Hansen finds owner for nonexistent NHL team to play in nonexistent Seattle arena

Hey! Chris Hansen, the would-be Seattle arena building, knows a guy who wants to own an NHL team! He doesn’t have an NHL team, but if he did, he would totally agree to play in Hansen’s arena, which he also doesn’t have! In fact, they have an agreement to do so — a “non-binding” agreement!

To be slightly fairer, Vancouver, B.C., real estate baron Victor Coleman does apparently have at least some support in the NHL, according to KING-TV’s Chris Daniels, who reports that “one league executive describes him as ‘the real deal,’ and he was flanked by the NHL’s top leaders during a clandestine meeting in Seattle back in May.” Still, Hansen has made clear that he’s not building an arena until he has an NBA team, which he really doesn’t have. And anyway, getting approval from the NHL was never going to be the problem (though deciding on whether it would be a relocated team or an expansion team could take a while), it’s getting an arena, which see above re: no NBA team.

In other words, not much to see here, move along. Unless you just want to hear a man reminisce about the day that the Canucks played their first game.

Gretzky denies interest in owning nonexistent Seattle NHL franchise in nonexistent Seattle NHL arena

This is from the New York Post and so probably pretty unreliable, but everyone else is writing about it so I suppose I might as well too: Wayne Gretzky is reportedly—wait, what’s that?

Wayne Gretzky’s agent is denying a report that the Great One is trying to bring an NHL team to Seattle…

Darren Blake, Gretzky’s agent, told The Canadian Press in an email that the 53-year-old Hall of Famer isn’t involved in any bid.

“As you can imagine prospective team owners from various franchises call frequently to gauge his interest in coming on board. Seattle is no different,” said Blake.

Oh, good, we can ignore this after all. And not just because what any prospective Seattle NHL team needs isn’t an owner, but somebody willing to build an NHL arena. How’s Gretzky with a trowel?

Ballmer reportedly wins $2B bid to buy Clippers, entire sports world turns upside-down

Okay, hands up everybody who saw this coming:

Los Angeles Clippers owner Donald Sterling does not have the authority to stop a $2 billion sale of his team because he has been determined to be mentally unfit to make decisions related to the family trust, a person familiar with the situation told USA TODAY Sports.

The Sterling Family Trust owns the team, with Donald and his wife Shelly each owning a 50% share. The trust spells out provisions and procedures related to the mental capacity of the trustees, and Donald Sterling did not meet the standard in a determination by experts, giving his wife sole decision-making power for the trust, the person said.

Shelly Sterling reached a deal Thursday with former Microsoft CEO Steve Ballmer to sell the Clippers for a record $2 billion.

That’s pretty … I guess “crazy” would be an insensitive way of putting it, huh? Let’s go with “unexpected,” though that seems a bit understated if the denouement of this whole Clippers mess is that everyone involved gets to avoid messy lawsuits and ownership votes to eject Sterling because of a family trust’s private psychologist.

Easier to designate as madness, meanwhile, is that $2 billion sale price. (As yet unconfirmed, but reported by multiple sources.) As I discussed yesterday over at Sports on Earth, it was expected that the Clippers were going to sell for a record price, given escalating sports team values, their presence in the mammoth L.A. market, and the fact that for once they aren’t league doormats anymore. But consider that the previous record, set just last month, was $550 million for the Milwaukee Bucks; and that earlier this year Forbes estimated the Clippers to be worth just $575 million, with the NBA’s most valuable team, the New York Knicks, clocking in at just $1.4 billion; and that the only sports franchise ever to sell for $2 billion was the L.A. Dodgers in 2012, a team that plays in a more popular sport and earns more than double the Clippers’ annual revenues, a figure that will likely hold true even after the Clips renegotiate their TV deal in 2016; and you’ll be forgiven for wondering whether Ballmer shouldn’t have his head examined as well.

