BY Art Thiel 06:23PM 05/16/2012

Thiel: Arena easy on taxpayer, harder on SoDo

Still miles to go, but arena backers have a proposal blessed by the mayor and county executive to take to their councils. Yet to be explained: Who pays to help fix traffic?

Chris Hansen, along with King County Executive Dow Constantine, left, and Mayor Mike McGinn, announced Wednesday a propsed agreement to fund an arena in SoDo. / City of Seattle file photo

In a feat equal to a dunk by Danny DeVito, I will attempt to explain briefly the proposed arena deal, without using financier-ese or bureaucrat-ese, and in the process offer something perhaps you didn’t know.

Nothing in this column is about the teams who may populate the arena. Also, nothing here about the arena’s controversial location.  Won’t touch civic politics — well, maybe one shot, later on. All I ask is that you hang with me: I don’t want to be alone at this elevation.

In summary, based on conversations with principals Wednesday and previously:

Developer Chris Hansen and fellow private investors (ArenaCo) propose to build, operate maintain and improve an arena in SoDo that seats 18,500 for basketball and 17,500 for hockey, for presumably 30 years. ArenaCo will provide $290 million, and ask the city of Seattle ($120 million)  and King County ($80 million) to invest a maximum of $200 million via their ability to bond against tax revenues generated by the building’s operations as a first-class facility that will attract events beyond sports.

Since no new taxes will be sought, nor old taxes diverted, the $200 million public contribution essentially is a loan, whose debt will be retired from building taxes as well as up to $2 million in annual rent. Any shortfalls in revenue will be covered by ArenaCo, which will also cover all cost over-runs during construction.

No public funds will be loaned until an NBA franchise is acquired, a binding non-relocation agreement is signed that matches the length of the loan, and all permitting and environmental reviews are done. An NHL franchise can come later, but is not necessary to begin construction, if approved by the city and county councils.

That is the essence of the proposed memorandum of understanding that was agreed to by Hansen, the city and county Wednesday. The entirety is way more complicated. Full documents are available on the county’s site here and the city’s site here.

And it’s only a proposal. The councils must vote to approve. Those meetings will be the first public forums at which hard questions will be asked, and presumably, answered. And if not answered, well, that’s what we have litigation and referenda for.

Getting back to the deal . . . Aside from the fact that the city is using up its bonding capacity that could be used on other projects, of which none exist that also includes $290 million in private money, it would appear that the city is getting such a deal that a fair question — again, setting aside the arguments about traffic, parking and teams — is why would Hansen would do this?

The answer is, primarily, what you haven’t been told –  the city and county can borrow money more cheaply than any private investor. That was not mentioned in the press conference Wednesday with Hansen, Mayor Mike McGinn, King County Executive Dow Constantine or anywhere in the MOU.

One had to ask. Which I recommend doing, a lot, for anyone who is interested in this project. If you need a reason, remember that McGinn thought for the longest time that Seattle’s best traffic solution was tearing down the Alaskan Way Viaduct and letting the poor bastards fend for themselves on city streets.

Gotta watch this guy (shot taken).

Back to the deal. According to Dwight Dively, who might be the smartest man working for the county, the good faith and credit of governments in the bond market make them swell partners for rich guys like Hansen. They just don’t like to advertise it. But hedge fund managers like Hansen make a good part of their livings understanding OPM (other people’s money) and federal and local tax laws.

Read here for a better understanding via crosscut.com from Matt Fikse, former CEO and city projects official, of why this arena deal, and pro sports ownership, works for people who know hedge funds.

“It’s no secret,” said Dively, director of the county’s office of performance, strategy and budget. “Hansen won’t share how he’s going to finance his part. He’s going to have equity partners, loans, various structures of debt, maybe refinance it several times over 30 years. He doesn’t want to signal his strategy because he hasn’t worked it all out yet.”

Asked how this particular deal works for Hansen, Dively said governments can borrow at rates four to five percent less than private investors. So a four percent reduction in interest on a $200 million bond can save $8 million in the first year, he said. Even for rich guys, that’s important.

