BY Art Thiel 04:35PM 05/11/2017

Thiel: Hansen fires back at KeyArena bidders

Chris Hansen Thursday offered a detailed comparison between his project and two bidders competing to remake KeyArena. Primary point: Team owners may not like someone else owning and operating the arena.

Chris Hansen’s group that is seeking to build an arena in Sodo fired back at rival bidders seeking to remodel KeyArena.

Arena shots fired.

On its sonicsrena.com site Thursday, Chris Hansen’s group offered a detailed comparison between its Sodo project and the two bidders seeking to remodel KeyArena. The “competitive analysis” concludes Sodo is better for the city because of design, transportation, more tax-revenue generation and lower risk, and likely more attractive to team owners because it puts sports ahead of the concert business.

It also suggests that the inability to own or run the building at Seattle Center will cause team owners to look outside the city, perhaps to Bellevue, for a friendlier deal in the marketplace that doesn’t include the third-party operations of either bidder, Oak View Group or Seattle Partners (Anschutz Entertainment Group).

A music-first operation, the report contends, can limit the sports calendar, as well as operations priorities and the sharing of sponsorships, premium seating and parking.

Under a headline, “Objective,” the report stated:

. . . Our objective here is first and foremost civic in nature. Our partnership has funded all of the costs to date from our personal capacities based on our strong commitment to bring the NBA and NHL to Seattle. Our primary motivation is not profits, the music business, or enhancing a corporate network of arenas. It is returning pro sports to Seattle. We think our commitment and goals are fundamentally different from SP and OVG.

The Hansen group claims that after an arena in Sodo is opened, it will assist in helping keep KeyArena financially viable as a second-tier concert/sports venue, one of the biggest concerns for city politicians seeking to keep Seattle Center in good business shape.

“We also stand ready to assist the city in finding an optimal solution that protects the city financially as it relates to KeyArena, just as we were under the MOU,” the report said.

It also contends that the construction timeline by both bidders, given the four years it took Sodo to get all city and state regulatory approvals, is unrealistic, saying five to seven years  from 2017 is more likely — and means being without a civic arena in Seattle from the time of demolition until re-opening.

The Hansen counterpoint was offered just ahead of an open house that was to take place Thursday on the Seattle Center grounds (KEXP radio) featuring presentations by both bidders that would allow the public to see displays and ask questions.

City officials and a citizen advisory panel are reviewing the proposals with a plan to choose one by the end of June. Hansen’s request to re-consider his plan, which lost a year ago a vote by the City Council to vacate a street his project needed, is unlikely to be heard before September.

The analysis estimates that upfront taxes from the Sodo construction will produce a lump sum of $11 million to $12 million to the the city, which would also receive annual tax revenues from $4 million to $5 million from the arena. The Key bidders, in various ways, have asked that they keep nearly all building revenues in order to pay down construction debt and fund maintenance and improvements.

The analysis calls out SP for its controversial request for $250 million in municipal bonds to help lower construction costs, when the city’s request for proposals specifically asked that the city’s contributions be “minimal.” The Hansen group made a similar request in its 2012 proposal, which it has abandoned in a revised pitch for an all-private arena now back in the hands of city officials.

But the analysis also claims that Oak View, which did not ask for bond help, nevertheless asked for a redirection of tax revenues, essentially a public subsidy, that total as much  $200 million. OVG CEO Tim Leiweke has argued that the tax revenues generated would not otherwise be available to the city if the Key wasn’t massively upgraded.

One example of an OVG subsidy is a proposed 850-car garage to alleviate the event-day crush in the lower Queen Anne neighborhood.

The project is not part of its $564 million bid. OVG has said it hopes to get funding help from the Port of Seattle. A spokesman for the port denied having talks with either bidder.

If it were built, the analysis estimated the cost of the garage at $30 million, producing annual revenues of more than $3 million. OVG asked for operational responsibility for all three existing Seattle Center garages. The report said the three garages produce more than $4 million in revenues for the Seattle Center budget. A revenue-sharing agreement for the garages was proposed in the bid, but offered no details.

The report insisted there would be no similar subsidies in the Sodo plan, with the exception of a waiver of admissions taxes on tickets that has been granted to the Seahawks and Mariners.

“We will privately fund all entitlement, construction, maintenance, operations and capital improvements associated with our arena,” the report said. “This is vastly different from both the SP and OVG proposals.”

Regarding design, the report says the Sodo project’s start from scratch, rather than having to deal with the constraints of KeyArena’s smaller footprint and soon-to-be-landmarked roof, will create roomier entries, concourses and seating, and better sightlines.

It claims the unique “Sonics rings” of seating tiers will provide 2,000 low-priced seats. And first-of-a-kind “gopher” suites eight rows up from the basketball floor will provide better premium seating than the options from Key bidders.

The Hansen camp called out OVG and SP regarding an exclusivity requirement, meaning that the city would agree to not permit construction of a competing arena.