The leading theory for what the hell just happened is what you might call billionaire glut: Thanks to the U.S. economy’s increasing propensity for concentrating all its wealth in a tiny number of people, there are a heck of a lot more rich guys like Ballmer in the market for sports teams these days, and not an appreciably larger number of sports teams for sale. That imbalance of supply and demand drives prices through the roof, with would-be hoops magnates bidding each other into oblivion in order to find something to buy with their money. (It’s not too unlike the real estate market in places like Vancouver, where Asia’s one-percenters have created a housing bubble by buying up condos left and right simply as a place to park their money — though you could argue that owning an NBA team, even the Clippers, is more fun than an apartment in Vancouver.) It has to stop somewhere, and it could yet be that $2 billion for the Clippers will be seen as an outlier — even Nate Silver, in his regression-analysis-driven projections of the effects of billionaire glut, could only come up with a Clippers value of $580-950 million — but it does help indicate why sale prices seem so suddenly out of whack with actual team revenues: These are rich men’s toys, yes, but they’re exclusive toys, and there are a lot more rich men wanting to be the ones to find them under their Christmas tree.

The fact that it’s Ballmer who is Clippers owner-in-waiting, meanwhile, means that he’ll no longer be part of Chris Hansen’s proposed ownership group in Seattle, where he was the moneybags behind Hansen’s hey-kids-let’s-put-up-an-NBA-team enthusiasm. Hansen’s supporters are trying to put a happy face on this, but with no team, no deep-pocketed partner, and an arena deal that expires in 2017, things aren’t looking too rosy right now. Though maybe once the NBA sees what nutso prices those billionaires are willing to pay for teams, they’ll rethink expansion.

Could Seattle get an NHL team to play in KeyArena? (SPOILER: no)

NHL officials may be decidedly noncommittal about putting a team in Seattle, but that isn’t stopping the sports media from getting all excited about how Seattle may be getting an NHL team, dudes! Or at least speculating where one would play, with the Seattle Times sports business writer Geoff Baker speculating that maybe a team could play at the existing KeyArena:

With no Sodo arena deal in sight to entice the NHL to award a franchise, [investment banker Ray] Bartoszek is seeking alternatives: the most eye-catching being a proposal to pump tens of millions of dollars into overhauling KeyArena into a modern, NHL-only facility.

“I think we’ve got to get away from this idea that the key to this is through that real estate,’’ Bartoszek said of the Sodo project, still awaiting political approval in a stalled process. “I assumed those guys held the keys to the city and the ability to get this all done. Now, it’s time to look at other approaches.’’

“Eye-catching” would be one word for it. “Cracktastic” would be another. Here’s a seating map of KeyArena for hockey:

That’s not easily fixed, unless you either saw the arena in half and stretch it out, or use TARDIS technology to make it bigger on the inside.

Before anyone says anything: Yes, yes, the New York Islanders are going to playing games starting next year at Brooklyn’s Barclays Center, which has a similarly screwy hockey layout. But there’s a different between convincing a single NHL owner, stuck in an arena he was unhappy with, to move to a new building with lousy hockey sightlines in order to grab a piece of the lucrative Brooklyn market, and convincing the NHL to give you an expansion team over a bunch of other similar mid-sized cities without an NHL-friendly arena.

Look, I would dearly love for a way for Seattle to get a new sports franchise without having to go through the expense of building a whole new arena. (Among other things, the world doesn’t need the carbon footprint of new construction.) But the odds on the NHL actually approving Bartoszek’s scheme are vanishingly small, even if he could figure out a way to pay for it. Right now, whatever interest the NHL has in Seattle, it’s only if Seattle gets a new arena; and with the only people in town interested in building a new arena unwilling to do so without an NBA team first, this could be a long wait.

NHL commissioner visits Seattle, looks around, doesn’t see new arena, leaves

OMG OMG Gary Bettman went to Seattle! And met with people! About hockey!

NHL Commissioner Gary Bettman and Deputy Commissioner Bill Daly flew to Seattle last week and met privately with King County Executive Dow Constantine and Seattle Mayor Ed Murray. Bettman has publicly stated the league has interest in placing a franchise in the Seattle market, but that “building issues” have gotten in the way.

Constantine spokesman Frank Abe described the meeting between Bettman and Constantine as a “meet and greet” and that “nothing was really brewing right now.”…

It’s unclear why Bettman and Daly made the personal appearance in Seattle, as opposed to discussing matters over the phone.

