NBA commissioner: No Seattle expansion team in immediate future

Seattle isn’t getting an NBA expansion team anytime soon, you guys:

“Whether or not the arena in Seattle is shovel ready is not a factor that we are considering in terms of whether or not we expand at this point,’’ Silver told The Seattle Times during the Associated Press Sports Editors commissioners meetings in Manhattan…

“We’re going through a collective-bargaining cycle right now, it’s no secret,’’ Silver said. “So, certainly, it’s not something that we would be thinking about as we’re focusing on ensuring that we’re going to have labor peace for the foreseeable future.

“I think that after we complete the extension of our collective-bargaining agreement, I think that would be the natural time, at least, for owners to consider whether or not they would like to expand. … Right now, we are not hearing it coming from within the league. We are hearing from some groups outside the league. But from within the league, there’s no strong push to expand at the moment.’’

Since Chris Hansen’s MOU for a new Seattle arena expires in November 2017, this means in the next year and a half we’re either going to see: 1) a big push by Hansen to try to get another team to relocate (your guess is as good as mine who he’d target, since there aren’t a ton of ready candidates looking to move), 2) a big push by Hansen to get the MOU extended, or 3) both of the above. Getting a team was always going to be the hardest part of Hansen’s Sonics 2.0 plan — yes, even harder than figuring out how to make his arena turn a profit — and it looks like that road isn’t getting any easier anytime soon.

Seattle ducked considering Key Arena reno option because rewriting is too damn hard

For anyone interested in the nitty-gritty of how the Seattle city council ended up issuing an environmental impact statement that said Key Arena couldn’t be renovated to modern NBA/NHL standards while it had another report in hand saying that it could, a report this morning by the Seattle Times’ Geoff Baker has all the nitty that your gritty could ever need:

Six weeks before the city of Seattle’s release last May of an environmental study on the proposed Sodo District arena, the woman preparing it received a telephone call.

The man phoning URS Corp. Vice President Katy Chaney was Ryan Sickman, a project manager with AECOM preparing a different report for the City Council on Key­Arena’s future. Public records released to The Seattle Times indicate Sickman and Chaney discussed how their reports differed on whether KeyArena could be modified for NBA and NHL use without demolishing its unique roof…

“Let me know if you have suggestions on whether to, and how to, revise either the EIS text or the response so that we don’t appear inconsistent between the two documents,’’ [Chaney] emailed Sickman on March 25, 2015.

Sickman two weeks later suggested a 221-word revision stating: “There are now studies in front of the city that show how the KeyArena could be reconfigured and redesigned within the building’s existing structure to accommodate both NBA and NHL franchises based upon the now accepted Sacramento Kings design model for NBA seating distribution.’’…

After the suggested changes bounced around privately between Seattle city staffers and politicians, the AECOM report’s scheduled early May rollout was postponed.

Nick Licata, who was on the council at the time, previously said, “There’s a lot of ways of not holding back information but not amplifying it. I wouldn’t say [the AECOM report] was purposely held back, but I don’t think there was much attention given to it.” That sounds about right from this latest timeline: Right as the council was about to issue a report finally moving ahead with Chris Hansen’s proposed SoDo project, the possibility of renovating Key was raised, and everybody more or less went, Oh, jeez, we can’t handle going back and looking at more options. Let’s just pretend we never saw it.

Baker also provides some detail on what happened in that “bounced around” period, drawn from city emails, particularly those of then-city policy analyst Sara Belz:

AECOM project lead [David] Stone by then was still tweaking his own delayed report and asked Belz on May 15 about mentioning the EIS — given extensive media coverage of its release and continued NHL possibilities in Seattle.

Belz took three days to reply, saying she’d checked with colleagues and “we don’t think you need to devote space in your report to the EIS or NHL stuff. Our thought is just that it might create confusion regarding the scope of your contract and analysis.’’

Again, this is way short of “coverup,” but still certainly doing their best to pretend that the two reports didn’t say dramatically different things, because nobody likes to do rewrites. The interesting bit now will be to see whether there are any repercussions, either for the city officials involved or for the SoDo project itself, especially with the council set to give final approval and opponents turning up the heat to try to block it. If last year was seen as too late to make changes based on new options, it seems impossible that the council would pursue it this year, but stranger things have happened. I think.

Sonics fans, Port of Seattle advocates yell at each other some more, film at 11

The Seattle city council held its public hearing on the closure of a street to make way for Chris Hansen’s proposed sports arena, and it went exactly as you’d expect:

Most of the crowd sported green and yellow Sonics gear, while others carried NHL hockey signs. A small group associated with the Port of Seattle, who oppose the deal, held signs saying, “Save Sodo.”

