Reality of “no team owner $$ and no arena = no NHL” hits Geoff Baker

 Finance  Comments Off on Reality of “no team owner $$ and no arena = no NHL” hits Geoff Baker
Apr 242015
 

Geoff Baker of the Seattle Times has many, many pieces where he pines for the NHL to grace Seattle.  He stirs up passions with stories of the NHL leaders meeting with rich guys who drop hints of Seattle, Bellevue, or Tukwilla sites for an arena.  Eventually, reality comes crashing in, as in today’s piece from a AP Sports Editors meeting.  Nobody with as deep pockets as Ballmer is rumored for the NHL in Seattle, and without an NBA team committing both city and private money to an arena, any NHL team would need to throw in big money.

NHL commissioner Gary Bettman made it clear Friday that Seattle needs an arena plan and financing in place before the league even considers expanding there.

“From a distance, it won’t warrant — if it does at all — serious consideration until there’s a realistic expectation that there’s going to be an arena there,’’ Bettman said. “You’ve got your approvals, you’ve got your financing — you’re ready to go. You’re basically saying, ‘Listen, if we get a team, we’re committed to and are ready to break ground, because this building can be a reality.’ ’’

Why, yes, for a league with many teams on shaky financials, it probably doesn’t make sense to expand to Seattle until a gift arena suddenly appears.  Would you like to look at the KeyArena, because the city council would love to show you around and could cut a nice deal ?

NHL Commissioner Bettman – SoDo is A No Go (for forseeable future)

 MOU, Other Arenas, PR Campaign  Comments Off on NHL Commissioner Bettman – SoDo is A No Go (for forseeable future)
Apr 252014
 

Bettman backs off from the talk of Seattle being an inevitable for the NHL.  Per the Seattle Times:

“Until there is some better certainty about a building and its availability to an NHL team,” Bettman said, “there’s really not a whole lot of point in even going further in the thought process.”

Others involved in NHL to Seattle rumors are similarly stymied:

With Ballmer and Hansen out of the hockey ownership equation, the only known candidate interested in downtown Seattle is New York investment banker Ray Bartoszek — who had a deal to move the Phoenix Coyotes here last summer in the event their new ownership deal in Arizona fell through. Once the Coyotes secured a deal to stay in Arizona last July, Bartoszek began exploring options for a Seattle expansion team and playing in a Sodo arena built by Ballmer and Hansen.  But in an interview Wednesday at his office in Greenwich, Conn., Bartoszek admitted he doesn’t see much hope of a Sodo deal happening anymore.  Bartoszek won’t rule out Sodo completely, but is exploring other options.  “We’re at the point now where somebody will have to get creative to make this happen,” he said.  One option Bartoszek began looking into this week was a major KeyArena overhaul into a bigger, hockey-only venue. Bartoszek has ruled out Bellevue as an arena site — even though some investors are exploring the possibility of building there.

So, with the NHL mum, I guess that just leaves people to salivate over the Bucks having their deal fall apart.  How noble.

King County Council Wants to Modify MOU Some More

 Finance, MOU  Comments Off on King County Council Wants to Modify MOU Some More
Oct 022012
 

This is what you get when the County and their minor financial stake in the arena decides to try to “lead”.  Confusion and more amendments.

Julia Patterson said today that she plans to introduce an amendment to the proposed arena agreement that would stipulate that requests for state and federal funding for transportation projects to improve freight mobility around the arena not take money away from other transportation projects that have been waiting for funding for years, even decades.

Councilmember Patterson wants to make sure her pet project in SR509 doesn’t get “Lander Street Overpass-ed” due to actually trying to improve the SoDo area where the arena is built.  As $40M isn’t enough to do any significant projects on its own I think Julia needs to recognize actually living up to transportation improvement commitments will require priority re-evaluation and she might be showing that the SoDo Transportation Improvement Fund decoy is faulty just a bit too soon.

