December 19, 2004
The subsidy that keeps on subsidizing
When the city of Seattle agreed to pay $74 million towards a $120 million renovation of the Sonics' Seattle Coliseum (now the Key Arena) in 1995, it was promised that the costs would be repaid by revenues from the arena itself. Well, that didn't work out so well: with the team struggling, the city's share of luxury suite and club seat sales has fallen, to the point where Seattle projects a $2.8 million shortfall on this year's bond payments alone.
With the Sonics losing money as well, the city and the team appear ready to ask for a bailout from their common woes - from taxpayers in Snohomish and Walla Walla. (Yes, I just like saying "Snohomish and Walla Walla.") The latest plan: Ask the state for revenues from the hotel and sales taxes that are being used to pay for the Seahawks' Qwest Field and the Mariners' Safeco Field, once those buildings are paid off. That won't be until the year 2018, but Seattle could still sell bonds based on those future revenues, and use the cash to pay off the previous arena bonds - and to give the arena its second facelift in its 21-year life.
As the Seattle Times reports: "Taxpayers financed a $74 million renovation of KeyArena nine years ago. But [Sonics VP Terry] McLaughlin said that wasn't enough to make the facility competitive in today's market." (Field of Schemes readers will recall that "competitive," in team-speak, is code for "we're not making as much money as we could be.") It continued: "He noted that Portland's Rose Garden, home of the NBA's Trail Blazers, cost $268 million and is much larger." Of course, the Sonics aren't selling out Key Arena now, so it's unclear how a bigger arena would help them - unless maybe that "much larger" remark is really about something else entirely.