That’s our old pal Chris Daniels of KING 5 TV reporting, and I should think he knows as well as anyone why they went to Seattle in person: Nobody gets headlines in USA Today for making a phone call. Hop on a plane, though, and it’s Katie, bar the printing presses.

In any event, the only phrase to pay attention to in this whole article is “building issues,” since in this case that means Seattle doesn’t have an arena that can fit hockey, and isn’t going to get a new arena unless it gets an NBA team, so it doesn’t really matter what Bettman and Daly want. It’s great for making Seattle officials look like they’re doing something to try to get a new sports team, though, and for NHL officials to make it look like there are lots of cities vying to get expansion teams, so it’s all good. Except for conveying any actual meaning, if that’s what you expect from your news.

NHL ready to expand to Seattle as soon as it builds arena that it’s not going to build for hockey

It’s time for another round of “Where will the NHL expand next?” with your old pal, David Shoalts of the Globe and Mail! Shoalts reports that expansion talks are “happening at the highest level,” with Seattle, Las Vegas, and Quebec City “the cities in play.”

Quebec has a ready-made fan base for a reformed Nordiques and an arena already under construction; Las Vegas has more arena plans than you can shake a stick at and a couple of potential ownership groups (one of which, alarmingly, is the Maloof brothers). Seattle, meanwhile, says Shoalts, “seems to be the darling of many NHL governors (even though its arena plans are tilted more to the NBA).”

That’s a revealing little parenthetical, because right now the Seattle arena plans actually require the NBA: Would-be builder Chris Hansen has only committed to the project if he first gets a basketball franchise that he can turn into a revived Sonics. That deal could be revised for hockey, but Seattle city council president Tim Burgess says it probably won’t be:

Responding to an email from Sportspress NW, City Council president Tim Burgess wrote Tuesday that the memorandum of understanding is unlikely to be changed because the financial risk is too high.

“I don’t believe the MOU could be modified to allow an NHL team to go first,” Burgess wrote. “During our initial consideration of the MOU, it was quite clear that the financial risk to the city increased dramatically with the NHL-first scenario.”

And:

A source within the group helping Hansen, the Seattle native who has proposed a $500 million basketball/hockey arena in SoDo, said Hansen has given no consideration to asking the city to change.

“Chris has not proposed changing anything,” he said. “He’s always said he’s a basketball guy.”

What’s so special about basketball, anyway? For starters, Hansen actually likes the sport — all signs are that he’s willing to overpay for both a franchise and an arena if it gets him a hoops team to sit courtside for. Also, Seattle has a proven track record with basketball that it doesn’t with hockey (most of the fans of the 1917 Stanley Cup-winning Seattle Metropolitans aren’t so much around anymore), and the NBA is in general a more profitable entity than the NHL — leaving more money floating around to potentially fill in all those gaping holes in the arena construction spreadsheet.

All this is, of course, subject to change. But right now, it looks more like the NHL is using Seattle for leverage with the other expansion candidates, while holding out hope that somehow an arena deal will emerge overnight once Hansen, Burgess, and the rest catch hockey fever. Shoalts can talk all he wants about how adding two West Coast teams would make conference scheduling easier, but when it comes down to it, this decision is going to be made based on what plan makes Gary Bettman’s owner friends the most money.

Seattle arena still missing traffic data, on hold until summer

For eons now, the final hurdle for Chris Hansen’s proposed Seattle arena project has been the completion of an environmental impact study. (Well, that and that the arena won’t be built until Seattle gets an NBA team, which isn’t happening anytime soon, or gets an NHL team, which could happen soon but would require completely renegotiating the arena deal.) The EIS was supposed to be done this month, but now that ain’t happening:

“The final EIS likely won’t be available any earlier than the end of summer,” says Bryan Stevens, of DPD.  “We’ve asked for some updates on the traffic analysis, location of parking during event days, and examples for how impacts could be mitigated along South Holgate Street.”…

Sources close to the Hansen group have also suggested, in the past few weeks, that they can easily provide the answers and speed up the timeline.  Hansen has been unavailable for comment.