PubliCola makes a point of mentioning the Port finding their pockets a little empty on transportation funding.  If they’re concerned about future business operations and have already committed to putting 200M into the viaduct project, I can understand there they’re coming from.  The Port of Seattle does receive a share of property tax collections via a levy, but they’ve been paring that back in recent years and seem to indicate further reductions in taxpayer subsidy are being sought out.

 

So, just a reminder…  if King County Amends the MOU then the amended MOU needs to go back to the City Council for a full vote, again.

 

ILWU #19 Letter to Seattle City Council

 MOU, Property  Comments Off on ILWU #19 Letter to Seattle City Council
Aug 222012
 

As reported by Save Our SoDo Jobs, the ILWU #19 has sent a letter to the Seattle City Council asking for further consideration of a number of alternate sites and object to the reactionary position they’re being forced into.  It also acknowledges that shipping companies leasing Pier 46 are weighing the arena proposal into their lease negotiations.

Download ILWU #19 Letter

Most Recent NBA Arenas Correlate With Economic Decline of $2,430 per capita

 Finance, Other Arenas  Comments Off on Most Recent NBA Arenas Correlate With Economic Decline of $2,430 per capita
Aug 092012
 

Today FieldOfSchemes pointed out a recent study of the economic impact of NBA arenas on cities.  I read through the recently publicized Geoffery Propheter study of basketball arenas and correlations with the economy of the cities they’re built in.  If you’re at a really nice library system this link will take you to the full text, which is pretty clear and reads better than any summaries I’ve seen.  It’s also worth noting that there is an error in the conclusions section related to which periods are being referred to which I’ve eliminated from the quotes (and supplemented with the “new franchise” numbers reported in the paper).

The Propheter study “Are Basketball Areanas Catalysts of Economic Development?” worked to expand and improve upon some earlier studies of economic impacts (Baade and Coates are common enough).  Propheter desired to account for arena locations being downtown or in rural areas, account for NBA only or NBA+NHL usage, and separate the NBA arena factors from the MLB stadia that dominated earlier studies.  Propheter develops models to examine three main questions :

  1. is there an economic impact from basketball arenas with these rural/NHL factors added in, from 1979-2009 ?
  2. does the arrival of a new basketball arena or franchise, from 1995-2009, have broad economic impact if the city has no other professional sports teams AKA “novelty effect” ?
  3. is there an economic impact from basketball arenas during specific timeframes that may differ depending on the overall national economy at differing times (1988-1994, 1995-2000, and 2001-2009) ?

FYI – Seattle, Tacoma, and Bellevue are joined as a Metropolitan Statistical Area (MSA)

1 –  Propheter’s model agrees with earlier studies which found a 0.7% decrease in the local economy from 1979-2009 built arenas, but the impact is not statistically significant

2 –

After controlling for subregional economic strength, I found that arenas built in basketball-only cities during 1995–2009 …  had positive impacts on real MSA per capita income. More precisely, the addition of an arena [or entirely new franchise] increased per capita income by about $600 and [$1,471], respectivelyIn multisport cities during the same period, no statistical conclusion could be drawn about arenas’ impacts.

Basketball-only cities benefit pretty well, particularly with a new franchise.  The novelty factor is big enough at $600 for the arena or $1,471 if it’s a new franchise to the area.  The Hornets and then the Sonics/Thunder were a huge draw compared to OKC tractor pulls at the Ford Center.  In cities with other established professional sports there is no statistical correlation with per capita income.  The “novelty effect” does not apply to cities with established NFL and MLB franchises.

3 –

 After controlling for differences in SMA economic strength, an arena [built in 1995-2000] leads to an increase of 4.8% in real per capita income, or $1,438 as estimated at the mean.

After controlling for economic strength, the impact of an arena [built in 2001-2009] is negative and is significant at the 96% level; each facility is associated with a real per capita income decline of $2,430. …  Contrary to previous research, then, newer and more expensive facilities with greater amenities do not boost regional economic development.  Unfortunately, there are not enough observations to test if the newest facilities’ negative impact varies across single-sport and multiple-sport cities.

