BY Art Thiel 06:30AM 02/21/2017

Thiel: Blacklisted? Lack of funds? Hansen says no

Developer Chris Hansen says he’s not been blacklisted by the NBA, nor will he be short of partners to complete his Sodo arena plan. But he would like the Port of Seattle to see his project as part of the solution.

Chris Hansen says the facts and projections used by the Port of Seattle to temporarily halt his arena project weren’t accurate. / 360 Architects

Second of two parts

Ever since Steve Ballmer bolted from their partnership in 2014 to buy the Los Angeles Clippers for a still-astonishing $2 billion, Chris Hansen and his plan for an arena that would bring back the NBA to Seattle has been dogged by two questions about his own status:

Does he have the resources to pull off purchasing a team as well as privately funding construction of a first-class arena?

Even if he does, will the NBA/NHL grant him a franchise, particularly after the dubious deeds following the NBA’s denial of relocating the Kings from Sacramento to Seattle?

So, during a one-on-one interview with me last week, the topics were fair game.

The notion of Hansen being blacklisted by the NBA has come up in my conversations with city officials, particularly after Ed Murray succeeded Mike McGinn, with whom Hansen struck a deal for an arena proposal in Sodo in 2012, as Seattle mayor.

Unsurprisingly, Hansen was adamant in his denial.

“Nothing could be further from the truth,” he said. “We’ve talked to plenty of owners. We’ve always had a good dialogue with (NBA commissioner) Adam Silver. He’s made public comments.

“Something worth considering is that all of us in our group (including brothers Peter and Erik Nordstrom and Seahawks QB Russell Wilson) want to bring the NBA back to Seattle. The easiest argument against (the blacklist claim) is, we would welcome in any new owner the NBA wants. None of us has insisted that he has to be a majority owner. We would never stand in the way of bringing the NBA back to Seattle.  (Majority ownership) is a second, third or fourth consideration among all of us.

“That whole (blacklist) issue is moot if we don’t have a place to play.”

Pro sports leagues vet potential owners fairly thoroughly before purchase, sometimes even before names surface publicly. If the investigations reveal a dubious history with, say, illegal gambling or organized crime, quiet ways are found to inform the subject, to avoid public embarrassment, that he would not qualify for ownership.

So the fact that Hansen paid a $50,000 fine in 2013 for attempting to meddle in the anti-arena campaign in Sacramento and is still talking to NBA officials suggests that he has not been dismissed from consideration. Particularly since he owned up to the mistake and apologized.

But it is also true that while costs for sports teams and construction continue to rise, Hansen’s personal fortunes have taken a knock, according to finance-industry stories such as this one in Fortune about about his hedge-fund operations.

Leagues can and often have denied a potential owner on the basis of wealth insufficient to own and operate a franchise successfully.

Asked if he had the required resources, Hansen said, “There are very few people in the world right now who can write a billion-dollar-plus check to own a pro sports franchise and arena. That’s why consortiums come together. We will likely have additional partners.

“If a team comes up for auction, and someone wants to pay more than we do (for a team in Seattle), we will gladly partner with them, and give them a place to play. We won’t put our individual ownership aspirations above getting a team.”

Hansen cited franchise sales involving multiple bidders for the Milwaukee Bucks, Los Angeles Dodgers and Sacramento Kings as examples of groups of wealthies who form late.

“Whenever there’s been an auction, there’s never been a shortage of potential partners who show up,” he said. “They come together at the very last second, swapping people in and out. Our job is not to figure out those details now.

“That should be among the least of the city’s concerns.”

What about the virtue in finding a large investor now and identifying him publicly in order to allay skepticism?

The proposed arena’s location in Sodo will not be disrupting residental neighborhoods. / King County

“If I asked you to buy a house, but I didn’t tell you where it was, or how much it cost, or when you could buy it, would you do it?” Hansen said. “Partners show up when there’s something to buy. It tackles a real special person to show up and undergo the scrutiny if he doesn’t know all those things.”

Hansen also said he seeks partners who have a civic conscience about Seattle.

“Our group is doing this for civic reasons,” Hansen said. “Those are the kind of partners we’re looking for, including Russell. Civically minded. They’re not just focused on (return on investment).

“I’m looking for someone who says, ‘I’m going to put my money in now, and the price is going to be what it’s going to be. I’m willing to be patient until it gets done.’”

With those kind of parameters, Hansen is probably looking at a small pool of qualified investors. Which makes his revised Sodo arena proposal that eliminates a previous request for some public funding help, an even riskier proposition.

Why make the investment more difficult?

