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.

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?