BY Art Thiel 08:49PM 06/16/2013

McGinn says Key ‘can support’ an NHL team

Mayor met two weeks ago with a potential buyer of NHL-owned Phoenix Coyotes, who may available for relocation. But KeyArena has 11,000 seats for hockey.

Another team and pro sports league appears ready to use the eagerness of Seattle and investor Chris Hansen for a new arena to help an existing franchise score a deal. This time it is the NHL, which has owned the Phoenix Coyotes since 2009 and is trying to leverage Seattle’s arena urgency into a new deal for the distressed franchise in suburban Glendale.

Mayor Mike McGinn, in a statement Sunday, acknowledged that a representative of Hansen, the Seattle native whose bid for the NBA Kings was rejected by David Stern and league owners in May, introduced him two weeks ago to potential investors in an NHL team, who also met with several members of the city council. The mayor said he also spoke with Commissioner Gary Bettman last week.

“Our message to all parties has been the same:  We believe we can support an NHL team as a tenant at KeyArena, and as a potential tenant of a new arena, subject to all parties reaching agreement on terms,” McGinn said in the statement. “As recent news reports indicate, it appears the NHL is taking the new ownership proposal seriously. But we also know from experience that it may be some time before an NHL team is located in Seattle, as the home city for the Phoenix Coyotes is working to keep them.

“We will keep the public informed as we learn more about the possibility of the NHL in Seattle.”

CBC’s “Hockey Night in Canada” reported Saturday (video here)  that if the Glendale city council cannot reach a deal with prospective buyers to keep the team in town by July 2, the NHL will sell the the club for $220 million to other bidders –  Ray Bartoszek, 47, and Anthony Lanza, 46. The pair bid unsuccessfully for a big share of the New York Mets in 2011.

If the purchase and relocation work, reports say that former nine-time NHL all-star and current NBC analyst Jeremy Roenick would run the hockey operations department.

In a recent visit to Seattle after his NBA bid was voted down, Hansen acknowledged talking to NHL people and seemed more open to a hockey-first idea, primarily because it would activate the MOU while the politicians who signed off on it remain in office.

“The NBA in our case is first for us, because we put the equity into the arena and would like to purchase an NBA team,” Hansen told KJR radio. “We don’t have mental free time to own a hockey team. If there was an owner of a team who wanted to relocate and move (before an NBA team), I’m sure it could be done. We’d have to know how they would invest in the arena project.

“The city/county (memorandum of understanding) probably could be reconstructed, but that’s not my decision. I think there’s big interest from a lot of people in hockey. A lot of owners view Seattle as a great market. We’d had some discussions, and have to see how we would get along and be partners.”

How McGinn plans to make the Key viable as a two- to three-year temporary home for NHL hockey is unclear. Because the building was remodeled in 1995 for basketball only, the sightlines for the bigger floor required for the NHL limit seating to about 11,000.

The smallest building in the NHL is the MTS Centre in Winnipeg, which seats 15,015 for the Jets. The Jets charge the second-highest ticket prices in the NHL, an average of $90, with lower bowl tickets ranging from $117-$200. The season was a complete sellout for the Jets, who were the Atlanta Thrashers until the club moved in 2012.

The average NHL ticket price in 2012-13 was $61. The NBA’s average ticket price is $51.

In a lockout-shortened season of 24 home games, the Coyotes drew 13,923, second-lowest in the NHL and 81 percent of capacity at Jobing.com Arena. The smallest attendance belonged to the New York Islanders (13,306), who will play one more season Nassau Coliseum on Long Island before moving in 2014-15 to Barclays Center in Brooklyn. The Chicago Blackhawks led the NHL with an average crowd of 21,775, said to be 110 percent of capacity.

Attendance is a more important factor in the NHL than any other major pro team sport in North America because the league lacks a lucrative national U.S. TV contract, and so depends much more on gate revenues.