The dockworker union folks claimed an arena will hurt the viability of the port, Sonics fans replied nuh-uh it won’t, and a fun time was had by all. There are two more hearings scheduled on April 5 and 19 before the council votes, so to save everybody time just bookmark this post and re-read it again then, okay? Thanks.

Washington state legislators call for timeout on Seattle arena plans

So this could be a bit of a stumbling block for Chris Hanson’s proposed Seattle arena:

With a public hearing scheduled for Tuesday to determine the proposed two-block vacation of Occidental Avenue south of Safeco Field, 36 members of the state legislature drafted a letter urging the Seattle City Council to vote down the plan.

The letter said the area in question “represents the crossroads of international trade, manufacturing and transportation interests that together form a key economic engine for our state,” arguing that “adding additional pressure to getting goods in and out of Seattle could have devastating effects.”

This pretty much echoes the concerns that the Port of Seattle has had — apparently that $40 million fund for better roads for its trucks didn’t assuage everyone’s fears. State lawmakers don’t have any actual decision-making power over vacating streets, but with this the last big hurdle before Hansen can build his arena — that and getting an actual team, mind you, which is the biggest hurdle of all, but we won’t talk about that for the moment — everyone involved is bringing whatever pressure to bear that they can.

More tomorrow after the hearing, if anything interesting happens. No decisions are expected, but there should be lots of shouting.

Seattle council did too ignore possibility of renovating KeyArena, says Seattle Weekly report

Seattle Weekly has investigated the great Geoff Baker-Tim Burgess fooferaw, and determined that Baker was right, the council did insist that KeyArena couldn’t be renovated in one report while another report said it could be:

Burgess fired back at the Times last week by releasing a memo prepared by legislative staff which purports to describe multiple significant errors in Baker’s story. That memo says that Baker “conflates the purposes” of the two studies. The EIS is supposed to predict the environmental effects of a large construction project. The other study, done through contractor AECOM, is meant to suss out the economic and financial impact of building a new SoDo arena, and look at alternatives. The two studies, the memo says, are as incomparable as apples and oranges, and Baker’s understanding of them is “muddled.”

However, “muddled” is exactly the word to describe the arguments laid out in Burgess’ memo. In several cases it seems to purposely misconstrue Baker’s reporting—which makes Baker appear not to understand the timelines of the two reports, even though his reporting displays a fine grasp of how everything went down. Meanwhile, the memo can’t seem to answer the simple question of why the EIS—which by law must analyze reasonable alternatives to the SoDo arena—did not analyze whether KeyArena could be retrofitted for a new NBA or NHL team.

Former councilmember Nick Licata, who was on the council at the time the dueling reports were issued, told the Weekly that it wasn’t a conspiracy so much as spin: “There’s a lot of ways of not holding back information but not amplifying it. I wouldn’t say [the AECOM report] was purposely held back, but I don’t think there was much attention given to it.” (I told the Weekly something similar, but Licata was there so he’d know better than me.) Luring new teams by renovating KeyArena is probably still a longshot, but then, so is getting a new NBA team via a new SoDo arena, so it’s worth investigating, anyway. Next on your editorial calendar, maybe, Seattle Weekly?

Seattle councilmember: We didn’t cover up KeyArena renovation report, nyah!

Seattle city councilmembers Tim Burgess and Bruce Harrell have lashed back at Seattle Times columnist/reporter Geoff Baker’s critical coverage of the council’s delayed study of Key Arena renovation, with Burgess tearing into Baker in harsh bureaucratese:

Mr. Baker suggests that a KeyArena remodel alternative was “discarded” in order to avoid choosing this alternative. However, the purpose of the EIS is to disclose environmental effects and to assist decision-makers in evaluating the impacts of a range of options against the preferred alternative.

Before the EIS was begun, ArenaCo had declared that they would not be interested in participating in a remodel of Key Arena. A remodel of Key Arena would not have been a reasonable alternative to ArenaCo’s project, even if it were a reasonable alternative for the City to consider.

In English, this seems to come down to “The environmental impact statement only has to look at alternatives to the project being studied, and Chris Hansen wasn’t interested in KeyArena as an alternative, so we didn’t include it, but we did eventually release a separate study, so just shut up already, you.”

Burgess was hardly an uncritical cheerleader of Hansen’s plan, though he did also brag about the final deal despite it not addressing the problem of the future of KeyArena once a new arena was built. So if you’re looking to take sides in this slap fight, feel free to take either of those into consideration.

