The big risk in a new sports arena
Private money could bring Seattle pro basketball and hockey. But which rich guy has the sense of humor to risk ending up looking like the chump who put millions into a team that becomes the lamest ticket in town?
I write this as I sit in the ground floor coffee shop of Starbucks world headquarters on First Avenue South. As I look east across the parking lot and street to the industrial area that would be adjacent to the proposed new PRIVATELY FUNDED ARENA (caps and face added by me as the initial name for the place), I see the project’s best feature:
The arena would be practically in the grill of Howard Schultz, the Starbucks CEO who sold out the Sonics. Thus, the all-time, punk-ass facial ever delivered in the NBA.
Delightfully ironic as it is, that is also part of the problem.
Giddy as sports fans and talk shows hosts have been over this proposed project, which has been sufficiently viable to have an investor put down $22 million to buy some land and and Mayor Mike McGinn to pay a consultant to vet it, there will be at least three neighborhood entities besides Schultz and his many innocent workers who won’t like it:
- Seahawks/Sounders
- Mariners
- The Port of Seattle.
None of them will say so, of course, ever conscious of the consequences of adding poop to the sudden party that is getting McGinn more attention than any of his screw-ups. But anyone who has much used First Avenue South is having a hard time imagining anything but hell attending the comings and goings of 22,000 fans to the truck (dead) stop that it often becomes in the late afternoon rush.
Besides the epic, five-sport congestion at the location — which will get worse in a few years as thousands of commuters use surface streets in an attempt to avoid tolls on the tunnel that replaces the viaduct — even I, as a sports guy, am having a couple of problems with it, one near term and one long term.
At the moment, Seattle is being played for a stooge in the Machiavellian manipulations of NBA Commissioner David Stern. Devious Dave suddenly likes Seattle, for the same reason that the NFL likes Los Angeles — it’s an empty, potentially lucrative market that can be used as leverage against cities fighting the extortions of the pro sports leagues.
Stern gave an interview to the Salt Lake Tribune Monday that the Seattle Times foolishly bannered Tuesday in which he admits talking to Chris Hansen, the hedge fund guy originally from Seattle who appears to be the leader of the group trying to build an arena without tax money. Stern’s unstated point was to let politicians in Sacramento, New Orleans, Charlotte, and elsewhere know that there is a bigger market getting itself ready to take your team if you don’t fall in line.
Stern committed to nothing but was at his his cloyingly, passive-aggressive best in threatening without threatening. Just as did the plain girl told by the stud jock she was the prettiest girl at the prom, Seattle lapped up the insincerity as Stern played it for personal laughs.
It is hardly the first time, and won’t be last time, Seattle will prove gullible in the saga. The more troubling question about the proposal is this:
Which among the big-time teams — Mariners, Seahawks, Sounders, University of Washington football, an NBA team, and NHL team — is going to be the sixth ticket in town?
In a seriously bruised economy that is stubbornly staying bruised, one of these enterprises would be the least sports desirable entertainment choice, which is no place to be.
Remember, the Sonics were already on a revenue fade before Schultz bailed in July 2006, which was before the economic collapse of September 2008 and the 2009 arrival of the Sounders and astounding MLS expansion success that makes them a co-equal in this market, unlike any other sports market in the U.S.
Aside from location, the other vulnerability in this proposal is that the private funding of the arena virtually mandates that it secure NBA and NHL teams for the 80-plus dates the anchor tenants would provide.
If we can guess comfortably that the arena itself would cost more than $500 million, plus another $100 million in infrastructure additions and changes, the arena would probably need a minimum of 250 rental dates to cover construction costs — unless Hansen is planning to donate the $500 million to his hometown. I don’t know, maybe successful hedge fund managers need the tax writeoff.
If construction costs aren’t a donation, Hansen and pals will need not only 80-plus winter dates, but an owner for each team who has to risk being the sixth ticket in town. We all know that Steve Ballmer is favorite to be the NBA owner, and while we all know he can afford it, rich guys hate looking stupid. Probably the same will be said for the NHL owner.
