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.

Bucks exec threatens move to “Vegas or Seattle,” er, that is, NBA would move team, yeah, those guys

Ooooh, he said it!

At an informational hearing held by the state Legislature’s Joint Finance Committee, [Milwaukee Bucks president Peter] Feigin said the Bucks owners’ purchase agreement for the team includes a provision that construction of a new arena start in 2015. If that does not occur, he said the NBA will buy back the team for a $25 million profit and move them to “Las Vegas or Seattle.”…

“The window is closing,” Feigin said. “We can’t wait months, even weeks to start the public process.”

This, of course, has been the threat behind the arena demands of Feigin’s bosses, Bucks owners Marc Lasry and Wes Edens, ever since they bought the team early last year with the provision that the NBA could buy it back and move it if there was no deal in place for a new arena by 2017. (Whether this meant a new arena in place by 2017 or a deal in place by 2017 has been a topic of some debate, though Lasry himself seemed to indicate it was the latter.) But this is, I’m pretty certain, the first time that a Bucks exec has come out and said “Approve this deal now or the NBA shoots this team,” and absolutely the first time that anyone has dared name specific cities, which comes awfully close to a straight-out threat by the owners, even if the NBA is still cast in the role of the big bad.

So how real is the threat? The buyback clause is obviously there for a reason, and Seattle is both a TV market twice Milwaukee’s size and the home of a guy willing to both build a $500 million new arena and pay $625 million, plus relocation fees, for an NBA team to play in it. (Las Vegas is a tiny market, and its main association with the NBA is of an All-Star Game that everyone involved would seemingly rather forget.) That would represent a $50 million profit for the NBA if it bought the team off Lasry and Edens for $575 million (which would in turn be a $25 million profit for Lasry and Edens), and if that’s a crazy amount of money for Chris Hansen to be putting up for a team and arena — or more accurately, for an as-yet-unidentified Steve Ballmer 2.0 to be putting up — that would be Hansen’s problem, not the NBA’s.

On the other hand, this is the same decision that the NBA faced two years ago with the Sacramento Kings, and the league decided then to give Sacramento some more rope to get an arena deal finalized, even though that deal wasn’t any more approved at the time than Milwaukee’s is now. Plus, that was before Chris Hansen was revealed to have secretly funded a petition drive to keep the Kings from getting their Sacramento arena, which undoubtedly didn’t win any friends in NBA offices.

Still, that isn’t going to stop the NBA from using Seattle as a threat, because that’s what it’s there for. As to whether it would go ahead and consummate a deal if its bluff is called by the Wisconsin legislature — that’s a tougher guess, but I’d recommend putting your money on Milwaukee getting at least a couple more drop-dead deadlines if this one doesn’t work.

Seattle lets bank keep naming rights to arena despite not paying for them for last four years

This is just incredible:

Shortly after the Sonics left Seattle, the contract between KeyBank and Seattle Center for naming rights for the sports arena came up for renewal. The price for the rights at that point was $1.3 million a year, but the city-owned Seattle Center offered a new price to reflect the fact that the arena would no longer host an NBA team: about $400,000 a year. But the bank still walked.

The consequence of KeyBank’s miserly ways? So far, nothing. For four years, the Cleveland-based bank’s logo has kept glowing red atop the arena, and its name is still invoked anytime a concert, Storm game, or roller derby takes place within its confines…

“If you take it down, what do you use instead?” asks Deborah Daoust, spokeswoman for Seattle Center. “It’s continuity for us, which is important from a branding aspect.”

Let’s see, you could maybe call it the Seattle Center Coliseum, which is what it was called before KeyBank bought the naming rights in the 1990s. Or the Storm Arena, if they wanted to follow the precedent set by the Miami Dolphins after naming rights sponsor Pro Player went bankrupt and stopped paying its bills. Or just the Arena, following the Philadelphia 76ers‘ lead.

Instead, the city of Seattle seems content to giving a local bank free advertising, just because “Meh, people are going to call it that anyway.” I guess maybe this might help them in marketing the naming rights to another company — you’ll get to keep your name on it even if you stop paying us! — but probably not in the way they’d hope.