Seattle delayed report on renovating Key Arena until after Hansen plan was approved

Seattle Times reporter Geoff Baker warns that Chris Hansen’s mostly privately funded arena proposal could be in trouble if President Obama follows through with his plan (re-introduced in his 2017 budget but as unlikely to pass Congress as it was last year) to ban the use of tax-exempt bonds for pro sports venues:

Obama’s measure could also have a more immediate impact on the debate here over entrepreneur Chris Hansen’s proposed $490 million arena project in the Sodo District…

It’s not clear if those bonds would be the tax-exempt variety. That’s to be determined, but it’s a safe bet a substantial portion will be.

Um, no, I don’t think so? It’s already illegal to sell tax-exempt bonds when they’re being paid off with anything other than “generally applicable” taxes (rent doesn’t count), which means that at most there could be about $100 million in tax-exempt bonds. Even if you knock, say, 1.5% off the interest rate for that thanks to the tax exemption, maybe that would save $10-15 million in present value. It’s not a deal-breaker by any means, in other words.

Way more significant is the item buried deeper in this story (though addressed in detail by a longer Baker piece on Sunday), which is that a consultant’s report that Key Arena could be renovated to accommodate both modern NBA and NHL needs for $285 million — $200 million less than the cost of Hansen’s proposed arena — was delayed from its planned release last May, apparently so that it wouldn’t trip up final approval of Hansen’s arena plan. Which, you know, it’s a consultant’s report so the usual grains of salt apply, and no actual developers have said they’d undertake a Key Arena renovation (though if they knew it was an option, who knows?), and if Hansen wants to go build a new arena with his own money (again, mostly) it shouldn’t be much skin off Seattle’s nose if he could accomplish the same for cheaper with a Key renovation … still, it seems worth exploring, at least.

There’s a public hearing on March 15 on yet another city council action needed by Hansen — I know I said “final approval” above, but there’s apparently always still more approvals, this one for closing streets — so maybe this will actually get openly debated. Probably not, but Seattle has a decent track record of actually grappling with these issues, so maybe, even if Nick Licata isn’t around to grapple with them anymore.

Nobody actually has money for suburban Seattle hockey arena plan, it may die by year’s end

There hasn’t been much news of late about the arena that former oil trader Ray Bartoszek said he was going to build in the Seattle suburb of Tukwila, and apparently there are good reasons for that:

Bartoszek has said his previous investor pulled out in July, scuttling his plans to apply for an NHL expansion team.

Bartoszek has yet to find a replacement investor. He said there is still potential of one emerging by year’s end, but he could not guarantee if the land options will be extended.

So we’re back to what this whole Tukwila deal seemed like in the first place: Rich guy says he’ll build an arena with private money, as soon as he finds somebody else with private money to actually spend on it. Bartoszek has put down some money for extensions on land options already, so presumably he’s at least somewhat serious about this thing, though it could always just be something he sees as an investment in getting his name mentioned in NHL expansion owner discussions. There are worse ways to spend your money when you’re a billionaire.

Seattle could renovate Key Arena for $285m, says study that doesn’t explain why it would want to

Chris Daniels of KING-5 TV in Seattle has gotten hold of a report on possible renovations to Key Arena that was commissioned by the city council, and it says: Yes, Key Arena can be renovated. How much money you got?

AECOM studied multiple scenarios for the building, of varying costs, and concluded there are multiple potential options for repurposing the building, including as an adventure sports park, amusement park, aquarium, museum, or waterpark. It even suggests the building could be redeveloped into 400-500 units of housing. Those options, according the report, would cost north of $100 million. The city could also demolish the arena at a cost close to $7 million.

The AECOM report suggests the city could complete a gut remodel of the building to make it NBA and NHL compatible at a cost of $285 million.

Okay, then. It’s not entirely clear what “NBA and NHL compatible” means — Key is currently too short to comfortably fit a hockey rink, but the only thing wrong with it as an NBA arena is that the NBA wants more revenues that it can generate, and the sky’s the limit there in terms of demands. (The report is online, but it’s 169 pages and the Scribd search function doesn’t appear to be working properly — if anyone wants to read the whole damn thing to see what $285 million would buy, be my guest.) And while Seattle city councilmember Jean Godden noted on Friday that “$285 million [would be] a small amount compared to the cost of a new arena” (true!), it would also be a whole lot more than the cost of letting Chris Hansen build a new arena with mostly his own money, not to mention more than just not building a new arena at all.

