April 20, 2005
Gang aft agley
The public wouldn't have to contribute a dime of tax money. At least that's how it was supposed to work.
That's from the Seattle Times' in-depth investigation of what went wrong with the 1995 renovation of the Sonics' KeyArena. The $120 million rebuilding of what was then the Seattle Coliseum was funded in part by $74 million in bonds from the city of Seattle, but with a creative twist: The city would receive an annual share of naming-rights and luxury-suite sales, which the team projected would be more than enough to pay off the public's debt.
It didn't quite turn out that way. Suite rentals dipped after the renovated arena's first few years, thanks in part to competition from new taxpayer-subsidized stadiums for the Mariners and Seahawks. The city has now lost money on its arena bonds for six straight years, with no indications that the future will be any brighter.
All this should reinforce a point that I try to make at every opportunity: Sports stadiums and arenas rarely bring in enough new revenue, in the long term, to pay off their construction costs. There are exceptions to be sure, but not enough to make sports facilities anything less than a very risky investment - in fact, the whole reason the Sonics ended up going to the city for stadium funds was because banks had rejected providing private loans for the project.
"There was a huge risk," former Seattle councilmember Jane Noland told the Times. "The deal was based on a best-case scenario rather than an average scenario. It was a steamroller, and nobody wanted to think about a bad case, much less the worst case."
The Sonics' proposed solution to this mess: another, even more expensive renovation, this time to be financed by the state of Washington. Don't they have a saying about this in Tennessee?