So somebody is going to be taking a rotund risk in the the next few years that Seattle is going to be a more robust sports market than it has ever been. Just ask the teams that have tried to sell a stadium suite in this town over the last few years. Sales are possible, but in the class warfare that is becoming a big part of the American culture, any public-facing company that owns a suite these days is going to be perceived, rightly or wrongly, as out of touch with what is going on.
Speaking of the public, we know little about the people, plans, and plausibility for this project, so we are way out over our skis in debating at this stage which teams Seattle can poach. Nevertheless, mayor and members of the council who have been in the know seem on board. That’s good, because their political careers will be in immediate jeopardy if the city’s financial contribution is anything more than one chubby old cop holding the stop/slow sign on First Avenue South during construction.
A huge private investment in Seattle and sports would be welcome. The benefits would be many, not the least of which is knowing Schultz’s morning cup in the office will be forever bitter.
But the risks for the principals are large. Hedge fund managers are used to that tightrope walk, so the presumption is Hansen knows the way. But he’s never been involved in pro sports, where up is down, right is left, and night is day.
And he has to know that one in his new circle will end up with the sixth ticket. Better hope it’s the richest guy, and he has a sense of humor.
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Comments:
Posted Sat, Feb 11, 9:38 p.m. Inappropriate
Well written speculation and handwringing.
The sixth ticket is the Mariners, they suck, and don't appear to care beyond attracting enough fans to turn a profit.
The Sonics revenue fade began when Safeco opened and KeyArena suite leases ended. The Sonics then just as the Mariners now, failed to compete on the field of play and in the community for corporate ticket attention. Maybe they should try putting a winning team on the field.
A modern indoor facility will draw the final breaths out of the dying KeyArena, and the large acts that go to the T-dome that refuse to go to the Key (it is terrible for concerts).
Since 2001 something has changed that far too many writers, apparently this includes Art, do not include in their analysis, population growth. They don't just give away extra congressional seats, they are a result of something.
Lastly, just how much truck traffic is there at 7pm on a mid-week February night. You Debbie downers out there act as if all these sports and traffic situations happen all at once. It's just stupid to shorthand that in a article, Art.
I guess they will be the Bellevue Sonics and Metropolitans.
Posted Sat, Feb 11, 9:52 p.m. Inappropriate
Just DON'T call the NBA team the 'Sonics'. They're in OKC now; Seattle isn't the Jet City anymore...
Posted Sat, Feb 11, 9:53 p.m. Inappropriate
Population of Washington grew by about a million people in the past decade, none of them enjoy sports? Really?
10 more years, another million, still no more sports fans?
If you want to argue both sides of that, be my guest.
No matter how difficult we make it for strangers they insist on moving here.
Posted Sat, Feb 11, 10:20 p.m. Inappropriate
"...proposed new PRIVATELY FUNDED ARENA "
So, where is everyone getting this "privately-funded arena" idea from? I have yet to read one article that says any private investor has pledged one dollar towards building a new arena in Seattle. Some guy bought a little land, but that doesn't include any money for constructing a new arena.
I have read about ideas for a new tv network that does not even exist yet. Or using some ticket taxes, which would be public money -- not "private" money.
So, when does someone come out and say publicly "I am going to spend $400 million of my own money to build a new arena in Seattle"?
Or, is this just wishful thinking by some dead-ender Sonics fans?
Posted Sat, Feb 11, 10:36 p.m. Inappropriate
I think Thiel misses the bigger problem with having 2 more pro sports teams in our town. It would be tough for all those teams to sell tickets, true. But, the bigger problem would be selling luxury suites and club seats for all the pro teams (NFL; MLB: MLS: NBA; NHL) plus all the suites and club seats at the new Husky Stadium.