NHL to take expansion bids from Vegas, Quebec, Seattle, etc. because MONEYYYYYY

The NHL is taking bids on expansion franchises starting July 6, which doesn’t necessarily mean it’s going to expand, but does mean it’s testing the waters. And given the price tag, it’s easy to see why:

That’s kind of aggressive, considering that Forbes estimates the average NHL team to be worth $490 million, and given the markets we’d be talking about here (more on that in a minute), these teams would be below average. But then, the magazine’s team value figures always seem to lag a bit behind actual sale prices — as Forbes notes, there’s a bit of a bubble thanks to the fact that “Wall Street guys like Joshua Harris (New Jersey Devils) and Andrew Barroway (trying to buy a controlling interest in the Arizona Coyotes) are willing to pay a lot of money for hockey teams that lose money.” (It also doesn’t hurt that they can get huge tax breaks on their purchase price.)

The next question, obviously, is where, and everybody from Deadspin to the New York Times is assuming that one of the cities will be Las Vegas. This seems pretty daft from here — Las Vegas would be the second-smallest NHL TV market (ahead of only Buffalo), it’s in the middle of the Sun Belt where hockey franchises go to die, and it has a relatively poor permanent population. (A proposed Vegas team has managed to get $150 deposits on 11,500 season tickets, though those are refundable if there’s no team starting in 2016.) But it does have a new arena going up, and those things are guaranteed gold mines, right?

If Vegas were one team, the other would likely be either Quebec (where telecom giant Quebecor is almost certain to throw its hat in the ring) or Seattle (which has interest but still no solid NHL arena plan). Quebec would actually be the smallest media market in the NHL (smaller than Flint, Michigan!), but it’s in Canada, so maybe that compensates? Also, new arena!

If nothing else, all this means that Glendale should probably feel relatively secure in playing hardball with the Coyotes owners over their lease, since the NHL is unlikely to encourage the team to move to a new city if that would jeopardize a half-billion dollars in expansion fees. And with that, let’s go look as some photos of the under-construction Las Vegas arena:

Yeah, that, um, looks like an arena. With two levels of luxury suites, which I guess is standard these days, but makes for just awful views from the top deck. But hey, not like anyone’s likely to be sitting up there anyway, amirite?

Hansen: No NHL teams are so eager to play in Seattle that they’ve gotten out their checkbooks

Chris Hansen, the would-be Seattle NBA arena builder who can’t get an NBA team, says he hasn’t been approached by any NHL teams wanting to move to Seattle and willing to pay him to do so:

“We’ve had a lot of informal discussions with people about this, but us or the city have yet to be presented with any kind of offer. I mean any kind of even basic offer that would be the opening point for negotiating something,” Hansen said in an interview with The Associated Press on Tuesday.

The AP called this “surprising,” but it really isn’t: There aren’t a ton of hockey teams looking to move right now, and while I’m sure any team owner looking to test the waters would do due diligence by putting in a phone call to Hansen (that’s your “informal discussions” right there), actually offering to put in a pile of cash to help get the arena built — something Hansen and the city say would be needed for hockey, which doesn’t bring in as much revenue as basketball — isn’t really how things get done in the arena game.

None of this means that Seattle will never get an NHL team, or Hansen will never get his arena built, though the latter is certainly looking less likely the more time passes from his original approval two years ago. But it’s a reminder that 1) paying for arenas is hard, which we knew already, and 2) “build it and they will come” isn’t a great strategy for landing a pro sports franchise, which we also knew already.

Seahawks owner expresses “concerns” about not-anywhere-close Seattle arena, this is news, people

Citizen responses to environmental impact statements are usually among the most academic of exercises — you file them, they go in the back of the final report, and no one ever reads them again. Unless, that is, you’re a citizen who owns the local NFL team:

Paul Allen’s First & Goal Inc., which oversees all operations at CenturyLink Field, expressed serious concerns about the proposed sports arena that could house NBA and NHL franchises in Seattle’s Sodo neighborhood…

“It was anticipated that the EIS regarding the arena would resolve many of our questions and concerns,” the letter stated. “Unfortunately, after reviewing the FEIS and the most current version of the Arena proposal, we continue to be troubled that the arena has not yet disclosed and the city does not yet know how the proposed arena will fit within the existing stadium district or how it will mitigate many of its potential effects.”

Allen hasn’t previously complained about Chris Hansen’s proposed Sodo arena — unlike the owners of the Mariners, who’ve griped about it causing traffic problems — and the Seahawks owner insists that he’s still supportive of the plan, despite his concerns. But it still has the Puget Sound Business Journal asking what Hansen will do with his downtown land if he doesn’t build an arena on it. (Answer: sell it to somebody for commercial development, say two commercial realtors.) Not that Hansen is ready to break ground on this thing regardless — he still doesn’t have a team to play in it, for starters — but it sounds like now the media is developing an exit strategy for him, whether he wants one or not.