“Using the public capacity lowers the cost of capital for the project,” Dively said. “There’s another reason they want us (the public) in the deal: There are tax revenues that will come out of the facility that they want to use in the facility. Governments normally collect them, but in this case we are committing them to pay the debt service on the bonds. There is no loss to the city and county’s general funds. But there is no gain, either.

“Hansen gets to use the the (redirected) taxes as part of his financing strategy (to induce investment), and the city gets the indirect gain — hotel room taxes, and all of that, for people coming to events. Those benefits are not part of this MOU, because that amount is hard to measure. But we know it’s there.”

The reason I trust Dively on the matter is because he’s been around for all the public-participation deals done for pro sports building here — Kingdome, KeyArena, Safeco and CenturyLink. Each has gotten progressively less onerous on the public for one reason.

“Governments aren’t involved anymore (in building and operating entertainment joints) because, frankly, we’re not good at it,” he said. The football stadium and exhibition center, which were funded from a statewide vote in 1998 and built privately, have been successful partly because they were built and are run by a private operator, Paul Allen’s First & Goal, under state authority.

One of problems with city-owned KeyArena, he said, was that money for maintenance had to come from the city’s budget for all facilities. Just one of the numerous hazards of being the only NBA facility to have been part of a public park.

That won’t be a problem in this deal. If Hansen or his renters break something, he fixes it.

In a thousand words, that’s the deal. It helps explain why the city, county and sports fans are excited. But there’s a million words yet to come on the location, none of which are in the MOU, and some of which will not be usable in child-friendly websites.

The arena is a long way from done, but it’s reached the dispatch room a lot quicker than many would have imagined.


YourThoughts

  • Tian Biao

    great article, Art, as usual. The fact that cities and councils can borrow more cheaply than Hansen himself explains a lot about why the deal is structured the way it is. But I’d like to ask, since you are obviously on top of this issue: what would you say are the ultimate chances of success (ie a completed arena with at least an NBA team)? 60/40 in favor? better, worse?

    • Artthiel

       Lots of elements still in play, but the Wednesday milestone was important. Much depends on  how vehement to SoDo opposition is. There’s a lot of sore feelings over broken promises there, matched against political/business high rollers who want this deed done. I’d say it’s up to 50/50. But what if Sac-town finds a buyer to keep the Kings there? New CBA means teams less incented to leave.

      • Grover

        I wonder how much opposition there is that is not being made public.  For example, the U.W., Seahawks and Sounders.  Plus the people who don’t want to see KeyArena lose much of its events.  There may be a whole lot of people opposing this behind the scenes who don’t want their oppostion known.

        • Jamo57

          UW and Seahawks have been very vocal in support.   In UW case, Sark, Romar and Scott Woodward have all said publicly and very strongly that they are in favor of the arena deal.     As has been the case with Paul Allen and Pete Carroll representing the Seahawks.    The Sounders share marketing management with the Hawks so there is no reason to think they would go in a different direction.   The only sports team that has been negative have been the Mariners and I would imagine that they will get out in front of the parade at some point after taking the PR beating they did. 

  • Tian Biao

    great article, Art, as usual. The fact that cities and councils can borrow more cheaply than Hansen himself explains a lot about why the deal is structured the way it is. But I’d like to ask, since you are obviously on top of this issue: what would you say are the ultimate chances of success (ie a completed arena with at least an NBA team)? 60/40 in favor? better, worse?

    • Artthiel

       Lots of elements still in play, but the Wednesday milestone was important. Much depends on  how vehement to SoDo opposition is. There’s a lot of sore feelings over broken promises there, matched against political/business high rollers who want this deed done. I’d say it’s up to 50/50. But what if Sac-town finds a buyer to keep the Kings there? New CBA means teams less incented to leave.

      • Grover

        I wonder how much opposition there is that is not being made public.  For example, the U.W., Seahawks and Sounders.  Plus the people who don’t want to see KeyArena lose much of its events.  There may be a whole lot of people opposing this behind the scenes who don’t want their oppostion known.