The Coyotes have survived to this point only because Glendale has provided the team a $15 million annual subsidy to operate the arena. Any potential buyer of the franchise wants to keep all or most of the subsidy in place. But Glendale, as with many Sun Belt cities, is under severe financial pressure because of decreased tax revenues following the 2008 recession.

The NHL took ownership of the team in bankruptcy in 2009. But now that the league has a new collective bargaining agreement following a lockout that ended in January, Bettman and other NHL executives are eager to bring the Coyotes’ ward-of-the-state situation to an end.

Bettman said last week that “stuff is gonna happen” if a June 25 meeting of the Glendale city council doesn’t produce major progress on a lease deal with an NHL-selected buyer, Renaissance Sports and Entertainment, a group led by Canadian investment banker George Gossbee and Anthony LeBlanc, former vice president of Blackberry manufacturer Research in Motion. The offer is said to be $170 million, but Glendale politicians are reportedly uncomfortable because the offer is much more borrowed money than equity, and the bidders seek a five-year escape clause.

The NHL Board of Governors is scheduled to meet June 27. In his state-of-the-sport press conference before the Stanley Cup finals, Bettman threatened Glendale in much the same manner as Stern threatened Sacramento with the loss of the Kings when the initial efforts to match Hansen’s offer fell short.

Bettman worked for the NBA from 1981 to 1993, rising to third in command, before taking the NHL commissioner’s job. He has studied under Stern, the master manipulator. Bettman finds in Seattle the same thing Stern found — leverage, in the form of an eager, relatively wealthy marketplace with an aggressive arena investor who has a political deal in hand.

Stern used Seattle as a way to prod Sacramento politicians and business people into funding a new arena deal that kept the Kings, which included a $258 million public subsidy.

Bettman is now attempting the same thing. There are differences, however. Bettman bears no personal ill will toward Seattle and the league already owns the franchise (no Maloof family to extricate). The Phoenix marketplace has NFL, NBA and MLB teams and a Division I college in Arizona State, so the Coyotes are the fifth ticket in town and would not be missed nearly as much as the Kings in Sacramento.

Another factor lending a little credence to a potential Seattle relocation was that the Vancouver Canucks wanted to place their American Hockey League affiliate in KeyArena but was denied by the NHL, according to the Hockey Night story. The team is in Utica, NY.

But Hansen’s arena plan still has to clear a hurdle in Seattle — an environmental impact statement that will consider the complaints of SoDo neighbors about the impacts of traffic with a third sports venue. The draft review is expected in August, and there is a likelihood of lawsuits by opponents if SoDo’s drawbacks aren’t taken seriously in the council vote on the EIS information.

Hansen’s original plan in the memorandum of understanding with the city and King County calls for an NBA franchise to be acquired before public funds can be used to break ground on a new arena. McGinn’s statement of support Sunday suggests that a rewrite of the MOU to accommodate the NHL first is at least plausible, but such a rewrite is subject to city council approval.

McGinn is also in a busy campaign for re-election in a crowded field, and is apt to say whatever will improve his electability. It is a matter of speculation whether the SoDo MOU is a help or a hurt to his campaign in Seattle, where skepticism about public funding of pro sports facilities has always run deep, and was roiled by the in-house NBA politics that thwarted Hansen.

The arrival of a competing bid for the Coyotes ratchets up the pressure on Glendale, which is all by Bettman’s design. Many things have to happen suddenly, because the NHL is eager to publish its 2013-14 schedule by July 1, and the mayoral primary in Seattle is in August.


YourThoughts

  • Tom

    A couple small questions for you, Art.

    Am I reading this correctly when I see that it would take just COUNCIL votes (not a Mayoral approval or a Dow approval) to approve the EIS and any tweaks to the MOU?

    Because if so, I’d imagine that’s something that would take care of itself over the next few months (assuming the EIS shows you can build the arena in SODO by mitigating traffic for $X like we expect it to).