Hansen cited two reasons: The discomfort electeds and taxpayers had with contributing to another sports palace, and more favorable market conditions than in 2012 for his proposal at $490 million.

“There was under-the-surface concern by everybody in politics,” he said, “and probably all taxpayers in general, that civic involvement in an arena makes people more uncomfortable. Even though I strongly believe that the original deal would have resulted in incremental taxes going to the city, it’s complicated. People hear (public funding) and turn off.

“So we can we use this opportunity to reclaim the moral high ground, if you will — something that is seen as an example of doing something right for any city. That’s exciting.”

By way of comparison, the newest NBA arena, the Golden 1 Center in Sacramento, had a $255 million public subsidy for an arena that was budgeted to cost $447 million when the city council approved construction in 2013. The building opened to rave reviews in September at a cost of $588.2 million, the overruns covered by ownership.

Current and potential partners of Hansen have to understand the risk is all private. But that kind of prospect is where Hansen makes a living in his day job.

“Any project depends on two things: The revenues and profitability of doing business — in this case, owning a team and arena — and the ability to finance that, and the cost of that financing,” he said. “One thing that’s very clear, partially reflected in the costs of an NBA team, is that the revenues and (financial) outlook for NBA franchises have improved from 2011 to 2017.

“We have a new TV contract and a new collective bargaining agreement that contributes to stability — we know what expenses will look like the next five-six years — that means a greater ability to service the financing costs.”

The market has also changed for lenders.

“In 2011, we were just two years removed from the financial crisis,” he said. “The capital markets weren’t looking as favorably upon arenas and NBA teams. It wasn’t just sports; a lot of institutions were burned in large projects. That has really changed.”

If Hansen has grown comfortable with the NBA’s health and his degree of risk, he still remains irked at his project’s primary opponent, the Port of Seattle.

Despite Hansen’s improved proposal and better market conditions, his project still sits at the doorstep of the port, whose pleadings before the city council about potential job losses from the arena’s increase in traffic probably was decisive in the 5-4 vote in May that denied the vacation of Occidental Avenue.

Hansen believes that the port had its way based on facts about its container business and Sodo traffic patterns that weren’t accurate.

“It’s been strange to me that people have not held the port accountable for the invalid facts and projections that they have put forward over the last three or four years,” he said. “If you look at the original council hearings for the projections they made for container traffic for (terminal 46), and opening up second shifts, they’ve missed their projections by such a wide mark.

“It’s either amusing, or like someone is not very good at their job. When you claim container traffic is growing at 30 percent a year for four or five years and it’s going to put a huge traffic strain on the area . . . We own all these buildings around here and I can tell you as a landlord, there’s very minimal traffic on any of the streets after 6 p.m. Not just freight. Any traffic, period.”

Rather than be a source of congestion, Hansen thinks his project can help. He cited one example: Under his arena plan, traffic exiting the Mariners garage (which is used by the Seahawks as well as the  general public on non-game days) could be routed behind the arena on its east side to Holgate Street, rather than onto Massachusetts Street and First Avenue South, where cars must work through pedestrian traffic.

“We think we can help a lot of things, and are happy to do that,” he said. “But how can you improve freight mobility at 7 or 8 p.m., when there’s no freight? Some of this is just posturing to defend a point of view that is not fact-based analysis.”

If the Lander Street overpass gets fully funded – it has commitments of $100 million of the $140 million cost, with another $20 million potentially coming from the proceeds of the sale of Occidental to Hansen — the port will have a significant solution to its long-time Sodo bottleneck. If the port recognizes the opportunity, the situation could be win-win. Hansen has no plan to hold a grudge.

“When we get our arena plan approved, we want to be good neighbors to everyone there,” her said. “We think there’s more to be done with mass transportation and additional parking.

“But there hasn’t been much discussion to find a solution. It’s just, ‘We’re opposed.’”

For a city that had no good choices in 2008 when it came to keeping the Sonics, 2017 appears to have brought three bidders with privately funded solutions for a premier arena. Upgrading Seattle Center is always a civic priority; that doesn’t create a mandate to screw up a grander opportunity.

Part one: Why Hansen thinks retrofitted KeyArena won’t work

 


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YourThoughts

  • Topcatone

    Perhaps we are working the wrong end. Can’t we throw out the current obstinate Port officials who are blocking this for apparently no good reason (other than perhaps some payoff is required to them)? No city has ever had an offer like Hansen An amazing gift horse. Take advantage quickly.

    • art thiel

      Well, the port CEO apparently threw himself out with his own misdeeds.

