The Seattle city council made its arena announcement as promised yesterday, and the big-ticket items were the ones that had been leaked earlier: $40 million extra money from Chris Hansen to pay for traffic improvements, a $7 million “fund to improve KeyArena,” and $25 million in extra city borrowing that Hansen would repay. There are, however, a few additional twists in the revised MOU (PDF with changes highlighted here):
- Hansen will personally guarantee five years’ worth of arena debt payments, in the event his arena company runs out of money.
- Hansen agreed to annual audits of his personal net worth, to show that it’s at least $300 million, and the city will be allowed to conduct an assessment of viability of his business plan and his private investors.
- The city and county can force Hansen to buy back the land and arena for the initial purchase price of the land plus inflation, or $200 million, whichever is greater, after 30 years.
- The $7 million KeyArena fund will actually come out of incremental sales and admission taxes at the arena as the result of any increased spending there while it plays temporary host to an NBA or NHL team. So it’s actually the city spending its own money on this, not Hansen.
- The city will study potential alternative sites, including the current site of the KeyArena.
- Everyone gets a puppy! Also, bees!
City councilmember Tim Burgess bragged yesterday that “we got it all” in negotiations with Hansen, but clearly that’s not true — they got effectively nothing in terms of the fate of KeyArena, and even if they discover that Hansen isn’t keeping up his end of the bargain to keep his net worth at $300 million, it’ll be too late to do much about it. Still, they got something by playing hardball, and that’s better than nothing.
The full council still needs to approve the deal, as well as the county council, but those seem way more likely now. Then all that has to happen is … oh, right, Hansen has to find an NBA team before he’ll break ground. The Seattle Times cites the Milwaukee Bucks, Charlotte Bobcats, and Minnesota Timberwolves (really?), but most of the speculation remains centered on the Sacramento Kings, whose owners the Maloof brothers yesterday issued a “no comment” on the matter. The key question, I expect, is whether the Maloofs and Hansen can agree on a price that works for both sides, given that the Maloofs have a ton of debts to pay off, and Hansen will need a purchase price that he can afford even after putting up most of the cost of an arena. Plus, of course, whether the Maloofs are actually capable of agreeing to anything without freaking out and calling it off at the last second, which remains an open question.
[UPDATE: An FoS commenter also points out that Hansen’s base rent has been reduced from $2 million a year in the original deal to $1 million a year in the revised deal. This probably doesn’t change the arena cost calculus much — Hansen has to cover any shortfall in bond payments beyond what comes in from arena taxes anyway, so unless there’s an unexpected surge in arena tax revenues, this will mostly end up being a shift from the “base rent” column to the “additional rent” column, both of which come out of Hansen’s pocket. It is a small concession to Hansen, though, and one that’s going unmentioned in media coverage of the deal so far.]