The financing of arenas has changed over time.  The period from 1988-1994 (Chicago Bulls domination?) showed no effect in local economies.  From 1995-2000 the arenas correlate to a positive boost to the local economies of around $1,438 per capita.  The latest financing models and costs for arenas built during 2001-2009 correlate with a decline in per capita income of $2,430.  As there aren’t enough data points to make conclusions about multi-sport cities we can surmise that (based on the findings of question 2) the $2,430 loss would be an aggregate of more than $2,430 lost in multi-sport cities (like Seattle) and less than $2,430 lost in cities where pro sports has a novelty factor.

In general, my findings support the conclusion that context is important for understanding the economic impact of sports facilities. However, the context that is important is not facility-dependent but rather city dependent. The pre-existing economic strength and sports infrastructure are key predictors of the success of basketball arenas. Basketball arenas are not primary catalysts of economic development but are instead economic complements. The present research is generally consistent with the notion that professional sports are not the cause of development so much as they are the effect.

So, newer basketball arenas are an unsure investment in a local economy.  If a place has no other professional teams (and Propheter used MLB, NFL, NBA, and NHL as the criteria for professional teams… sorry MLS) then this paper suggests citizens might see a positive economic benefit.  Of course Seattle has both the Seahawks and Mariners and Sounders already well established in the SoDo area so “novelty” is lost.  The past decade of arena deals has indicated a negative economic impact of $2,430 per capita.

More from the Port of Seattle and Seattle City Council

 Finance, PR Campaign, Property, Security  Comments Off on More from the Port of Seattle and Seattle City Council
Aug 072012
 

Port of Seattle Studies

We have a release from the Port of Seattle aggregating the traffic studies previously done.  It’s the same way that the study Hansen paid for was put together using existing data.  It’s  a big, complicated project to do a real study on these things.

PDFs are from the Stranger (which broke some sort of media embargo)

 

Seattle City Council Members on Seattle Channel Round Table

The City Council is still working on financial security, not killing the KeyArena entirely, and transportation issues.  No real details on the negotiations are revealed at City Inside/Out (which really hasn’t had any bite since CR Douglas left).  Bruce Harrell didn’t sign the letter because the council doesn’t have any expertise on these things (maybe he should speak with Reuven about that).  Licata is well aware that the County Council’s $5M entry point is quite a bit different than Seattle’s $115M.  O’Brien admits that the City may still have to bow out after an environmental review.  Bruce Harrell weighs in saying the proposal is “fully compliant with I-91 so we understand we’re not misusing any tax funds” – hope that doesn’t come back haunt around election time.  Harrell seems to think the Seattle Center may be put to other purposes.  I suggest finding a use for the 8,000 seat Mercer Arena before cutting KeyArena in half to create an amphitheater.  Nobody on the council is saying “No” but they’ve got to improve the City’s situation.  O’Brien hopes for a resolution soon, Harrell wants to adjust the balance, and Licata (who’s leading the subcommittee) has no idea when the vote comes up and recalls the February Elway poll where 80% of the public don’t want to subsidize the NBA.  Licata further comments on the DOJ reforms $41M estimate and is hoping to bring that figure down (which is good, because if you think polling on a levy to fund libraries is tricky try issuing one to hire police oversight).

I’m practically livid over Licata’s saying that the Seattle Council still haven’t been provided the business plan from ArenaCo.  That was something the Seattle Review Panel was asking for in their April 4th report (pg 11) and wanted put to a third party review.  I had hopes the business model review was going on behind the scenes, particularly after the NHL requirement was dropped.  Certainly Hansen would have a business plan prepared when recruiting investors.

I’m already convinced the County’s vote last week was entirely theater, but this just proves it.  No responsible investor would take action towards such a large project without seeing the business plan.  Either the County was putting on a show or 6 of 9 members have proven themselves incompetent as stewards of public funds.