        • Jamo57

          UW and Seahawks have been very vocal in support.   In UW case, Sark, Romar and Scott Woodward have all said publicly and very strongly that they are in favor of the arena deal.     As has been the case with Paul Allen and Pete Carroll representing the Seahawks.    The Sounders share marketing management with the Hawks so there is no reason to think they would go in a different direction.   The only sports team that has been negative have been the Mariners and I would imagine that they will get out in front of the parade at some point after taking the PR beating they did. 

  • jafabian

    Based on what I’ve read up until today, it seems the NBA is the prime reason this deal is being put in place and I don’t understand why that is. The NBA forced the city’s hand to break an existing lease when the Sonics were here.  The NBA by it’s own admission is continuously operating in the red.  And the NBA has basically had the approach of “Build a state of the art arena and we’ll consider returning, but it won’t be a new team.  It will have to be a team moving from another city.”  And that’s no guarantee.  The NHL has openly said they want in the Seattle market and will even play in Key Arena as long as its a temporary solution.  Seems to me a new arena should be built more along the lines towards an NHL team rather than an NBA franchise.  And IMO an NHL team would do just as well as an NBA team if not better in this neck of the woods.

    I don’t agree that maintenance has to be covered by the city in regards to Key Arena.  That could easily be paid for by the new NBA tenant but that’s all water under the bridge at this point.  Key Arena’s days are numbered and it will eventually be demolished at taxpayer expense, much like how most of the Seattle Center is now as the city tries to find ways to make it quit bleeding the money it has been since the Sonics left.  Or even before then when the franchise nose-dived under Howard Schultz’s watch.  However if something is wrong with the new arena then the Hansen group pays for it?   I won’t hold my breath.  After only ten years from the Key Arena remodel the Sonics wanted either a new arena or an extensive remodel.  And Clay Bennett and David Stern showed us that agreements can be broken.  At least where the NBA is concerned.  And Howard Schultz showed us that local ownership isn’t always the answer.  Even John Ellis threatened to sell the M’s when negotiations for Safeco Field’s construction hit a snag.I still have reservations on the SODO location due to the construction currently going in the area and planned for later.  IIRC, that’s a good ten years of potential congestion.  I imagine both parties feel as though that’s a bridge to cross later. 

    • RadioGuy

      I agree wholeheartedly with your first paragraph.  I’d be looking to bring an NHL team to Seattle first, especially if they’re willing to suffer playing in KeyArena while the new one’s being built (I don’t know when that’s been said by Bettman or anyone else, though).  What do we owe David Stern or the NBA?

      I’ve said it before:  Check into the New York Islanders.  They’re the third most-popular NHL team in the NY-NJ market, play in an outdated arena (in front of the smallest crowds in the NHL) and have an owner who has said he wouldn’t have bought the team if he had it to do over again.  Does this sound like a stable and successful franchise?

      • jafabian

        In fact, the Islanders will be available for moving in three years.  I find that amazing considering the market their in but that’s the reality of their situation.  David Stern has been largely indifferent on the NBA returning to Seattle.  Probably because Seattle serves the NBA better right now without a team than with one.  Cities like Milwaukee, Sacramento, Oakland, Salt Lake and possibly even NYC, Denver and Detroit who all have some of the older venues in the league will get the stinkeye from Stern and get the lecture of “if you don’t do things my way what happened to Seattle will happen to YOU.”  Seattle serves the NBA the way Los Angeles does for the NFL.

        • Artthiel

           Stern is indeed using Seattle’s vacancy to extort other teams, as the NFL uses the LA vacancy. But there will be a time when filling the market is more important than leaving it empty.

      • Artthiel

         The NHL does not want to play for three years in a facility that seats 11,000 for hockey. Period. End of discussion. Fresh questions, please.

        • Grover

          What NHL owner would agree to a 30-year lease and 30-year non-relocation clause, in a city which has never proved it can support the NHL?

          • Artthiel

             Because the team is failing in a smaller market. And if no suche tam exists, or doesn’t want to move to Seattle, the public portion of the deal is capped at $120M, not $200M.

