or more the revenue from suites, seats, and concessions sounds pretty tough – why should the city of Seattle be getting the money when people go to Sonics games? The answer, though, is that that’s what the Sonics agreed to, in order to get KeyArena renovated in the ’90s: The city would get to keep a large chunk of arena revenues to pay back its $74 million share of renovation costs.
There are several lessons here:
Teams want new arenas, but not if they have to pay for them.
If, in fact, the Sonics really can’t make money with this lease, then it’s unlikely any arena can pay off its own costs and still turn a profit for the team that plays there. ($74 million is a piddly amount in arena construction/renovation terms.)
If a team owner promises that if you build him a new arena you’ll get all your money back eventually, keep one hand on your wallet.