    And then as far as Peter Steinbrueck is concerned, if he did win the Mayoral race, how much sway would he have when it comes to making existing council members magically flip their “YES” votes into “NO” votes? Because as is, there’s a 7-2 City Council vote that’s in favor of the arena right now, and the 4 council seats that are up for election are the 2 “NO” votes and 2 “YES” votes (and out of the 2 “YES” votes, only 1 is involved in a contested race).

    • Tom

      At least, I think only 1 of the “YES” votes is involved in a contested race right now.

  • jafabian

    As long as Key Arena isn’t a long term solution for an NHL franchise it’ll work. The NHL has been wanting to get into the Seattle market for years and a Seattle/Vancouver rivalry is a natural. And since it would be a new sport in the Seattle area I think fans will support it at the onset as they have the Sounders. Smart for the NHL to move now and smart on Chris Hansen to get things moving before the current city officials are out of office. I’m a bit surprised that things aren’t working out for the Coyotes but then, the opera ain’t over until the fat lady sings.

    • Kirkland

      The Coyotes had a solid fan base when they moved to Phoenix in 1996, but unfortunately were in the Suns’ arena, which has the same obstructed-view issues Key Arena has. Instead of building a needed new arena elsewhere in Phoenix or Scottsdale, where their fan base was, they chose to build in a new development in Glendale, which I understand is a pain in the rear to reach via Phoenix. (I hear it’s like putting an arena in Issaquah and adding worse traffic on I-90.) Thus, the core of hockey fans have a difficult time getting to Coyotes games, attendance fell despite a great arena, and red ink follows.

      My fear is that if the ‘Yotes move up here and the SoDo arena gets shot down, what happens in the handful of years before Seattle figures out another arena plan? The team can’t play in the Key for more than two seasons.

      • art thiel

        The arena is a lot closer to the M’s home in Peoria than to all the rich folks in Scottsdale who can afford the hockey tickets. Having made the drive several times, I would prefer catching a piano from five floors up.

    • art thiel

      If the new hockey owners don’t care about the difference between 11,000 a night and 18,000 a night, I don’t care either. Hell, Amazon could take a single day’s gross and buy out the entire building for the season. Can’t wait to see the mascot for the Seattle Amazons.

  • usk377

    I liked Art’s idea of playing in Vancouver on temp basis until new arena is built. LOL! Lived here for 40 yrs and only thing more comical will be watching inept Seattle media to cover a sport they know nothing about! Well..it’s about time!!! Go Mets!

    • art thiel

      I would be delighted to cover the Seattle Metropolitans for two years as your guest, and you can educate me as to the two-tooth penalty vs. major bridgework penalty.

  • RadioGuy

    Interesting how Seattle doesn’t really enter the NHL’s conversation as a major league hockey franchise site until just before the league starts arm-twisting the City of Glendale to keep that annual $15 million subsidy alive. Like the NBA, the NHL appears more interested in using Seattle as a bargaining chip in negotiations with a curent league city than in actually placing a franchise here. Why commit to an 11,000-seat arena with poor sightlines and a scoreboard hanging over one end of the ice when the new arena is not a 100% sure thing?
    Nobody’s paying much attention to the EIS due out in November, but that’s THE potential dealbreaker because of all the lawsuits based on its findings that might follow. The Port of Seattle and Longshoremen aren’t going away, and the EIS may represent their last/best hope of scuttling the new arena.
    In the meantime, “Welcome to Seattle: The new Tampa Bay.”

    • art thiel

      In partial explanation, both leagues are coming out of lockouts, which typically is not a good time to talk expansion.

      As far as 2-3 years in 11,000-seat Key, I don’t see it either. Unless there’s some big reward downstream to make up for the early operating losses.

      A think a lot of people are watching the EIS. It’s the whole game.

      Where you been, Radio?