    • Artthiel

      Jafabian, if you read my two-part interview with Hansen, he said that he knows hockey fans are here but NBA fans are “a multiple” of hockey fans. And if you read my column last week, Stern makes the claim that the new CBA will have all teams with a chance to break even in three years. And Hansen said the arena is being built to accommodate hockey at the expense of some basketball seating. And my latest column said that KeyArena WAS maintained by the city, not that it would be in the future.
      Please, my man, pay attention before you complain.

      • jafabian

         Read your columns regularly for years Art.  Not complaining as opposed to seeing all this beyond more for what best for the city as opposed to a “how can we get the Sonics back” approach as well as refusing to take a new sport team owner at face value.  The previous Sonics owner showed me that.

        • Artthiel

          I agree with your skepticism, which is why I spent two hours with Hansen: getting him to answer questions for the public no one has asked him. Schultz would have never submitted to that.  You’re right. The city must come first, not broken hearted Sonics fans.

          I just get dismayed when ground previously covered is, as Roger Clemens might say, “misremembered”.

          • jafabian

            That’s life on the Internet.  And it’s all for discussion.  I don’t remember everyone by name here that I might have talked with before and I don’t expect everyone to always remember me.  And this kind of subject will bring out a lot of passion from people from all angles.  But that’s what creates discussion, good and bad.  Everyone will have an opinion and believe in it.

            Did Hansen ever say how he plans to avoid the apathy that Charlotte has shown for the Bobcats?  I see potential for that scenario in Seattle were the NBA to return.

      • Grover

        If all NBA teams will break even within 3 years, what is the “need” for a new arena?  Just put a team back in KeyArena, and it will break even within 3 years.  Why waste hundreds of millions of dollars on a new arena, when KeyArena will work under the new CBA?

        • Artthiel

          Any arena needs to work for top tier concerts. The Key’s fatally flawed single loading bay keeps major acts away. And the new arena has 1,500 more seats than the Key.

  • jafabian

    Based on what I’ve read up until today, it seems the NBA is the prime reason this deal is being put in place and I don’t understand why that is. The NBA forced the city’s hand to break an existing lease when the Sonics were here.  The NBA by it’s own admission is continuously operating in the red.  And the NBA has basically had the approach of “Build a state of the art arena and we’ll consider returning, but it won’t be a new team.  It will have to be a team moving from another city.”  And that’s no guarantee.  The NHL has openly said they want in the Seattle market and will even play in Key Arena as long as its a temporary solution.  Seems to me a new arena should be built more along the lines towards an NHL team rather than an NBA franchise.  And IMO an NHL team would do just as well as an NBA team if not better in this neck of the woods.

    I don’t agree that maintenance has to be covered by the city in regards to Key Arena.  That could easily be paid for by the new NBA tenant but that’s all water under the bridge at this point.  Key Arena’s days are numbered and it will eventually be demolished at taxpayer expense, much like how most of the Seattle Center is now as the city tries to find ways to make it quit bleeding the money it has been since the Sonics left.  Or even before then when the franchise nose-dived under Howard Schultz’s watch.  However if something is wrong with the new arena then the Hansen group pays for it?   I won’t hold my breath.  After only ten years from the Key Arena remodel the Sonics wanted either a new arena or an extensive remodel.  And Clay Bennett and David Stern showed us that agreements can be broken.  At least where the NBA is concerned.  And Howard Schultz showed us that local ownership isn’t always the answer.  Even John Ellis threatened to sell the M’s when negotiations for Safeco Field’s construction hit a snag.I still have reservations on the SODO location due to the construction currently going in the area and planned for later.  IIRC, that’s a good ten years of potential congestion.  I imagine both parties feel as though that’s a bridge to cross later. 

    • RadioGuy

      I agree wholeheartedly with your first paragraph.  I’d be looking to bring an NHL team to Seattle first, especially if they’re willing to suffer playing in KeyArena while the new one’s being built (I don’t know when that’s been said by Bettman or anyone else, though).  What do we owe David Stern or the NBA?