“This is a critical point of differentiation,” the report said. “Both SP and OVG appear intent on blocking our right to build a competing arena, while we have asked for no such consideration. We are fine with Seattle being a two-arena market and the resulting competition . . . competition is good and fair.”

 

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YourThoughts

  • 3 Lions

    Key Arena is the wrong location. It’s time has come and gone. Who really cares about the roof? It is valuable real estate that will be redeveloped no matter what. The city can barely run itself never mind dictate how & where the NBA or NHL will do business.

    • art thiel

      Since Seattle Center is the town living room, lots of people care about lots of things there, including the roof. And it’s all city property, so politicians are disinclined to sell off.

      • Steed

        Right. But they were happy to give a big piece of it to Chihuly for a big glass museum/monument to Dale Chihuly.

        • art thiel

          So now, they don’t want to make a second mistake.

    • Howard Wells

      tear down the Eiffel Tower and the Acropolis because they can be made into newer and better purposes serving the people TODAY!

      • Steed

        The Acropolis is in no danger. The biggest threat to it was after the Athenians lost the Peloponnesian war in 404 BC and the Thebians and Corinthians wanted the city to be destroyed, but the lacedaemonians (spartans) refused.

        • art thiel

          Showoff.

          You left out WWII.

      • art thiel

        Eiffel Tower. Acropolis. KeyArena.

        Which one is unlike the other two?.

  • Beckett Tallmadge

    Hansen needs to win the PR battle. Sodo is clearly the best location. We just need the Seattle process to understand what all of the Fanbase already understands. They can take the $300-$400 million of tax revenue from the Sodo arena and dump it all into key Arena if they want. Two arenas for the price of none.

    • art thiel

      PR has little to do with it. The bids of SP and OVG have to provide substantive money details of how their projects are sustainable.

  • jafabian

    Much ado about nothing, IMO. Even if the city makes Key Arena a facility on par with the Staples Center it will still be a city owned facility. If Hansen is named owner of a new NBA franchise to be in Seattle he won’t be obligated to play at the Key. The question remains will the NBA let him into their circle of owners? And can he get the land necessary to build his own arena?

    • WestCoastBias79

      Other than the small piece of Occidental the city is stonewalling him with, he has the land. Also, both KeyArena proposals have non-competes built in, that means no other arena in Seattle.

      The comparisons between Seattle Center and LA Live/Staples Center always omits the following fact–Staples Center sits at the junction between LA’s biggest east/west and north/south freeways, and has mass transit access, like SoDo.

      • art thiel

        Staples is a one-off, not comparable to any other because of LA Live and the host of corporations who are party to the sun-bleached carnival.

    • art thiel

      He already owns $125M worth of Sodo property. And no, the NBA doesn’t name owners; it lets them bid for expansion franchises and bid to buy distressed ones. Neither kind are available.

  • Splifton

    Any word on how much OVG/AEG would get in tax breaks if former Port Commissioner Gael Tarleton’s bill (HB1114) gets passed? It seemed like Hansen’s was silent on this point…

    • art thiel

      Proposal has just surfaced. Don’t know yet.

  • 1coolguy

    It appears in terms of revenue to the city, infrastructure additions to the city, serving the fans (who are also taxpayers), providing the best game day experience which includes transportation options, SODO is the obvious choice, if the Port can get on board.
    For a committee to take much longer than a few weeks to make a decision, they should all be replaced. Build SODO and if a private company wants to run Key and perhaps re-hab the old lady, let them do it.

    • art thiel

      The committee is made up of volunteers, so go light.

      Any tie gets broken by the council’s desire to fix the Center and please the port.

      • Howard Wells

        no one “volunteers” to serve on a committee without having SOME interest in the outcome. The “volunteers” know what they want and how they will be reacted to… Especially on a non essential committee concerning a sport stadium. Lots of passion not a lot of essential needs. Going “light” is counter to the democratic process..ok maybe not but I will confuse even myself by saying screw the Seattle Process and let’s get something done to bring back my team.

        • art thiel

          The volunteers have to try to be impartial because they don’t want to damage their reputations if they endorse the proposal that turns out to be way too expensive, ill-designed or poorly thought out.

  • Kirkland

    Hansen should’ve been this aggressive last spring before the Occidental vote, instead of letting the opposition carry the narrative. Good to see him doing this to the AEG and OVG proposals, which are showing weaknesses.

    • art thiel

      Lotsa would-coulda-shoulda for Hansen, but he needs a partner a step below Ballmer-sized to help get confidence among electeds for his deal.

      • Steed

        He doesn’t need money from a Ballmer to go ahead and build his arena. If elected officials just need to be intimidated by some high profile local uber rich guy before they will allow a SODO arena, they are a pretty sad bunch.

        • art thiel

          Actually, he does need the money. Building the arena, plus the expansion fee(s) is a huge financial undertaking, and a Ballmer lite would ease the city’s apprehensions.

  • Tom G.

