Seattle council votes tonight on arena, damn the remaining questions

The Seattle city council is set to meet today to vote on Chris Hansen’s proposed $490 million SoDo arena (hearing starting at 2 pm Pacific, webcast here), and the Seattle Times sums up the situation well:

Seattle City Council members this summer said they wouldn’t approve a $490 million basketball and hockey arena without knowing more about Chris Hansen’s business plan, his investors and how he would minimize the risk to taxpayers for up to $200 million in public bonds.

Monday, the council is expected to approve an agreement with Hansen, though many of their questions remain unanswered.

Most important, the council effectively gave up on getting assurances that the new arena won’t hurt the future of the existing KeyArena, likely because everyone now admits there’s no way that Key can survive with a newer competitor across town. (The council did agree to spend $7 million to study the future of Key; they could have saved $7 million by shaking their heads sadly and muttering, “It’ll have to go.”) And the guarantees of Hansen’s financial viability pretty much come down to an independent accountant looking at his books and confirming that he’s not cooking them.

Which is all well and good, but the big question remains: Can Hansen actually procure an NBA franchise at a price that will let him pay for both the team and the arena on the slim profits that are generated by a sports arena in a mid-sized market? I appear in the Seattle Times article in my now-accustomed role as voice of “this’ll be great if it works out, but my Spidey-sense is deeply skeptical that the math can add up.” Assuming the council votes for this as expected tonight (they already voted unanimously in a committee vote last week to advance it to the full council) and the county council follows suit, I’ll be rooting for Hansen to succeed, since it’d be nice to have a second successful mostly privately built sports facility to point to in addition to the San Francisco Giants‘ AT&T Park. But I’d still love to be a fly on the wall of Hansen’s bookkeeper.


18 comments on “Seattle council votes tonight on arena, damn the remaining questions

  1. When do you think Seattle will have a team? Is 2013 practical at this point?

    (I’m imagining an EIS that contains some very expensive mitigation…)

  2. There are a few privately funded parks in MLS. You’ll never find one in baseball at any level, not even independent leagues. The PCL just screwed the tax payers in El Paso on friday.

  3. I think anywhere from 2013 to “never” is conceivable for Seattle getting a team. It all depends on who’s willing to sell, and whether Hansen can afford to buy at their price.

    Remember, a year and change ago it looked certain that Anaheim was going to get an NBA team, and for years before that everyone expected it would only be a matter of time before Kansas City would get a team. Then again, who seriously thought Oklahoma City would get one? These things can’t be predicted by algorithms — there are way too many individual factors at play.

  4. Neil;

    Are you saying you believe the only serious option for Hansen is buying and relocating an existing team? I’m sure it would be cheaper/preferred to expansion… Do you believe the NBA will not offer an expansion franchise if a willing seller (including, I guess, themselves…) cannot be found?

  5. The one foreseeable factor in play for Seattle, though, is the EIS. Hansen would be crazy to buy an NBA team if he wasn’t very confident that the EIS would be “favorable.” Since the EIS might take a year to complete, I can see why he wouldn’t buy a team until the EIS is all the way done.

    That, and the relocation fee. Some people are saying — and I completely disagree with them — that the relocation fees might be as high as $150M. That would set up a lawsuit that the NBA would lose, in my opinion. $30M to move the Sonics out, and $150M to get them back? That has “restraint of trade” written all over it.

  6. This whole project has been amazing to me. If Seattle was capable of supporting an NBA team the Sonics would’ve stayed in the first place.

    Check out the Sonics’ attendance from ’05-’06 (they are listed as Thunder): http://espn.go.com/nba/attendance/_/year/2006

    The team made is to the conference semis the prior year so they should have seen the typical year-after bump. Instead they drew a pathetic 16,200/game with ticket prices that were far closer to the Milwaukee/Minnesota level than the Dallas/OKC level (I won’t even compare LA/NY because that’s unfair). The city is just a bad fit for a high ticket price sport like the NBA and I don’t see a new arena solving that long term.

  7. To go along with what steven said above, both Red Bull Arena in NY and Stade Saputo in Montreal are both privately owned and were also financed via solely private funding. It’s apparent to me that MLS teams seeking soccer specific stadiums are more apt to fund their ventures predominantly through private monies rather than looking for as many public handouts as possible. Compared to other sports in this country, I’d say MLS is on the opposite end of the publicly-funded stadiums spectrum.