 

Richard Conlin (not in the Round Table) Weighs In

It may be possible to craft an agreement to move forward that meets all or most Councilmembers’ concerns, but that will take considerable discussion and negotiation.  We expect to work on this over the next few weeks.  All of us would welcome investment in the City and a new basketball team, and are willing to look carefully at these proposals.  However, any agreement must be designed to protect and advance the public interest.

Reasonable people can disagree on what the public interest is.  Councilmembers have a range of opinions on what an acceptable agreement would be, and I am writing to explain my point of view.  I appreciate that not everyone will share my perspective.

 

The Council Updates their Agenda

The Seattle City Council has updated their schedule to address the arena issue.  Of note is that the Monday 13th sub-committee deliberations have been pushed back and hinges on negotiations.  The full council consideration and vote will come after it’s promoted from the subcommittee.

Wednesday, August 15, 9:30 a.m. Potential Committee deliberations, pending ongoing negotiations
To be determined Full Council consideration and vote

Don Levin On Furness KJR / Calabro 710ESPN

 Finance, Other Arenas, Property  Comments Off on Don Levin On Furness KJR / Calabro 710ESPN
Jul 272012
 

Furness KJR Interview with Don Levin

Don Levin called in to KJR to talk, not so briefly, about the Bellevue Arena plans.  He says details will be forthcoming within approximately one month and he’s got the money to do this. He may even believe red elephants are less useful than white ones. 🙂

  • Levin has been discussing with Bellevue for 25 months
  • Will be located in Bellevue near light rail expansion (ArenaCo’s WSA Properties owns half of the SoDo site according to public records)
  • NHL is his anchor tenant and he wants the NBA involved
  • Wants to run things himself rather than hire arena operators
  • Any Public Funds would be backed with a secured ($ to $), executable guarantee (a big win over ArenaCo’s Unsecured ParentCo Guarantee  – the radio hosts don’t understand that an aging arena isn’t the greatest asset as security, especially if a lot of other banks have liens on it)
  • Levin intends to move to the area if the arena goes through
  • He’s not ready to reveal the list of investors  (Hansen’s list is pretty incomplete too and contains people one would expect to be on the short-list of potential owners)

 

Calabro 710ESPN Interview with Don Levin

Shortly after the Furness show, Levin also spoke with Kevin Calabro of 710ESPN.  Pretty much the same points but he adds that he came forward due to siting concerns and he felt the public needed to vet his option. We also have concerns about the space for the site.  It sounds like Levin feels confident enough in his ability to secure an NHL team he’s willing to build on speculation.

  • The radio hosts are still promoting the notion that this could be voted on by Monday the 30th and then other parties suggest that mid August is more appropriate
  • Don Levin clarified that the city would issue a bond and the public’s security would be via an insurance company (not a building with additional private debtors)
  • He reiterated that their concerns about who controls the building limit their partnership abilities (which makes sense given the NBA CBA revenue-sharing model and arena expense deductions)

The City of Seattle would be foolish to sign a 5 year MOU commitment to Hansen’s deal if they do not know what is going on with the Bellevue Arena.  All the modeling available for revenue streams on the ArenaCo arena suggest the main debt service source, Admissions Taxes, would drop quite a bit without an NHL team (the City Council has asked Hansen to provide his revenue models but we don’t have those numbers).  You can argue about arena being an indirect revenue source for the city, but with how many tax streams were dedicated to debt service and potential shortfalls elsewhere the nearly-break-even view seems appropriate.  Any Seattle politician looking at I-91’s record would find a way to side with Levin.

The King County Council might not care which proposal wins.  King County was only giving up $5.8M in tax revenue (net present value) over 30 years.  Increased spending in Bellevue still occurs in the county.  The County bonds are capped at $5M until an NHL team is secured and Hansen’s camp has been lackluster on the NHL side of things.  In fact, Don Levin was the guy arena proponents point to when discussing the NHL coming to Seattle.

Levin has operated the Chicago Wolves (AHL team) for years and has close ties to the NHL.  Certainly the hockey contingency sees Levin’s proposal as far more attractive.

The heat on the ArenaCo proposal has just been turned to 11.