      No one needs to lose a job over this. I think Hansen’s request is fair: Be honest with the facts.

      In my view, the arena is not the threat that the port makes it out to be.

      • Topcatone

        Great Hansen interview Art. Can you interview appropproriate Port people as well, perhaps politely refute their calculations/issues with job loss, transportation issues etc and WHAT fixes would bring them on board? I mean, build them a tunnel for the trucks if necessary. Pay them off if necessary. And get them to not campaign against/fund YES voters on the City Council.

        • art thiel

          Always glad to talk to port folks. I know sports fans love to demonize the port, but most people there are smart and dedicated, who naturally wanting to protect their part of the city’s turf/shoreline.

  • Beckett Tallmadge

    I swear Chris Hansen should be nominated for sainthood. Having to deal with the Seattle process is enough to drive anyone crazy. The city vacates literally hundreds of streets a year with no issues, but can’t vacate this worthless alley that would benefit the entire Pacific Northwest. The port, the mayor, the times all should be ashamed of themselves with how they have tried to discredit or kill this project. It has been so frustrating watching this entire situation play out over the last nine years since the sonics left.

    • art thiel

      Tim Burgess said in council chambers last year that the city had vacated 32 streets at the port’s request.

  • Jon

    Hansen’s plan, as it has evolved, is a no-brainer. I wish the M’s would now get on board, so the Port’s “issues” would be isolated. We know there is an unholy alliance between the Port’s supporters and those who believe KeyArena is critical to Seattle Center’s viability. The M’s only complicate matters by supporting the Port to mask their own insecurities about having additional competition in SoDo.

    • art thiel

      The M’s can help, and new owner John Stanton was once a part-owner of the Sonics under Howard Schultz, so he’s not tone-deaf. Perhaps if there’s a moment when the M’s can cover themselves with glory using magnaminity . . .

    • Playhouse

      It sounds like the M’s have softened their opposition. They are mainly concerned with access to the parking garage, which the arena group has already address. I’m sure competition is always a concern, but it’ll be there wherever the team is in the city.

  • Paul Harmening

    I’ve had my differences with you lately Art, primarily in the arena of some attention given to a few Seahawk players personal political opinions and as such your opinion as to said issue. However, you allow the reader to contribute our positions to your posts as well. That’s America. We should all be thankful we still get to do this. And, to you for encouraging that.

    My comment today is to offer a thumbs up for another journalism job well done in these continuing articles concerning Hanson, the NBA and of course that dirty word ‘politics’ which is, well, necessary in this case since it is the city and county who will either once again detour the Sonics pathway back home, or, put personal political gains aside and allow the gates to open for the green and gold to swish our nets once again.

    I only wish that journalism in this great country, as a whole, would still be following your example of a job well done as it once was, it seems, so long ago when the Walter Cronkites were still around. In your case thought, I do believe Royal Brougham is smiling.

    • art thiel

      I appreciate your gratitude for the forum, Paul. Lots of media publications have banned comments or put them in a separate file. I understand the reasons, but so far in our polarized political word the rival points of view on SPNW have rarely veered to the insult or to racism/misogyny. I will ban those who do, but I want to keep discussions going as long as possible in the increasingly fraught climate.

      If you and others want to back up your appreciation, you can help keep independent journalism alive by contributing via PayPal on the site link provided, or by sending a check to SPNW at POB 61381, Seattle 98141.

      The need for quality journalism is greater than ever, but the business model is broken. The community that wants honest reporting and opinion needs to help fund it.

      End of pitch. Back to work.

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  • Kirkland

    On the one hand, if Donald Sterling hadn’t made that racist phone call and been forced to sell the Clippers, I wonder if Steve Ballmer still being part of Hansen’s group would’ve helped with the street vote last May.

    On the other hand, Hansen hurt his cause by not showing up at the vote. I know he’s busy with his hedge fund, but no appearance at important meetings for such a vital project wasn’t a good look, and one easily exploited by opponents.

    • Playhouse

      Not showing up to the vote had less effect than the fact that the Port was in the council’s ear pretty much every week on the issue. It’s the behind-the-scenes communication that needs to be stronger ahead of the next vote.

      • art thiel

        Hansen played that game too, but the port has a long and influential history with all mayors and councils. The port doesn’t always win, but the arena vote was about a luxury, not basic services. The no vote was easier.

      • Jamo57

        All Hansen needs to do is swing one vote. Hopefully the clarification on Occidental not being vacated until a team is secured will be enough for that one vote. Or the decision not to use the bonding authority of the city to help borrow capital at a lower interest rate.

