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Sports with Art Thiel
Hansen makes a compelling NBA arena case, KPLU's Art Thiel says
For 45 minutes at City Hall Wednesday night, would-be arena mogul Chris Hansen calmly answered questions from politicians, bureaucrats and agency heads who reflected Seattle’s pain from repeatedly getting kicked in the bicuspids by pro sports owners, starting with the loss of the Seattle Pilots in 1970.
In the sometimes lame give-and-take, he made a point lightly understood but significant for grasping why his idea is different than those of his sporting predecessors more practiced in the art of shoe-leather dentistry.
“Our equity in this project is larger than the city (and county combined),” he said. “Are we going to risk a $600 million investment over a $2 million annual shortfall?”
Unlike the Kingdome, unlike KeyArena, unlike Safeco Field, unlike Century Link Field, this project proposes to put the privates’ privates at greater risk than the public’s privates.
That’s a new one for Seattle.
A game changer
Not saying there isn’t some public risk. Not saying that some people, businesses and industries aren’t going to feel pain. Not saying it’s going to work.
But putting $290 million in private money up front is something no other enterprise has done in the modern sports history of this town.
It changes the whole dynamic. It takes government off the motorcycle and puts it in the sidecar, where it belongs.
Each of the four Seattle sports buildings mentioned all were driven by public grants of tax money that put government in a position to do what it is not trained to do – manage an entertainment facility.
It isn’t necessarily a fatal flaw, but in the cases of the Kingdome and the Key, it was. Both were built by a conservative public entity, forced by public accountability to choose the least expensive option when it came to creation, maintenance and upgrading of the enterprises.
Analyzing past deals
The Kingdome lasted 24 years, partly because no King County Executive wanted to write the big check for the preventive fix to the roof that ultimately failed, dooming the building.
The Coliseum remodel that became KeyArena lasted 13 years before the anchor tenant moved away –seven years short of the construction-bond debt retirement – unable to survive because the funding mechanism made the building economically obsolete for the bloated needs of its main income source.
The football and baseball stadiums were better deals, but if the Mariners owners were given truth serum, they would admit being bitter to this day that they had to pay $120 million on cost overruns mandated by the Legislature.
The public-private deal that worked best was the last one, the Seahawks stadium that won a 51 percent majority in statewide voting in 1997. The team owner,Paul Allen, picked up a chunk of the tab and has continued to spend on the building and the team, because he can. Watch what happens with free agent quarterback Peyton Manning.
Other Sportspress Northwest stories:
- Should Seahawks Pursue Flynn or Manning?
- Dybas: Sounders’ holdover core takes to newness
- Huskies Launch Tourney Play Vs. ‘Streaking’ Beavs
A rich guy’s passion
Sports spending is a Hansen passion too. That’s the deal with rich guys. They can do what they want, unconstrained by the limits of government or, hey, even good business judgment.
Hobbled by a brace protecting his right knee, whose ACL and MCL was torn up by a ski accident, Hansen limped into City Hall to submit to questions from several members of the government-appointed Arena Review Panel.
His first public explanation of the plan to build a 20,000-seat area south of the stadiums not only wasn’t adversarial, it was uncommonly polite for such things. It’s what happens when government is offered money, instead of being asked for it.
In several different ways, Hansen was asked by panelists the same thing: Why won’t we get screwed in this deal?”
“I’m trying to put this (deal) in a (situation) where it won’t blow up,” Hansen said.
The easiest, and only, way to do that is to make private capital more responsible for success than government. The public portion is limited to using the combined bonding capacity of the city and county for what amounts to a $200 million loan, and a return of tax revenues generated by the arena that would not otherwise exist, plus an admissions tax (a user fee). No new taxes, no diversion of current revenues, only a reduced capacity to borrow for other projects.
“We will pay for (any construction-cost) overruns,” he said. “And the owners will backstop any (annual operating revenue) shortfalls with increased rent.”
No current or former Seattle pro sports owner has come within miles of those remarks. As he reads those quotes, hot coffee will burn its way through the nostrils of ex-Sonics owner Howard Schultz.
Sports with Art Thiel