      • RadioGuy

        I think there are going to probably be EIS-based lawsuits regardless of what it says, unless it states unequivocally that no environmental harm will come from the new arena. Anything less may provide room for a suit based on inferences based on what the EIS DIDN’T say. It’s like that computer virus that looks for the slightest of openings to infect your hard drive.
        Been taking a break from SPNW because I found myself getting too worked up with my replies concerning the Mariners…sort of a self-imposed “time out,” I guess. I don’t mind being a smartass, but there are too many angry posters on the internet already and I don’t want to be one of those. BTW, I freely admit it wouldn’t hurt having Carp and Jaso in the batting order, although I’d still have made the Morse deal.

  • Leon Russell

    “Another factor lending a little credence to a potential Seattle relocation was that the Vancouver Canucks wanted to place their American Hockey League affiliate in KeyArena but was denied by the NHL”
    This would work great for KeyArena, and Seattle. With the Sonics out of KeyArena, it would be profitable for minor league hockey, and would give KeyArena a few dozen more event nights per year.
    Hopefully, when the Coyotes situation is settled, the NHL will allow an AHL team to move to KeyArena.

    • art thiel

      Beats an empty Key. But the NHL needs a lease-free building in order to extort Glendale.

      • Leon Russell

        I don’t give a rat’s ass about what the NHL thinks it needs. I am concerned about what is best for the City of Seattle. Having a minor league hockey team in KeyArena would be good for KeyArena, assuming that team would pay significant rent to use KeyArena.
        A minor league hockey team could always sign a lease at KeyArena giving any potential NHL or NBA team scheduling priority for a couple of seasons if an NHL or NBA team wanted to play at KeyArena as a temporary home.

        And, KeyArena is not empty. I believe it hosted close to 100 events last year. And, I know KeyArena made a profit for the City of Seattle last year, while a new arena would require city of Seattle tax subsidies for decades.

        • RadioGuy

          Given that the NHL won’t allow one of its team’s AHL affiliates to move to Seattle (a bad idea anyhow, given that all but one AHL team is west of the Rockies), the only other viable alternative is to bring in an ECHL independent team. An ECHL franchise costs under a million dollars, but being an indy in that league means you’re on the hook for all player salaries and the ECHL’s weekly salary cap is $12,400 per team.
          Would Seattle support minor pro hockey? The Thunderbirds (who are not pros) moved to Kent in part because they couldn’t make ends meet at the Key and they don’t pay ANY player salaries. An ECHL team would fill 36 dates a year, but they’d still need fannies in the seats to pay the bills. I just can’t see it working in Seattle.

          • Leon Russell

            The only reason the Thunderbirds moved out of KeyArena was because the Thunderbirds’ lease at KeyArena gave all the concession and advertising revenues from Thunderbird games to the Sonics! So, obviously, the Thunderbirds couldn’t make any money at KeyArena with the Sonics getting all the revenues from Thunderbird games except for ticket sales.

            Now that the Sonics are gone, a minor league hockey team could get a much better lease at KeyArena, and would probably draw better, also, without Sonics games to compete for the winter sports event dollar.

            KeyArena is fine for minor league hockey, as long as there is no NBA team playing there and getting all the concession revenues from the minor league hockey games.

  • Leon Russell

    If an NHL team wants to play in Seattle, that would mean that there is not need for any public revenues at all for a new arena — the NBA owners can pay half of the cost and the NHL owners can pay half of the cost.
    Hansen was willing to put up about $290 million for a $490 million new arena. The NHL owners should be willing to put up $245 million, cutting Hansen’s share to the other $245 million. That is $490 million of private money, with NO tax revenues needed whatsoever.
    win-win-win for NBA, NHL and the City of Seattle.

    • art thiel

      So you’re asking for the hockey owners to pay $245M for arena plus $220M for the relocated team, and Hansen to pay $245M for the arena and $535M+ expansion fee for a new NBA team.

      I’ll forward the request. Be prepared to go hockeyless and hoopsless for a little bit, however. But hey, the negotiations have to start somewhere, and nowhere is somewhere, right?