When Safeco Field opened, a lot of owners of suites in KeyArena gave them up to buy suites in the brand-new Safeco Field. And then at brand-new Qwest Field. That really hurt suite sales at KeyArena.
Now, the Sounders have a lot of fans who buy suites to Sounder games, and the UW has a lot suites in their new stadium that did not exist when the Sonics were unable to sell their suites at KeyArena.
So, adding a new NBA team and new NHL team, in a new arena with a lot more suites than KeyArena had, along with the Sounders, and new Husky Stadium, would probably at least double the number of suites for sale in our city since the Sonics last played at KeyArena. If there weren't enough buyers for luxury suites for 3 pro teams a few years ago, why would anyone think there would be enough buyers for twice as many luxury suites now?
Posted Sat, Feb 11, 11:11 p.m. Inappropriate
Leave it to Art Thiel to bring to Crosscut's readers his distinctive inject of insight and wit.
Could even Mossback top such phrasings as, "all-time, punk-ass facial ever delivered in the NBA"? I'm not sure what it means, but Art, it's time you ran for the GOP nomination.
Posted Sun, Feb 12, 7:53 a.m. Inappropriate
I hope someone will assess the impact on viaduct replacement tunnel tolling revenues. If the area is really congested, more traffic may divert to I5. A new arena would need to be busy a lot of weeknights in order to make the finances for it work.
Posted Sun, Feb 12, 10:50 a.m. Inappropriate
As venues of that size go, the Key Arena is a fine place to see concerts. The Tacoma Dome may draw bigger ones (despite being a vastly inferior venue to attend one in - and by vastly I mean VASTLY), and there are new facilities that compete with it (such as the White River Amphitheater - which is also a MUCH worse venue to see and/or hear a concert and a nightmare to get to/from one), but when a major league performer like Eric Clapton still chooses it over the other venues it's pretty clear that the whole "its a lousy place to see a concert" meme really doesn't hold water.
The Key Arena ain't the Paramount, but it IS the best place of its size to see a concert in the King/Pierce/Snohomish region....
Posted Mon, Feb 13, 1:21 p.m. Inappropriate
I read this story last Thursday at Sportspressnw.com under the head "Top virtue, worst parts of arena proposal" and now the Crosscut editors deem it "The big risk in a new sports arena". Now, that's spin. Hey, Crosscut! You're showing your bias.
Posted Tue, Feb 14, 3:58 p.m. Inappropriate
The short response to this article is: who cares? If an wealthy business man decides that he/she wants to have the privilege of owning a professional sports team they will do so and find a way to get it done without taxpayer dollars. Sports team owners don't buy teams because their profitable per se, but rather because they are (in their mind) cool and critically for their ability to add value to adjacent properties. This Malcolm Gladwell article (http://www.grantland.com/story/_/id/7021031/the-nets-nba-economics) describes this in more detail, but the basic premise is pretty simple. Use a sports stadium as a tool to garner eminent domain for a larger development project, or alternatively don't use eminent domain and simply buy up a bunch of adjacent properties and use a stadium to boost the value of the adjacent properties.
I really hope something like this happens, not only as a basketball fan, but because the SODO neighborhood deserves better than to be largely an industrial wasteland, especially considering the lgiht rail (the proposed site would be a few blocks from SODO station) and bus investment that is already in the neighborhood. If such a plan made a serious effort to reconnect the streetgrid and make SODO a mixed use (i.e. industrial, commercial, residential, civic) walkable neighborhood, I think it could be a hugely positive development for the city of Seattle. Throw in Seattle's rapid population growth and the plans, at least generally speaking, make a truck load of sense.
And also for those "traffic" considerations, who seriously believes the city would squash a privately funded NBA/NHL arena because of "traffic considerations"?
Posted Wed, Feb 15, 5:07 p.m. Inappropriate
It's about time someone called out Schultz for his behavior in the whole Sonics affair. Well done, Art.
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