      I’ve said it before:  Check into the New York Islanders.  They’re the third most-popular NHL team in the NY-NJ market, play in an outdated arena (in front of the smallest crowds in the NHL) and have an owner who has said he wouldn’t have bought the team if he had it to do over again.  Does this sound like a stable and successful franchise?

      • jafabian

        In fact, the Islanders will be available for moving in three years.  I find that amazing considering the market their in but that’s the reality of their situation.  David Stern has been largely indifferent on the NBA returning to Seattle.  Probably because Seattle serves the NBA better right now without a team than with one.  Cities like Milwaukee, Sacramento, Oakland, Salt Lake and possibly even NYC, Denver and Detroit who all have some of the older venues in the league will get the stinkeye from Stern and get the lecture of “if you don’t do things my way what happened to Seattle will happen to YOU.”  Seattle serves the NBA the way Los Angeles does for the NFL.

        • Artthiel

           Stern is indeed using Seattle’s vacancy to extort other teams, as the NFL uses the LA vacancy. But there will be a time when filling the market is more important than leaving it empty.

      • Artthiel

         The NHL does not want to play for three years in a facility that seats 11,000 for hockey. Period. End of discussion. Fresh questions, please.

        • Grover

          What NHL owner would agree to a 30-year lease and 30-year non-relocation clause, in a city which has never proved it can support the NHL?

          • Artthiel

             Because the team is failing in a smaller market. And if no suche tam exists, or doesn’t want to move to Seattle, the public portion of the deal is capped at $120M, not $200M.

    • Artthiel

      Jafabian, if you read my two-part interview with Hansen, he said that he knows hockey fans are here but NBA fans are “a multiple” of hockey fans. And if you read my column last week, Stern makes the claim that the new CBA will have all teams with a chance to break even in three years. And Hansen said the arena is being built to accommodate hockey at the expense of some basketball seating. And my latest column said that KeyArena WAS maintained by the city, not that it would be in the future.
      Please, my man, pay attention before you complain.

      • jafabian

         Read your columns regularly for years Art.  Not complaining as opposed to seeing all this beyond more for what best for the city as opposed to a “how can we get the Sonics back” approach as well as refusing to take a new sport team owner at face value.  The previous Sonics owner showed me that.

        • Artthiel

          I agree with your skepticism, which is why I spent two hours with Hansen: getting him to answer questions for the public no one has asked him. Schultz would have never submitted to that.  You’re right. The city must come first, not broken hearted Sonics fans.

          I just get dismayed when ground previously covered is, as Roger Clemens might say, “misremembered”.

          • jafabian

            That’s life on the Internet.  And it’s all for discussion.  I don’t remember everyone by name here that I might have talked with before and I don’t expect everyone to always remember me.  And this kind of subject will bring out a lot of passion from people from all angles.  But that’s what creates discussion, good and bad.  Everyone will have an opinion and believe in it.

            Did Hansen ever say how he plans to avoid the apathy that Charlotte has shown for the Bobcats?  I see potential for that scenario in Seattle were the NBA to return.

      • Grover

        If all NBA teams will break even within 3 years, what is the “need” for a new arena?  Just put a team back in KeyArena, and it will break even within 3 years.  Why waste hundreds of millions of dollars on a new arena, when KeyArena will work under the new CBA?

        • Artthiel

          Any arena needs to work for top tier concerts. The Key’s fatally flawed single loading bay keeps major acts away. And the new arena has 1,500 more seats than the Key.

  • Sam Kelly

    Chris Hansen is the man in my opinion, lets do this I will definitely buy tickets 

    • jafabian

      We’ll see.  For every Sam Schulman, Barry Ackerly, Paul Allen or John Nordstrom there’s a George Argyos, Jeff Smulyan, Ken Behring or Howard Schultz.

    • Artthiel

       I have seen nothing yet to suggest that Hansen has an agenda other than the ones stated. Obviously, it’s early, but if you read my interview with him, he has studied the errors of his ownership compadres. It doesn’t guarantee that he won’t devolve into an Argyros, but there’s nothing about him so far that indicates he’s a self-aggrandizing, blowhard idiot.