Okay, then! Either a Seattle arena and NHL expansion franchise is imminent, or there are so many unanswered questions that they may never happen. Somewhere in between those two.

Okay, bankrupt Detroit paying for a hockey arena is nuts, but what can we do about it?

Hey, it must be “Let’s all boggle at bankrupt Detroit building an arena for the Red Wings” week: Yesterday’s Lansing State Journal article is followed up by an in-depth piece today at NextCity (you can read the whole thing for $1.99, or read an excerpt at Deadspin) on how “the Ilitch family—with its estimated $3.2 billion net worth—will get a new stadium, slated to open for the 2016-2017 season, built off the backs of taxpayers.” In a city, mind you, where police and firefighters may have their pensions cut to 16 cents on the dollar*.

All of this should be old news to readers of this site, though NextCity’s Bill Bradley does provide a nice precis. The more interesting bit (aside from the several quotes from yours truly, which is mostly going to be interesting if you’re related to me) comes in the section omitted from the Deadspin excerpt, where Bradley asks sports subsidy critics like former U.S. Rep. Dennis Kucinich (who held hearings on stadium subsidies back in 2007) and Seattle city councilmember Nick Licata (who testified at those hearings, as did I, and who was instrumental in passing Seattle’s Initiative 91 that requires that the city get a positive return on any sports venue investment) what the heck they think can be done about it. Kucinich first:

“Any time you’re talking about massive investment of public resources, it ought to be treated in the same way that a venture capitalist would treat it,” Kucinich said. “There’s no business in the world — no bank, no venture capital fund — that would give money to an entity without asking for anything in return. Negotiate a position in the same way that a venture capitalist would. You become a partner, not simply someone who is playing Santa Claus with taxpayer money.”

That’s certainly what Licata and the I-91 forces did, even if the math for “return on investment” turned out to be trickier than they had anticipated. And, it’s worth noting, even though the Sonics subsequently moved to Oklahoma City, Licata says he didn’t suffer any significant retribution at the ballot box from spurned basketball fans:

When he ran for reelection in 2009, the year after the Sonics had left for the heartland, his opponent, Jessie Israel, came out “aggressively” on the stadium issue. “[Israel] was younger than me, well connected, raised more money than I did and beat me up on that issue,” Licata said. “And I still won by a 14-point advantage. The folks who are strong advocates for professional sports teams are passionate and that passion translates into a lot of heat, but it doesn’t necessarily translate into a lot of votes.”

Still, the number of elected officials pushing a standard of “the public should get back something equal to what it puts in” remain few and far between, for reasons that I’ve covered elsewhere. (TL; DR version: Lobbyists!!!) And to change that is likely to require more organizing from both the local Licatas of the world and the Congressional Kuciniches — okay, you know what, hell with, I’m just going to quote myself:

Ending the scam that is stadium welfare very well may have to start with local leaders — like Licata in Seattle and [Frank] Rashid in Detroit — before there’s a better chance of real change in Washington.

“I think it has to be both at once,” deMause said. “Congress isn’t going to act until there’s a major public groundswell, which needs to happen locally because organizing takes place around this stuff on a local level. At the same time, local officials are always going to be at the mercy of teams threatening to move — even if only to the county across town with the elected officials dumb enough to fall for their scam — until there’s some federal restriction on companies playing off localities against each other.”

Things aren’t exactly going great on either of those fronts, but hey, there’s a first time for everything. Drops of water turn a mill.

*UPDATE: Or 94 cents on the dollar, or somewhere in between. See comments.

Seattle thinking NHL after NBA commish says no expansion team coming soon

My apologies for not updating you the weekend before last when new NBA commissioner Adam Silver declared that he’s in no hurry to issue new expansion franchises:

“My job is to ensure that 30 teams are healthy and competitive and so that’s what my priority is as opposed to expansion,” Silver said.

On the one hand, of course he’s going to say this — so long as there are team owners out there trying to get new arena deals by hinting at moving to vacant cities (hey there, Milwaukee Bucks owner Herb Kohl!), Silver would be foolish to start plugging those holes with expansion teams a minute before he has to. On the other hand, this has Seattle NBA fans who were hoping for a revived Sonics wailing and gnashing their teeth that no quick resolution is now likely.

