The New Arena
Reclusive hedge-fund manager Chris Hansen went public today with a proposal to build a new arena housing an NHL and NBA team in south Seattle. In a letter to King County Executiye Dow Constantine and mayor Mike McGinn, Hansen states that the public investment would be limited to revenue-backed bonds, that all cost overruns and operating deficits would be covered by the private investor group that Hansen will lead. The facility would be built in SoDo, on a parcel already owned by Hansen. Nothing can move forward, however, without a tenant and a binding 30-year non-relocation clause.
The proposal would appear to meet the tests imposed by Initiative 91 , which prevents the city of Seattle from providing funding to any sports franchise unless the investment would return a profit. That measure passed in the midst of the furor over Clay Bennett’s purchase of the Seattle Supersonics and his “efforts” to get the state to build a new arena in Seattle (or Renton).
So, a bit over three years since the last new team moved into Sodo, the M’s may have some new neighbors. Does this help or hurt? First of all, let’s be clear that nothing’s finalized and that the city and county have to review the proposal while Hansen searches for some tenants. But say Hansen’s successful and the M’s get two new top-level sports franchises moving in on their doorstep – is this a good thing or a bad thing?
Three years ago, USS Mariner readers were open to the idea of the Sounders, a team whose season overlapped with baseball’s. The Sounders were an instant hit, drawing over 30,000 per game in 2009, and have reliably drawn over 36,000 since (their 2011 average of 38,000 in 2011 includes Kasey Keller’s last game which drew over 60,000). Meanwhile, the M’s dropped from 2.3 million fans in 2008 to 1.9 million fans in 2011. Obviously, the drop in M’s attendance has much more to do with the M’s posting a 101-loss team in 2010 and a 95-loss team in 2011 than any poaching by their neighbors. There’s no clear evidence that the Sounders success has hurt the M’s, despite the overlap. While two winter-sports franchises might seem to be even less likely to take fans away from the M’s in a zero-sum competition for a finite supply of sports dollars in the city.
On the other hand, it’s not really about casual fans attending a game or two more/less per year – it’s about businesses ponying up for luxury boxes and well-heeled fans paying for season tickets. It makes sense that some businesses may choose to purchase suites/boxes at the new arena in lieu of springing for Mariners tickets, though of course the M’s best attendance years occurred while the Sonics played a few miles north at Key Arena. From what we can tell, the state of the team matters a lot more than the existence of sporting substitutes in the NBA or NHL.
In fact, new teams in these leagues could end up helping the M’s. A package of an NBA, NHL and MLB team would exert a lot of leverage when negotiating a TV deal with ROOT sports or with Comcast. The option to create a local, team-owned sports network would interest the M’s (and the other teams) and would have to play in to any bid to renegotiate the current contract with ROOT. The existence of the Rockets must’ve helped the Houston Astros launch a new network that will carry the team’s games in 2013; it’s obviously got nothing to do with the success of the team. The YES Network (the most successful of the team-owned operations) broadcasts the NJ Nets as well as the Yankees, and Comcast’s SportsNet Bay Area broadcasts both the Giants and the Golden State Warriors games.
So now we wait; Sonics fans whose heart was ripped out by David Stern and Clay Bennett (just saying these names in certain company can provoke highly un-Seattle-like rage and spittle-inflected diatribes against everyone from Starbucks and Howard Schultz to certain sports radio personalities to the viability of the NBA itself) now take interested looks at the rosters of certain vulnerable franchises. People who wouldn’t know the offsides rule in hockey even with an Ed Hochuli-level explanation now opine on the inevitability of the Phoenix Coyotes moving north. Patrick Dubuque captures the tension of recently-aggrieved Seattle dans aggressively looking for weak franchises in a great post here. Anyone who’s railed against the NBA, its unsustainable business model and David Stern’s vampiric nature while simultaneously feeling nostalgic about Gary Payton/Shawn Kemp (hell, his son’s playing for UW)/Detlef Schempf knows what a weird 24-48 hours it’s been.
This could ultimately come to nothing, especially if Sacramento’s new stadium proposal is adopted, or if the city/county balks at committing its credit to a bond sale for pro sports. Nothing’s set in stone. But we know enough to say first that this deal makes the M’s deal with the state/stadium district look like highway robbery. Sure, that deal’s looked suspect for a while, but it’s nice to see some early evidence for those who’ve argued that stadium deals should be able to work for private firms/investors without massive, uncapped public subsidies. Second, the facility would be publicly owned, and the city/county would charge the tenants rent to repay bonds issued to construct the facility. Though the dollar amounts are obviously far different, this is basically the approach the City of Tacoma took when they issued bonds to renovate Cheney Stadium.
So what do you think? Would new tenants help the M’s or hurt corporate ticket sales? Are you excited about a “new” NBA team, or will you make good on your pledge never to watch the NBA again? Are you ecstatic about the possibility of an NHL franchise to get you through the baseball-less doldrums of winter, or do you associate hockey with lawlessness, cheap-shots and Strange Brew? Is Chris Hansen a civic savior, or is this not the right time to celebrate the titans of private equity, whatever they choose to spend their money on?