  • Sam Kelly

    Chris Hansen is the man in my opinion, lets do this I will definitely buy tickets 

    • jafabian

      We’ll see.  For every Sam Schulman, Barry Ackerly, Paul Allen or John Nordstrom there’s a George Argyos, Jeff Smulyan, Ken Behring or Howard Schultz.

    • Artthiel

       I have seen nothing yet to suggest that Hansen has an agenda other than the ones stated. Obviously, it’s early, but if you read my interview with him, he has studied the errors of his ownership compadres. It doesn’t guarantee that he won’t devolve into an Argyros, but there’s nothing about him so far that indicates he’s a self-aggrandizing, blowhard idiot.

  • Grover

    No mention of I-91, and whether or not this proposal satisfies I-91.

    Also, since the bonds will be general obligation bonds, the city’s general fund has to guarantee the bonds.  That is why the interest rates are lower — if anything goes wrong, the city has to pay off the bonds from its general fund.  There is virtually no risk to the people who buy the bonds.  The risk is all to the city.

    • Artthiel

       The MOU satisfies I-91, as stated Weds by all parties. The bonds probably will be general obligation, as opposed to revenue, which means the city’s credit is at risk. Which is why so many safeguards were put in place to protect the public interest. Hansen isn’t going to bail on a 30-year commitment in which he has invested $290M, more than any ownership in Seattle history.

      • Grover

        What?  You mean that the guys who wrote the MOU say it satisfies I-91?  lol  Are you kidding, or what?  Are you really that simple?

        Where is the worksheet that proves this?  Where is the analysis by independent financing experts?

        You mean Dow Constantine, Mayor McGinn and Chris Hansen say it satisfies I-91, so therefore it does?  Really?

        Chris Van Dyk has stated publicly that if the bonds are general obligation bonds, then, in his opinion, it does not satisfy I-91.  Van Dyk wrote I-91.  Shouldn’t Chris Van Dyk be included in “all parties”?  Has Van Dyk signed off on this?  Or any of the other sponsors of I-91?  Or any independent experts (not affilitated with the city or county)?

        So far, all I have heard from is the foxes who are guarding the henhouse.

        • Artthiel

           Wouldn’t you imagine that that is the first question city council members, most of whom voted for I-91, would ask of the city attorney and the drafters? The only loophole I see is a potential lack of specificity about whether the bonds are GO or rev. Th other safeguards in the MOU may be sufficient to satisfy intent.

          • Gstommylee

            That’s one thing I would really like to know from city attorney on rather or not the proposal meets I-91.  If not then what does it take for it to be I-91 compliant.  So far i have yet to hear/read from any backers of I-91 on specifics within a proposal to where it meets I-91. All i read are comments from people claiming its not I-91 compliant.
            It would be good to hear from an actual lawyer that understands I-91.

          • Jamo57

            I heard Chris VanDyke on the radio early in this process and he was actually pretty supportive of the deal.   He said that at first blush it seemed to satisfy I-91.   And the MOU that was put forth yesterday was seen by all parties to be consistent with what the original offer was that VanDyke was responding to.   McGinn voted for I-91.   I can’t imagine him sticking his neck out without the city lawyers going over this with a fine toothed comb.

  • Grover

    No mention of I-91, and whether or not this proposal satisfies I-91.

    Also, since the bonds will be general obligation bonds, the city’s general fund has to guarantee the bonds.  That is why the interest rates are lower — if anything goes wrong, the city has to pay off the bonds from its general fund.  There is virtually no risk to the people who buy the bonds.  The risk is all to the city.

    • Artthiel

       The MOU satisfies I-91, as stated Weds by all parties. The bonds probably will be general obligation, as opposed to revenue, which means the city’s credit is at risk. Which is why so many safeguards were put in place to protect the public interest. Hansen isn’t going to bail on a 30-year commitment in which he has invested $290M, more than any ownership in Seattle history.

      • Grover

        What?  You mean that the guys who wrote the MOU say it satisfies I-91?  lol  Are you kidding, or what?  Are you really that simple?