      • Leon Russell

        Hansen has already agreed to pay $290 million for the arena, plus whatever it takes for a team, up to at least $535 million. So, that is no problem. That is correct, is it not?
        So, why should the NHL owners be allowed to contribute less to an arena than the NBA owners? Presumably, the NHL team will cost a lot less than the NBA team, leaving the NHL owners with a lot of money left over to pay for an arena. That is correct, is it not?
        This should not be a request. It should a demand: Pay for your own freaking arena, you billionaire jackasses.
        I am prepared to be without the NBA and NHL forever. The past several years in Seattle without NBA or NHL have been just like the previous years with the Sonics. No difference whatsoever to me, or to the City of Seattle.

        • art thiel

          You may well represent the majority view in Seattle. Just as a majority would not also support public funding for arts, parks, etc and other non-essentials. Which is fine.

          My understanding is that any hockey investors would take up part of Hansen’s $290M share. The public please purchase of up to $200M would remain unchanged. The percentage is a negotiation between them, and the public loan to the project remains unchanged because the primary virtue is the city’s ability to borrow money at about half the rate of private investors. Without that savings, according to Hansen, the arena deal doesn’t pencil.

          • art thiel

            the word “please” should be omitted. Never type at lunch.

          • Leon Russell

            Why should the NHL pay Hansen? The city of Seattle would “own” the new arena. The payment from the NHL should go to the “owner” of the arena, shouldn’t it? Hansen is just renting the arena from the city. Why should the NHL’s contribution go to the renter and not to the “owner”?
            If that is what it says in the MOU, then the MOU is even worse than I thought. The MOU should be re-written so that, in case of an NHL team playing in the new arena, the NHL team has to pay the city of Seattle to play in the new arena, and not pay Hansen.
            And, what if the NHL is the only team in the new arena? Is Hansen still going to pay $290 towards a new arena if he does not have an NBA team to play in it?

      • Leon Russell

        Are you suggesting that an NHL team should not contribute anything towards a new arena in Seattle where it would play its games?

  • Matt

    KeyArena could work as a one season hockey facility. But even the most optimistic scenario of the NBA awarding Seattle an expansion franchise in the next 12 months and the inevitable lawsuits following the EIS ruling swiped aside, you’re looking at about three years before any arena could be completed. Three seasons of the NHL at KeyArena is ridiculous, and that’s under the best case scenario.

    A better temporary option is the Tacoma Dome. The seating layout for the rink isn’t great, but at least capacity wouldn’t be constrained. The NHL club owners could update the facility as they play there, leaving it in better shape than what they found it when they eventually move north to the new arena. And, should the Seattle arena never get built due to city politics, at least the NHL team would have established a base in the Dome, could continue with updates to make it a more comfortable home and lessen the dependency of its future on the Seattle process. Better than being stuck in limbo in the Key.

    The population base of Pierce County and S. King County is roughly the same size, but with a higher GDP/capita, than NHL market Buffalo. So there are worse things than being placed in Tacoma temporarily, and that’s assuming no Seattle and Eastside market support. As a Seattleite, that’s a scenario I’m willing to accept. It beats losing out on a team to Portland.

    • RadioGuy

      The Tacoma Dome easily meets the required seating standards of the NHL and it’s certainly accessible enough from I-5. However, the sightines for hockey are horrible there because the rake of the seats is too gradual for people watching a game in which the action is centered on a floor-bound object. Basketball works there much better than hockey for that reason.
      More important, there are not nearly enough revenue-generating amenities like luxury boxes and club seating, and given the lack of a national TV contract on par with other major sports leagues, NHL teams have to rely more on money they bring in through home games.
      Given the choice, I’d take the Tacoma Dome over KeyArena as a temporary venue for a Seattle NHL team, but given the bigger picture, I’d take Quebec over Seattle for that same franchise even if the new arena gets built here. People can talk market size all they want but Phoenix is a larger market than Seattle. How’s that been working out for the NHL? In Quebec there would never be an unsold ticket, and you can’t say that for Phoenix or Seattle.

  • William

    Art, The Coyotes name is pronounced Ky Yo Tees. Please don’t do the Ky Yotes anymore. Thanks,

    A hockey person