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July 30, 2012

Seattle council to Hansen: We'll reject arena deal, unless...

While the King County council gets ready for its big arena hearing, the Seattle city council has stolen its thunder by issuing a letter to Chris Hansen (PDF here) telling him that "the majority of Councilmembers to conclude that the agreements do not represent an appropriate balance of public and private benefits," but that they're willing to keep talking, if he agrees to certain concessions. Namely:

  • Kicking back 100% of arena taxes "does not represent an appropriate balance between private and public benefit," and Hansen will need to agree to a "more equitable arrangement."
  • The city needs to be guaranteed it'll be first in line to be repaid if Hansen's arena company goes bankrupt, and get more access to Hansen's business plan and books.
  • There needs to be a concrete proposal about what to do with KeyArena once the new building is in operation.

This is a huge bombshell, obviously, but not an unreasonable one: There's no particular reason Hansen shouldn't agree to pay at least some taxes on his building — even if you were to agree that they're entirely "new" taxes, most businesses don't get to keep all the tax revenue they create — and guarantees that neither the loans nor KeyArena will turn into albatrosses aren't crazy asks. The question now: Does Hansen play hardball and say "You'll take my arena plan or get none at all!" or does he go back to the negotiating table and try to find a compromise?


MAN Neil, you will find a way to put a negative spin on second coming of Jesus if given the chance.

I do not understand how this is a bombshell. Most people here locally have been expecting this for quite a while. At least 3, may be 4 people from the city council are planning to run for mayor. Why would they just rubber stamp this and let Mayor McGinn have all the credit. THEY want the credit for this and want to turn this into a deal COUNCIL negotiated, not McGinn. I read this document today and became more convinced than ever that this deal is going to get done. Your second and First bullet points above are PEANUTS relative to the overall equity investment Hansens group is making. The first bullet point is big, but again, up for negotiations and seems fairly flexible. Nothing in this document says that anything is a deal breaker. The council members just want credit for the deal and want to find a way to make both opponents and proponents happy. After all, let us remember that is what politicians do. Call me crazy, but I was surprised that Council didnt demand more. I am truly convinced that they are looking to make a deal but just want to get the credit for it.

And Hansen had to have expected this. Remember he has supporters in the council too and was kept abreast of all this. Just 3 days ago, when he had to have known the details in this doc, he said that he felt great about where this deal is going. That does not sound like someone who is going to walk away from this.

Posted by joe on July 30, 2012 05:02 PM

The KeyArena is interesting. Hansen's advisors said that it was essential for ArenaCo to control the booking on both his arena and the key. The Key is currently being run by AEG until 2015 with a threshold of revenue kept by AEG (2M currently) and profit sharing 60-40 city-AEG above that level. They've guaranteed a minimum payment of $1M/yr currently.

The city (Seattle Center) has a current contract on the KeyArena that is guaranteed some revenues so just signing off to allow Hansen to run both would seem counter-intuitive without similar provisions.

Posted by ChefJoe on July 30, 2012 05:35 PM

They're going to figure out a way to get this done. The points the Council addressed will be pretty simple to fix. This really won't take long; I'd bet they stick to their original time-frame of getting this done before the end of August.

Further, I'll say once again that I admire their level of transparency. They're not leaving what it'll take to complete this a complete mystery until their Council meeting. They've been working hard to get this done, and are being open about their points of contention. I think they're doing a great job.

Posted by MikeM on July 30, 2012 06:03 PM


I wouldn't say Neil is being negative. Rather, he seems to be shocked.

Whether the council members are running for mayor or not, or whether they want "credit" for a better deal, I think the "bombshell" on here is that the politicians are SEEKING a better deal on behalf of the citizens of Seattle, and not simply rolling over. There are a lot of cities, major and minor league, who wish they had 25% of that.

Posted by GDub on July 30, 2012 06:18 PM

That they dropped it on the eve of the county hearing was a bombshell, I'd say. But a smart one, as now it puts the focus squarely on their demands.

I don't think any of those should be deal-breakers, either, but I'm still very curious to see what Hansen does. If he okays most of them, I think not just the council but a lot of arena opponents (not the Port, okay) would feel a lot better about this deal.

Posted by Neil deMause on July 30, 2012 06:36 PM

Well, now the County has passed its part:

In the end, today's "snag" won't even be remembered as a small hitch. That's my prediction anyway. I don't think I'm being bold, either.

Posted by MikeM on July 31, 2012 12:42 AM

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