        Where is the worksheet that proves this?  Where is the analysis by independent financing experts?

        You mean Dow Constantine, Mayor McGinn and Chris Hansen say it satisfies I-91, so therefore it does?  Really?

        Chris Van Dyk has stated publicly that if the bonds are general obligation bonds, then, in his opinion, it does not satisfy I-91.  Van Dyk wrote I-91.  Shouldn’t Chris Van Dyk be included in “all parties”?  Has Van Dyk signed off on this?  Or any of the other sponsors of I-91?  Or any independent experts (not affilitated with the city or county)?

        So far, all I have heard from is the foxes who are guarding the henhouse.

        • Artthiel

           Wouldn’t you imagine that that is the first question city council members, most of whom voted for I-91, would ask of the city attorney and the drafters? The only loophole I see is a potential lack of specificity about whether the bonds are GO or rev. Th other safeguards in the MOU may be sufficient to satisfy intent.

          • Gstommylee

            That’s one thing I would really like to know from city attorney on rather or not the proposal meets I-91.  If not then what does it take for it to be I-91 compliant.  So far i have yet to hear/read from any backers of I-91 on specifics within a proposal to where it meets I-91. All i read are comments from people claiming its not I-91 compliant.
            It would be good to hear from an actual lawyer that understands I-91.

          • Jamo57

            I heard Chris VanDyke on the radio early in this process and he was actually pretty supportive of the deal.   He said that at first blush it seemed to satisfy I-91.   And the MOU that was put forth yesterday was seen by all parties to be consistent with what the original offer was that VanDyke was responding to.   McGinn voted for I-91.   I can’t imagine him sticking his neck out without the city lawyers going over this with a fine toothed comb.

  • Godwin

    Old taxes are diverted. It is the loss of sales from other entertainment venues that go to events in a new facility, which will hold twice as many events as Safeco and Centurylink combined, in a pool of FINITE discretionary spending dollars in the economy. The economists call it “substitution”. This part of the shell game they are calling “self financing”; this will impact other revenue streams. Even the Stadium Panel admitted that, with their lowball figure of 15%.

    • Artthiel

       Since I learned of substitution, I have not used the term self-financing, even though the city does. There are other costs — like road improvements, sidewalks, etc. — that defeat use of the phrase. But the proposal is not a diversion of a dedicated stream, nor do these costs outweigh the virtues and protections of the deal as written.

      And you’re right, Hansen doesn’t need the NBA franchise to be profitable operationally for the arena deal to be successful. I never wrote it, and he never said it. And it not illegal for him to profit from the land flip. But he is unlikely to walk away from this deal for the purposes of scoring on a flip. Makes no sense, unless you think ripping off one’s hometown in a most public way is sensible. 

  • Godwin

    Old taxes are diverted. It is the loss of sales from other entertainment venues that go to events in a new facility, which will hold twice as many events as Safeco and Centurylink combined, in a pool of FINITE discretionary spending dollars in the economy. The economists call it “substitution”. This part of the shell game they are calling “self financing”; this will impact other revenue streams. Even the Stadium Panel admitted that, with their lowball figure of 15%.

    • Artthiel

       Since I learned of substitution, I have not used the term self-financing, even though the city does. There are other costs — like road improvements, sidewalks, etc. — that defeat use of the phrase. But the proposal is not a diversion of a dedicated stream, nor do these costs outweigh the virtues and protections of the deal as written.

      And you’re right, Hansen doesn’t need the NBA franchise to be profitable operationally for the arena deal to be successful. I never wrote it, and he never said it. And it not illegal for him to profit from the land flip. But he is unlikely to walk away from this deal for the purposes of scoring on a flip. Makes no sense, unless you think ripping off one’s hometown in a most public way is sensible. 

  • Godwin

    In addition: it does not matter to Hansen if a team makes money. He is making his cash off the land flip. He has/will invest 23 to 30 million, and when the permits happen, he will flip it to the city for up to 100m. He can then walk away with his 70–77m in cash profit.

