If you recall, the big question for determining how much public subsidy will be required for the proposed $500 million Seattle basketball arena project is what share of the costs will be paid by different revenue streams? With a little help from my friends, I’ve now located the city’s official estimates of the various revenue streams that would pay off the public’s $200 million share (see way at the bottom of the page), which amount to this (all figures in present value):
Arena admissions taxes: $71.8 million
Team business taxes: $15.7 million
Arena incremental property taxes: $11.6 million
Arena sales taxes: $4.9 million
Leasehold excise tax: $2.9 million
Arena incremental property taxes: $3.5 million
Leasehold excise tax: $1.5 million
Arena sales taxes: $0.9 million
Base rent: $28 million
Imputed additional rent: $57.6 million
What does all that mean? Well, the rent payments are rent payments: Chris Hansen’s new Supersonics would be paying for those, so they’re not really public costs. (The “imputed” rent is to cover Hansen’s promise that the team will cover any shortfall in tax revenues toward paying off the full $200 million.)
On the taxes, the big-ticket item is the admissions tax, and that’s generally something that’s considered to come out of a team’s pocket as well — the argument being that if fans are willing to pay no more than (say) $50 a ticket, then the team will charge $50 a ticket regardless of whether a chunk of that has to go toward admissions taxes or not. And since it’s a special tax not levied on other entertainment options, the city doesn’t have to worry about losing tax revenue elsewhere from places where Seattleites will no longer be spending their money once there’s an NBA team in town to blow it on.
Not levied on other entertainment options except for the Mariners and Seahawks, that is, who have admission taxes that help the state stadium authority pay off their respective stadiums. So to the extent that fans will be spending money on the Sonics that they’d otherwise spend on the M’s or Seahawks, that would be admission tax money lost to the state. If that’s one-quarter of all fans (I’m just guessing here, but all these numbers are just more or less educated guesses), then the state would end up losing $18 million on this deal.
Team business and property taxes, as discussed earlier, are dicier topics: They’re inarguably new money, but it’s new money that the city and county are voluntarily giving up to make this deal happen. So that $30.8 million is a public subsidy, but not a public cost.
The big item that’s likely to be coming out of the public coffers is sales taxes on arena concessions, since it’s really tough to argue that people buying a hot dog at a Sonics game wouldn’t have eaten anything (at least, not anything subject to city or county taxes) if the team didn’t exist. I don’t have good figures for what a reasonable substitution figure would be here (and it’s going to change depending on whether you count money cannibalized from elsewhere in the county or just in the state), but even if you assume it’s something high like 75%, that’s only going to come to $4.4 million in lost public revenue.
In the end, then, assuming that all these layered assumptions are reasonable, we’re looking at somewhere between $22 million (if you only count losses to the city/county) and $53 million (if you include kicking back money that the public doesn’t currently receive) in public subsidies for this arena deal, much of which would hit the state or county, not the city. That’s not the city turning a profit, as is required by I-91, but it would still be one of the most taxpayer-friendly sports facility deals in recent memory. There could still be more shoes to drop, but right now Hansen’s deal looks a lot more promising than it did a couple of weeks ago.