    • art thiel

      I’ve thought about Sterling’s wackiness numerous times. But it only makes Hansen’s point: Since a city can never tell what sort of nonsense will force an owner to move/sell, best be ready when it happens.

      Regarding Hansen, yes, I think he erred in not showing up to counter the sad eyes of the port workers who were always present in front of council.

    • Husky73

      Now that Ballmer has watched his team trash talk, sleep walk and stagger through a season and a half (as most of the NBA does), I wonder if he has had any second thoughts on his purchase as not only an investment but as a filler of his time?

      • Kirkland

        He’s waited for years to own an NBA team. A bad season-and-a-half won’t faze a guy as passionate as he is.

        • art thiel

          Kirkland is right, Husky. Ballmer cares about winning, but he cares even more about being an NBA big shot, the richest guy in the league who can do anything he wants. Wouldn’t you want to be him for a day?

          • Husky73

            Let me think about that for a moment…no.

          • art thiel

            For a day, not a lifetime.

          • Husky73

            I want to be Kate Upton’s masseuse. For a lifetime.

  • Husky73

    After watching the open gym pick-up game that was the NBA All Star Game (the Pro Bowl is worse)….I can again honestly say that I do not miss the NBA one iota. I was a HUGE Sonics fan in the days of Lenny, Bob Rule, Detlef, Sikma and so many others. It was a great league of Wilt, Russell, Kareem, West, Baylor, Pistol Pete, Jordan, Bird, Magic…but, now, the NBA is just awful on so many levels. I do not understand Hansen’s fascination with the NBA.

    • art thiel

      Well, there’s that.

      I’m not defending the NBA here, but is it not a fact that all the sports we watched when we were younger seemed more wondrous, splendid and human that the ones we watch now? Human nature is wicked cruel.

      • Husky73

        That is probably true. Good response…and two very well researched and written articles. Thank you.

        • art thiel

          Thanks.

      • Gary

        It seems that way because it was!
        We are still just leverage, the NBA doesn’t need us, smaller markets without competition is where they will want to be. After the stench they left here why would you want them back?
        No arena is a hindrance, the promise of one? that is a lot of blue sky.

  • WestCoastBias79

    It’s encouraging to see that Hanson has emerged from under his rock. I understand he has a job and a family, so I don’t hold it against him. The opposition to this has been baffling, from the Seattle Times to the current mayor, it seems those against this are on a relentless assault against logic and very apparent facts. There’s really no reason that the new arena and KeyArena cannot coexist. With hockey and basketball, there will be plenty of dates available for a premium concert venue in KeyArena. The only loser would be the Tacoma Dome. Lower Queen Anne would be hell if they tried to shoehorn two league schedules and concerts into that area. Think the port doesn’t want traffic, wait until the neighbors of Seattle Center weigh in…

    Also, it would seem logical that the port would use this opportunity to get a piece of the redevelopment, instead of just playing defense to maintain a sub-optimal status quo.

    Watching this unfold is like watching a bunch of blindfolded idiots in a field of upturned rakes trying to navigate while refusing outside help and handing each other wads of cash.

    • art thiel

      Hansen’s answers to two questions about blacklisting and absence of partners were responses to myths held by the council. The port’s opposition I’ve explained, and the Times editorials are based on doing the bidding of the Mariners.

      A two-state solution grows more plausible, but arenas in competition with one another in the same city will drive prices up for the biggest events.

  • 1coolguy

    Seattle is the only city on earth that looks a gift horse in the mouth and turns away. What a collection of fools, after all, what is the downside? A private person builds a structure that loses money? That remote possibility is a government calling winners and losers, which is not the governments’ job.
    The building will pay MORE real estate taxes to the city than the property as is and it and will definitely pay MORE sales taxes, which are two results the city SHOULD desire and advocate for.
    The Seattle mayors office = No Leadership, a long term affliction.

    • art thiel

      The downside is it pisses off the port, which contributes to campaign and creates jobs for voters.

      As far as economic benefits, Hansen will take all the risk of arena ops, but in exchange he’s going to want, and likely will receive, many tax breaks. No arena/stadium anywhere is cash-positive to its city. With the exception, ironically, of the Key, which is profitable only because the city let the Sonics out of their lease early for $45M, which paid off remaining debt.

  • Lee Stamper

    the real issue is with Seattle getting another NBA team is keeping it out of the handling of the Seattle City Council. the NBA does not want a team that is controlled by the rude council.

  • LarryLurex70

    Still hoping like hell that isn’t the final design.