    The line that Hansen delivered where he said “if OVG or AEG’s proposals are granted the exclusive right to build an arena in Seattle it could force prospective NBA/NHL owners to look outside the City to seek a better share of arena economics” was actually kind of fascinating to me.

    Who knows how likely a two-building scenario is, but that sounded like foreshadowing on Hansen’s part as if to say that he or someone else (maybe one more try for Ray Bartoszek in Tukwila??) would try and build a building outside of Seattle if the City decided they were “all in” on KeyArena and they were going to deny Hansen the street vacation again.

    I’m trying to think how it’d work financially to have two buildings relatively close to each other though with one in Seattle Center for larger concerts (AEG/Oak View) and the other in the suburbs for professional sports.

    I personally wouldn’t mind seeing two bigger buildings if that’s what it ultimately took to get our teams back and placate everyone; but then again, I’m not paying $500 million for an arena either….

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    • art thiel

      Hansen thinks two buildings will work in Seattle — his for sports, Key for most concerts. I’m skeptical, but he knows the landscape better than me. The Bellevue idea has risen and fallen multiple times, which doesn’t mean it can’t happen, especially with all the market growth. But he tossed it out to scare Murray, who wants a legacy building in his town.

      • The SoDo Arena would probably get all the big concerts and KeyArena would probably be better suited as a venue to help serve the festivals that go on at Seattle Center now. Seattle probably can’t support two major concert venues, but if it was managed by STG I could see that working.

        • Tom G.

          IDK if I’m thinking in terms of 2 major concert venues in this particular discussion though.

          I’m thinking more along the lines of Key being THE concert venue in town while Tukwila or Bellevue is the home of professional sports.

        • Tom G.

          I just wonder more than anything what percentage of that statement is Hansen just trying to saber rattle and what percentage is bourn out of realistic possibility (even if it’s not him personally going to Bellevue or Tukwila).

          • art thiel

            Hansen is doing some saber-rattling but it has been true that some teams don’t like playing in buildings they neither own nor operate.

          • Tom G.

            Hence why I wish the City wouldn’t turn Key into Sprint Center II.

            Don’t turn it into a colossus of a building that can’t attract actual TEAMS because there inevitably isn’t going to be enough power and money to go around between the City and OVG/AEG.

            If you want to do something with Key so badly, turn it into what they turned the old Forum in LA into. Make Key a plush ≈17K seat music-only venue and then set aside SODO as the arena that’s owned and run by the actual pro sports teams.

          • RadioGuy

            BINGO! When you control the facility you play in, you control almost everything about it (playing dates included). I can’t imagine an owner in any sport who’d rather be a tenant than a landlord.

            Still, I think the fix is in and that the City will go with a Coliseum renovation because A) they own both the building and the land it sits on, and B) they like being in control, too. I’m not a Hansen fan, but he’s about to get the royal shaft.

  • Has anyone asked how much it will cost the city if they just shut down KeyArena?

    • art thiel

      As I wrote, the Key is generating about a million-dollar surplus over the last several years. But boarding up a building that big on Center grounds will be something no Seattle mayor will want.

  • Steed

    The Hansen proposal is all about bringing the NBA (and maybe the NHL) to Seattle. The two Key Arena proposals are not about that at all. But they are happy to pretend that their plans for the Key would somehow help in bringing pro sports back, if it helps them get support for their proposals.

    • Tom G.

      That’s how I’m feeling about it too.

      And that’s all independent of whatever feelings I have about Chris Hansen.

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    • art thiel

      Both KeyArena bidders know the winner has the inside track with the city, and subsequently with the NHL. Both know that Hansen has marks against him. Both know, and the leagues know, the arena in Seattle will be litigated by some citizens’ groups. Until construction is under way, there’s no point in waiting on a team whose first season may be six years away.

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  • Manjinder Moore

    I still think the street vacation will make it to vote in September; the mayor was quick to throw the SCC under the bus when last year’s vote failed to pass and saying things like the no vote has setback the NHL/NBA to Seattle for 5 years etc – and now he’s gone the other way. Murray doesn’t have a vote on the street vacation and I do believe the 4 CMs who voted yes (all male) last May, will vote YES again and I believe one of the female CMs will vote YES this time. I wish Hansen had gone private funds from the beginning but his biggest roadblock was probably the NBA first clause. The Sodo deal is clearly the better one. I just don’t see Arena Co. group sitting back and letting these out-of-town suits come in and shutting down their project whether directly or indirectly after a 6 year Seattle process for them. I do believe Tukwila or Bellevue is being considered as a back-up. It was Hansen who originally brought in Ray Bartoszek and Anthony Lanza as potential NHL partners, especially when the Glendale vote in 2013 almost landed the Coyotes in Seattle. With a no vote in Sodo, it does free up over 100M in capital costs that no longer have to be spent in Sodo and can go towards a new arena outside city limits. With today’s announcement of the Storm getting a new deal at the Key which includes temp relocation penalities, things just got more interesting. I think 17,100 seats is a bit too small for NHL – Seattle is not Winnipeg.