  8. Wes;

    The original ($15m) Saputo Stadium was privately funded (by the Saputo family themselves). The recent $25-30m renovation for MLS was almost entirely public money, as I recall.

    As far as MLS itself goes, the Hunt family did build Crew Stadium and PHP in Dallas, and there have been others (RBA, as you noted) that were either completely or mostly privately funded. However, Sandy stadium (RSL), Rapids stadium (Col), BBVA (Hou), BMO field (TFC), Bridgeview (Chic) and countless others have either been heavily subsidized by the taxpayer or were fully paid for with public dollars.

    MLS isn’t really any different from the major sports in North America when it comes to sinking it’s/their feeding tubes into the public blood supply.

  9. Steven:

    Not many (fully) privately funded facilities in MLS, but there are one or two (depending on what you want to include in “funding”, of course).

    I agree with you on baseball. The only point I would make is that if team owners make outlandish demands and municipal governments (or taxpayers) are too stupid to say no, it’s really more a case of taxpayers (or their representatives) screwing themselves.

    I never blame team owners for asking for something. History has shown they get anything they ask for, so why not?

    Yes, I suppose they are shameless. But it seems utter shamelessness is very profitable, doesn’t it?

  10. I thought Staples in LA (not the stuff around it, but just the arena) was considered to be privately financed…? I’d never bet a mortgage payment on what Wikipedia says, but they claim it is.

  11. News reports now are saying that the owners of the Edmonton Oilers were in town over the weekend. Ooooh, international intrigue now. “Nice little hockey team you got there, Ed. Be a shame if, say, something terrible was to happen to it.”

  12. Our local fan blog doesn’t seem to have it right, either. They still think that if someone buys the Kings for $400M, they assume the existing debt, too.

    StR, that’s not how it works. The revenues raised from the sale would pay off the debts. They wouldn’t pay $400M, and then assume $192M in debts. If you still think that — you’re doing it wrong (thinking, that is).

  13. I should have counted Staples as privately funded, yes. Not Red Bull Arena, though — it got a ton of land and infrastructure money from Harrison.

  14. Yes MLS owners see billions being tossed at the other teams in town and ask for help on at least infrastructure and financing. Most of the parks are built with 80 to 100% owner money in some cases in return for public use the city or county have come up with a few million like in the case of Houston. Keep in mind that the public gets no choice in the matter even if law requires a vote these teams get a waiver or the public is lied to like with the reds and yankees. Also keep in mind that unlike other sports MLS gets no direct subsidies from the cities or counties like other leagues. Also remenber that the old jerks running these cities are normally old guys with a dislike of soccer who will fight any public funding for the sport. The MLS owners arnt saints by choice but they wont burn in hell like baseball owners.

  15. BTW the latest MLS project is in San Jose and the owner bought the land and is paying 100% of the park and with all that had to make a deal not to have concerts to get an OK. He is also the owner of the A’s and the city wants to give him prime downtown land,infrastructure and direct money if he ever gets the ok from MLB. Same owner and politcal goons but 2 different sports.

  16. Hopefully now Hansen will actually show his business plan to the councils so they can actually examine how the heck the project can “pencil out”.

  17. @ Steven – land, perhaps…it was part of a “redevelopment” parcel that got caught up in the legal maze when Governor Moonbeam decided to give all the redevelopment agencies in CA the axe. There’s one critical parcel that the successor agency to the San Jose RDA does not control, and the word around the water cooler is that it will go to eminent domain and taken over by the city for the purpose of going over to Wolff – for a “fair price.”

    The “infrastructure” was already planned, in that the Autumn Parkway connector was and is intended to improve access to the existing HP Pavilion and to provide another direct link between the Nimitz and Sinclair Freeways. Direct money? Not without a direct vote from the people, that’s in the city code.

    Lew Wolff has been very clear – he would like to do his stadium projects without having to go to the voters to ask for money, because he knows he’d lose. That’s why the MLS stadium has taken so damn long to get going. Now, the baseball thing? The only thing holding that up is Bud Selig and the SF Giants.