Meanwhile, for folks who just want some kind of new sports arena built in Seattle, they don’t care what sport it’s for — beats me who these people are, but apparently they exist — focus has turned to attracting an NHL team, with several potential owners rumored to be interested, including former Microsoft CEO Steve Ballmer. The NHL has been more open to adding a Seattle expansion team, and there have even been rumors of an expansion announcement coming in the next few weeks, but then you run into the problem that Chris Hansen’s arena plan is contingent on getting an NBA team. Presumably someone (Ballmer?) could simply copy Hansen’s plans, crossing out “basketball” and writing in “hockey,” but given that Hansen’s numbers didn’t seem too likely of turning a profit anyway, and his whole arena plan only made sense as a way of fulfilling his personal ambition of owning a new Sonics franchise, it’s tough to see why anyone would want to do this.

But hey, why worry ourselves over where to find half a billion dollars for an arena when there’s the nickname of this phantom NHL franchise to argue over? Go, Kraken!

No, Hansen’s Seattle arena wouldn’t really cost Seattle $731m

Cleveland Stockmeyer, one of the Seattle attorneys who unsuccessfully sued the city to block Chris Hansen’s proposed arena deal, is back with a report on what he says Seattle’s losses would be from the project. And it’s a whopping big number:

In the newly-released report, a group called Sonics Without Subsidies claims Seattle is giving away more than $731 million in subsidies for Hansen to build his SoDo arena — and they’re asking city leaders to change the deal.

$731 million is, needless to say, unexpectedly high for a project that will only cost $490 million to build total, that will only involve $200 million in public spending, and that after tax revenues and rent payments are shuffled back in forth, I’ve estimated previously would leave taxpayers with at worst a $21 million loss. So where does Stockmeyer’s hired economist come up with $731 million?

The answer, it appears, is it depends on what you mean by “loss.” Seattle’s Initiative 91, passed back in 2006 by city voters, requires that the city turn a 2.7% annual profit on any investment it makes in a pro sports facility. Under Hansen’s deal, the city would take out $200 million in bonds, which would be repaid entirely by Hansen, so there would be no cost to the city. But — here’s the catch — if you count the $200 million as a city expense, then city is getting stiffed its 2.7% annual return on investment. If you do the same math for the missing annual return on tax credits and property tax breaks Hansen would be receiving, then subtract the $92 million in land value that the city would be getting back in the deal (Hansen would buy the arena land and give it to the city), voila! $731 million!

In other words, notwithstanding the scary headlines, the “gross shortfall” that Stockmeyer’s report refers to isn’t actually money that Seattle would be giving the Hansen; it’s money that Hansen would have to give Seattle in order for the city to turn the kind of profit that I-91 required, if you count bond sales that the city doesn’t have to pay off as an “investment.”

None of this should be news to the Seattle media, since it’s exactly what Stockmeyer in his lawsuit earlier this year, though he didn’t put a dollar figure on it then. And the shoddiness of I-91′s “return on investment” formula has been established for even longer; as I wrote in July of 2012, when it was Hansen who was using bizarro math to claim that the city would rake in a ton of money from the deal:

The problem here is that I-91 was crappily written, assuming that the city would put up cash up front, and not considering that it might have to borrow money and then pay back both itself and bondholders. As a result, you have Hansen arguing that a deal in which every penny of taxes and rent payments supplied by the arena — even by his own numbers — would get poured into paying off annual bond payments is a net positive return for the city.

That was a dumb argument, and Hansen himself later backed away from it. Stockmeyer, though, seems to be deliberately confusing people about what his economic study means. To repeat: Hansen would be paying off Seattle’s bonds, and (mostly) repaying his tax breaks, but he wouldn’t pay it back and then give Seattle extra money to turn a profit on the deal as well. Whether you think this is a good deal is open to interpretation — Stockmeyer clearly doesn’t think so, two city councilmembers voted against it, and I’m on the record as being pretty meh about it, though “meh” is still better than most arena deals from where I sit. But it’s not a $731 million “subsidy” or “tax break,” no way, no how.