Council Member Nick Licata Challenges Sonics Subsidy
That didn't take long. Less than a month after becoming the new (and unlikely) city council president, famously antiestablishment Council Member Nick Licata is taking on the mayor, the Greater Seattle Chamber of Commerce, the state legislature, a $3 billion New York–based corporation (the NBA), and a fundamental piece of Seattle's genetic makeup.
Before becoming council president, Licata passed a resolution last year that put the freeze on city support of a SuperSonics bailout. He is now armed with four simple follow-up demands that he thinks the state legislature should consider. The proposed amendments would prevent the state from earmarking $200 million in public subsidies for the Seattle SuperSonics basketball team. The Sonics, who lost about $16 million last year, have threatened to leave Seattle if they don't get the subsidy.
The high-profile legislation (NBA Commissioner David Stern will be in Olympia on February 23 to support the bill) would extend King County's Safeco Field and Qwest Field taxes (taxes scheduled to sunset in 2014 and 2021, respectively, when the baseball and football stadium debts are paid) to fund a KeyArena remodel. The local taxes include: a rental-car tax, a sales tax, and a food-and-beverage tax on bars and restaurants. The KeyArena remodel is "not driven by a need for greater seating capacity," a recent city council study notes, but rather "so that more points of sale and other amenities, such as restaurants, can be added... Amenities tend to be more high-end these days to appeal to the high-paying customers and to justify high suite prices."
Licata has proposed four amendments to derail the handout. First, Licata would require a public vote on extending the tax. "I don't know of a precedent where we've extended taxes without a vote," Licata says. Interestingly, voters rejected the Safeco tax during a campaign led by Licata in the mid-'90s. The King County Council, at the urging of then County Council Member Greg Nickels, subsequently approved those taxes
Second, Licata would limit the Sonics' share to 50 percent of tax revenues.
Third, Licata would give the City of Seattle control over 25 percent of the money; under the Sonics' proposal, King County would control all of the money.
And finally, Licata would prioritize KeyArena over the Sonics. The current legislation stipulates that tax revenues are only available for an arena leased to an NBA team.
It's this last amendment that gets to the heart of Licata's gripe. "The current language denies the city the option of trying to run the KeyArena profitably without the Sonics," Licata says. He believes Seattle should re-vision the taxes as an opportunity to invest in an important, but ailing, city asset, KeyArena, not in a private corporation. "The city's focus should be to operate KeyArena in the black, not on helping out the shareholders of a private company," Licata says. The non-Sonics option—which includes technology upgrades and making the arena convertible for smaller concerts—would cost $20 million—relatively minor compared to the $200 million Sonics plan.
A KeyArena study released last week showed that the arena could be a profitable venue (making between $2 million and $3 million a year) without the Sonics by hosting additional concerts, ice shows, and other sports events like UW basketball. Taken in isolation, KeyArena concerts, for example, are more than three times as profitable to the city as Sonics games.
The Sonics know how profitable non-Sonics events are. In another telling sign about the viability of the Sonics, the Sonics have pushed for "the right to retain all basketball and non-basketball revenues derived from the operation of the arena." [Emphasis added.] This could deny the city $700,000 to $1 million a year on average from non-Sonics events.
The bill's Seattle sponsors, Rep. Jim McIntire and Rep. Phyllis Kenney, both Democrats from North Seattle's 46th District, did not return calls by press time.
Licata is certainly a great foil for Sonics boosters. A skinny nerd—he looks something like a goyish Woody Allen—Licata lived in a commune-type group house on Capitol Hill known as PRAG, or (tongue-in-cheek) the Provisional Revolutionary Action Group house, for years. Licata made his name as an activist during the mid-'90s, fighting against public funding for Nordstrom and, of course, against public financing for the stadiums. After he was elected to the city council in 1997, his first big play was to thwart Seattle's cheesy bid for the Olympics.
After nearly 10 years on the council, Licata is still on point. Last month he told Sports Illustrated that if the Sonics made good on their threat to leave town, the economic and cultural impact would be near "zero."
Licata is right to say that professional sports teams are economically irrelevant to cities. An in-depth 2004 study by the Cato Institute (no enemy of business) found that, if anything, professional sports teams may actually hurt local economies. The study debunks industry claims that sports teams generate new consumer spending (they actually just suck up existing discretionary spending), and concludes, "the net economic impact [is] a reduction in real per-capita income over the entire metropolitan area."
As for the Sonics recent claim that they pump about $234 million annually into the city, UW Professor Bill Beyers told the Mayor's Task Force on KeyArena last month that the Sonics impact study was "not a good study" and that the researcher who did it "did not know what they were doing..."
In addition to the economic specifics, there are also some ugly details about the city's current arrangement with the Sonics that undermine the team's case for a new handout—and bolster Licata's skepticism. The city just authorized and financed a $77 million upgrade to KeyArena in 1995. With debt service, the total bill stands at about $130 million. (The city would still be covering that debt, due by 2014, while taking on this new one.) The Sonics were supposed to cover the debt themselves, but because the Sonics are in the red, the city has been covering the difference to the tune of $2.2 million a year since 2000. (It spiked at $2.9 million last year.)
And the Sonics will probably be back for another subsidy in five years. Check this out: NBA arenas built before 1960 lasted an average of 59 years. NBA arenas built in the 1960s lasted an average of 30 years. In the 1970s—an average of 25 years. In the 1980s—an average of 20 years. And judging from KeyArena (again revamped in 1995), arenas built in the 1990s last 10 years. Indeed, of the 29 NBA arenas currently in use, the average age is 10 years. Only six have been in service more than 15 years, and most of these are already slated for replacement. Licata laughs: "The evidence shows that the team will be unhappy with a new stadium before it's even built."
Given the city's emotional connection to the Sonics, it's unlikely Licata will win this fight. A few months ago, it was also unlikely that Licata would become council firstname.lastname@example.org