Seattle arena EIS finally done, just needs team to play there, way to pay for building it

The Seattle arena environmental impact statement is done! The Seattle arena environmental impact statement is done! It’s 1600 pages, so if you want to read it you’d better have nothing planned this weekend, but apparently it says that a new arena wouldn’t result in the trafficpocalypse, so that’s something.

Now that that’s done, the main holdup for Chris Hansen’s arena plan is that his deal with the city only accounts for funding an arena if he gets an NBA team. Chris Hansen, unless something fairly dramatic and unlikely happens to throw a wrench into the long-simmering Milwaukee Bucks arena talks in the next few months, is not getting an NBA team anytime in the immediate future. What he might get is an NHL expansion team, but his arena deal only allows for that as an add-on, not the main course.

What to do? Rewrite the deal, obviously, which Hansen now says he’s open to, and as Chris Daniels of KING-5 reports, Seattle Mayor Ed Murray is prepared to pursue:

Murray has indicated he’s willing to champion new legislation if someone brings a financial model to the table that makes sense.

Oh, is that all?

Now, it may seem odd that Hansen and Co. can’t just cross out “NBA” in its arena plans and pencil in “NHL” — they have the same season length, after all, and you could still schedule the same number of concerts to go along with them. (Maybe a smidge less if you need more time to pour ice for games, but that shouldn’t be a huge factor.) But keep in mind that Hansen already lost his main money man, Steve Ballmer, when Ballmer bought the Los Angeles Clippers for all the money in the world, and that basketball has a built-in fan base from the Sonics days, and that his NBA business plan already looked to offer only wafer-thin margins, and you can start to see that an NHL-first plan might not be a … what’s the hockey equivalent of a slam dunk? An open shot on net? Something involving the five hole? I gotta watch more hockey.

Prospective Seattle NHL owner knows a guy who knows a guy who knows Bill Russell

Now that it’s been revealed that a commodities-trading billionaire is maybe interested in building an NHL arena in a Seattle suburb, everyone is sniffing around for more information, filing public records requests left and right. And they’ve turned up lots of stuff, even if none of it is quite what we’d most like to know:

  • Chris Daniels of KING 5 reports that the city of Tukwila has had “numerous conversations” with Ray Bartoszek’s arena group, and one of the investors may have met with arena operators AEG and arena architects Populous!
  • The Seattle Times reports that local biodiesel magnate Yale Wong owns part of the land that would be used for the arena’s parking garage! And Wong has met NBA legend Bill Russell!

As for how the hell this thing would be paid for, and whether Bartoszek has a business model where he’s really going to host 200+ nights a year of events at an arena way out of town, the documents are silent. Right now it sounds like Bartoszek is trying to create momentum that will make his arena seem like a more viable option than Chris Hansen’s downtown Seattle one; it could be a while yet before anything becomes clear about how it would actually work.

Shady oil-trading billionaire looks into NHL arena in Seattle suburb, everyone gets all excited

Move over, Chris Hansen! Your plans to build an arena for a nonexistent NBA team now have a competitor: Former oil trader (no, I’m not exactly sure what that is, or how you become rich doing it, or what he was doing for his first six years after getting his MBA, though it all seems to have something to do with profiting off third-world corruption) Ray Bartoszek has filed a zoning code interpretation request in the suburb of Tukwila, which would be the first step toward building an NHL arena there.

Bartoszek doesn’t have an NHL team, mind you, but he did reportedly offer to buy the Phoenix Coyotes in 2013 if they hadn’t gotten a new lease approved, and he owns some shares in the New York Yankees and, um, rich guy, okay? Rich guys must be taken seriously! Because rich!

Here’s how rich guy Ray Bartoszek says he will pay for building an arena in a Seattle suburb out near Sea-Tac airport for an NHL team that he doesn’t have yet:

The Seattle Times reports that the arena would be built on less than five acres of land, which is probably impossible, while says that “the proposed arena would house about 230 events per year,” which bwahahaha!

Anyway, rich guy filed a zoning application, so this now gives an NHL team in Seattle “momentum,” according to Yahoo! Sports. It must be nice to be rich. Remind me in my next life to get involved with buying commodities from outlaw states.