I suppose one way to look at it would be that this would be an investment in keeping the Key Arena active and maintaining the surrounding neighborhood — except that, according to another study from earlier this year noted by Daniels, the surrounding neighborhood doesn’t seem to have been bothered much by the NBA’s departure:

The study [by economists Brad Humphreys and Adam Nowak] says condo prices have experienced “excess price appreciation” since the Sonics left, based on research involving 10,000 residential property transactions within one mile of Key Arena between 2000-2013. They write, “These results suggest that the presence of a team in a high profile sports league is not the most important factor driving observed property value increases documented in the existing literature.”

This isn’t a brand-new study — I mentioned it in my Vice Sports piece about the Bucks back in July — but still the point remains: Seattle could spend $285 million upgrading Key Arena to make NBA and NHL teams want to move there, maybe, depending on what the upgrades included and what kind of lease they were offered. Or it could not, and still have $285 million and still be Seattle. It’s nice to have all the options on the table, but unless the only question being asked here is “How can we get a basketball or hockey team to move to Seattle?”, this isn’t all that enticing an option.

No, the NBA doesn’t need to move the Bucks so it can make $1 billion

Today in bad journalistic math, we present an article by Business Insider’s Cork Gaines, which proposes that the NBA has a vested interest in the Milwaukee Bucks arena plan failing, since it would allow the league to take over the team and profit off of rising franchise values in the wake of its new TV deal:

If the Bucks fail to get a new arena approved, the NBA will buy back the Bucks and then turn around and sell it to the highest bidder in either Seattle or Las Vegas for as much as $1.6 billion. That would be a cool $1 billion profit for the other 29 NBA owners.

Another scenario would allow Edens and Lasry to keep the team and move it to Seattle (or Las Vegas) after paying the NBA a relocation fee, likely in the hundreds of millions of dollars. Under this scenario, the other NBA owners still get a hefty pay day and Bucks owners get to keep an NBA team in a new arena that is still worth more than the total amount they paid in 2014.

Anyone see the logical flaw here? (No, not that someone would pay $1.6 billion to put an NBA team in Las Vegas — we’ll get to that in a moment.) Come on, it’ll come to you. Let’s take a look at the chart that Business Insider included in its article (based on Forbes’ franchise value estimates), maybe that will help:

01-713-1Got it yet? Here’s the key: Those soaring franchise values are for all 30 NBA teams, including the Bucks. That means that even if the Bucks sit right where they are, they’re worth a whole lot more than they were a year earlier, thanks to the league’s new $24 billion TV deal that is already driving player salaries skywards.

Yes, since the NBA’s buyback agreement for the Bucks is fixed at $575 million, that’s an opportunity for the league to make some easy cash if it can get the franchise at a bargain price and then resell it. (This is assuming that the other 29 owners would actually go ahead with scarfing up the current Bucks owners’ equity for themselves, which seems like the kind of thing billionaires don’t do in polite company, but we’d see.) But if you’re including “let Edens and Lasry keep the team for a fee and move it to Las Vegas” in your scenarios, you also have to include “let Edens and Lasry keep the team for a fee and keep it in Milwaukee,” which could potentially be even more lucrative, given the nearly half-billion dollars in subsidies on the table, even if they don’t manage to get approved this year.

Meanwhile, $1.6 billion for a Seattle team, let alone a Las Vegas team, is completely insane, new arena or no. Keep in mind that the Atlanta Hawks, a team in a market bigger than either Seattle or certainly Las Vegas, were just sold for $730 million, a figure that had Forbes itself suggesting that sports franchise values have already peaked. And then take a look at the Forbes NBA valuation estimates: Only five teams are valued at $1.6 billion or higher, and all of them play in New York, Los Angeles, Chicago, or Boston. The nearest markets in size to Seattle are Phoenix ($910 million) and Minneapolis ($625 million), and neither of those teams would be saddled with tens of millions in annual arena debt payments like a Chris Hansen-owned team would be in Seattle. So any potential sale payday here is probably closer to $100 million than $1 billion.

Anyway, all this is no doubt raising temperatures in the Wisconsin state legislature, where Senate Majority Leader Scott Fitzgerald has started suggesting that a ticket surcharge could play a role in a revised Bucks arena funding plan. That’s potentially good news for Wisconsin taxpayers — ticket surcharges mostly end up coming out of team owners’ pockets, since it means they can’t raise ticket prices as high as they would otherwise without pricing themselves out of the market — but without any details it’s hard to say by how much, and Fitzgerald didn’t provide any. The Wisconsin legislature can be called back into session at any time to deal with this, so with no deal close at hand, best prepare yourself for a long, hot summer of this stuff — “window is closing” rhetoric or not, $457 million in cash and tax breaks is too rich a potential offer for either the Bucks owners or the NBA to turn their noses up at.