  • Godwin

    In addition: it does not matter to Hansen if a team makes money. He is making his cash off the land flip. He has/will invest 23 to 30 million, and when the permits happen, he will flip it to the city for up to 100m. He can then walk away with his 70–77m in cash profit.

  • Soggyblogger

    The real question in my mind is: Does adding more sports arenas and more sports franchises create a bigger sports entertainment pie or just divide up the same sized pie more ways? The answer is probably, a little of both. The pie will probably get a little bigger, but ultimately, each slice of pie will get smaller. 

    That brings up additional questions like: Does adding an NBA franchise threaten the viability (profitability) of existing sports franchises? The answer to that question seems to be yes. 

    Another interesting and disturbing question is: Will using the proposed arena for non-sporting events such as concerts threaten the viability of Key Arena? And if the answer to that question is yes, then wouldn’t the city/county be shooting itself in the foot by helping finance a competitor to the market of Key Arena? 

  • Soggyblogger

    The real question in my mind is: Does adding more sports arenas and more sports franchises create a bigger sports entertainment pie or just divide up the same sized pie more ways? The answer is probably, a little of both. The pie will probably get a little bigger, but ultimately, each slice of pie will get smaller. 

    That brings up additional questions like: Does adding an NBA franchise threaten the viability (profitability) of existing sports franchises? The answer to that question seems to be yes. 

    Another interesting and disturbing question is: Will using the proposed arena for non-sporting events such as concerts threaten the viability of Key Arena? And if the answer to that question is yes, then wouldn’t the city/county be shooting itself in the foot by helping finance a competitor to the market of Key Arena? 

  • sportsfanx

    One 18wheeler size problem is the traffic congestion in the SoDo area.  I drive trucks for a living and am down in SoDo, and the Seattle area in general all the time with my job.  Seattle has serious issues with traffic congestion- I don’t think this is ground breaking news!  I live up in Whatcom County and have to grit my teeth, bite a bullet, take a couple swigs of Tequila (joking HA) every time I go down to Seattle, on my own time during the day,  to deal with the traffic mess.  Going down to SafeCo field, there is ALWAYS gridlock in and out.

    Some kind of mass transit system should be set up, maybe on the north and south end of King county for direct passage to the sports stadiums in SoDo.  I can’t imagine the traffic with a new NBA,NHL, etc. stadium sitting next to SafeCo and The Clink stadiums.  Oh yeah, there is one more entity that might be a bit of a factor to SoDo’s traffic: The Port of Seattle with a million semi’s  and a major railroad running north and south!!  Maybe a couple of park and ride lots set up with buses directly to the stadiiums on sports days.  Myself, having driven trucks in Puget Sound for years, I would much rather ride a bus then deal with that traffic mess.

    I can see it now:  WA DOT Traffic Alert- Warning Do Not Even Think Of Driving Near The SoDo Area Due To Hours Of Gridlock

  • sportsfanx

    One 18wheeler size problem is the traffic congestion in the SoDo area.  I drive trucks for a living and am down in SoDo, and the Seattle area in general all the time with my job.  Seattle has serious issues with traffic congestion- I don’t think this is ground breaking news!  I live up in Whatcom County and have to grit my teeth, bite a bullet, take a couple swigs of Tequila (joking HA) every time I go down to Seattle, on my own time during the day,  to deal with the traffic mess.  Going down to SafeCo field, there is ALWAYS gridlock in and out.

    Some kind of mass transit system should be set up, maybe on the north and south end of King county for direct passage to the sports stadiums in SoDo.  I can’t imagine the traffic with a new NBA,NHL, etc. stadium sitting next to SafeCo and The Clink stadiums.  Oh yeah, there is one more entity that might be a bit of a factor to SoDo’s traffic: The Port of Seattle with a million semi’s  and a major railroad running north and south!!  Maybe a couple of park and ride lots set up with buses directly to the stadiiums on sports days.  Myself, having driven trucks in Puget Sound for years, I would much rather ride a bus then deal with that traffic mess.

    I can see it now:  WA DOT Traffic Alert- Warning Do Not Even Think Of Driving Near The SoDo Area Due To Hours Of Gridlock