Slog
News & ArtsThursday, February 16, 2012
City / Sports / Breaking News
City/County Announce $500 Million Arena Deal Proposal
Posted by Goldy on Thu, Feb 16, 2012 at 2:01 PM
- Goldy
It's real, and the official announcement is happening now. $290 million private money, $200 million public contribution (county/city split), with guaranteed revenue to pay off the bond. Debt payments guaranteed, and the whole deal is contingent on getting both NBA and NHL teams.
As good a deal as any city has gotten in a long time. Details coming...
UPDATE: Honestly, objectively, and not just because I'm a hockey fan itching for an NHL franchise, this really does look like a damn good deal for the region and taxpayers. Assuming it actually happens.
Under the terms of the proposal introduced this afternoon by Seattle Mayor Mike McGinn and King County Executive Dow Constantine, a private investment group led by Seattle-born Chris Hansen, would put up $290 million toward building a new sports arena just south of Safeco Field, matched by a joint city/county contribution capped at $200 million. The city/county would own the arena, with its debt service paid through a combination of taxes generated by the facility, and rent paid by both the teams and the facility operator. In years where revenue falls short of the debt obligation, the teams and operator would be required to pay additional rent to cover the difference.
The city/county would issue a 30-year bond to finance its portion of the construction costs, and the teams would sign a 30-year lease with a binding non-relocation clause. Under the terms of the current proposal, the city/county would not issue its bond until both NBA and NHL teams have been secured. The whole proposal is designed to make the deal entirely risk-free to taxpayers. Hanson will lead the group to acquire an NBA franchise, and is working to secure a partner to acquire an NHL team.
When you count in the cost of acquiring the teams, we're looking at a $200 million public investment leveraging $800 million in private investment.
As for Initiative 91, which bars the city from using taxpayer dollars to subsidize an arena, Mayor McGinn emphasized that "I voted for it was well," and promised that any final deal would abide by the measure. To this end, an arena advisory panel is being appointed to review all the details.
So... will it happen? "This is not game seven," cautioned Constantine. "This is the tip off of the first game of the preseason." What we've got are the general terms of a proposed public-private partnership, and there are a lot contingencies before a penny is spent by either partner, the most obvious being, we need to acquire the teams.
Once those teams are acquired, and construction begins, the agreement requires that both the NHL and NBA teams play at Key Arena until the arena is completed.
1
Phew! Finally figured out a way to get rid of those giant surpluses every level of government is running, I see. Thank god they didn't spend it on stupid crap like city services.
How much do we still owe on the Kingdome?
How much do we still owe on the Kingdome?
3
Why don't they just buy the teams themselves instead of stadiums?
It's like buying a garage in the hopes that a car will someday park itself there.
It's like buying a garage in the hopes that a car will someday park itself there.
4
Ugh. I'm so irritated about this that even the promise of someday going to a real live hockey game right here in Seattle doesn't cheer me up.
5
Seriously, what the fuck is this mess. Where do we have 200 million to spare lying around. I'm a sports fan and I'm pissed about this.
6
So the city thinks that 200 million is a worthwhile investment because it will eventually pay itself off with more taxes and fees coming in? Maybe a few years from now if the economy improves, but certainly not now.
7
$200 million is a little further from 'no public money' than I expected. For that, they'd better get a decent team like the Florida Panthers to move up.
9
What @1 through @5 said. Glad we're not wasting this money on stupid stuff like roads, schools, housing, public health so that billionaires can reap the profits.
10
@1, conveniently enough that debt is scheduled for retirement this year. And our "investment" will pay for itself over time and benefit the entire region. Exactly as disproved by the study rob! likes to cite. Or, if you prefer, exactly as the mayor said the tunnel won't.
11
Now that is leadership! Putting up 200 million at a time when our libraries are open 10 hours a week.
13
Seattle residents will get 2/5ths off admission prices since we're forking over 200MM, right? Or we'll be entitled to 2/5ths of the profit? Hum, hum?
15
@1, @5, etc: Where do we have 200 million to spare lying around.
So much financial ignorance on display here I half-suspect you all still keep your money in piggy banks.
So much financial ignorance on display here I half-suspect you all still keep your money in piggy banks.
16
Completely off topic: I know you folks don't control your ads, but what exactly is a Islamic Home Loan that is "Sharia Compliant"?
17
@15 Yeah, if this goes through its the 3rd best arena deal in the NBA and the best stadium deal for Seattle in decades. I don't get the blind resistance; the details of this seem unprecedentedly good for the city, if you listen to them.
18
@16, usury (loan interest) is against Sharia law. Islamic banks have devised various schemes to get around this prohibition, usually through profit-sharing or something like that.
19
Wait, wait -- so Hansen has to
A) secure the teams
B) put up and secure his portion of the cash and any overruns
C) before the city/county puts up money at this point
D) the city/county portion is bonded/loaned
E) we legally will be securing a profit on our investment
F) similar to the US bail out of GM, mechanically, it sounds like
So we have little risk as a city, stand to make a material profit on our investment, and get a new world class entertainment facility and two sports teams as well?
What is the downside?
A) secure the teams
B) put up and secure his portion of the cash and any overruns
C) before the city/county puts up money at this point
D) the city/county portion is bonded/loaned
E) we legally will be securing a profit on our investment
F) similar to the US bail out of GM, mechanically, it sounds like
So we have little risk as a city, stand to make a material profit on our investment, and get a new world class entertainment facility and two sports teams as well?
What is the downside?
23
From the Seattle Times;
The $500 million arena would be paid for mostly by a private investment group led by Seattle native Christopher Hansen, but includes city and county financing that would be repaid over the next 30 years through rent on the arena and tax revenue it generates, including property, sales and admissions taxes.
The proposal includes no new taxes, and the city and county wouldn't pay anything until the teams were secured. Construction would take about two years.
The investors would rent the facility from the city and county, and Fred Podesta, the director of finance and administrative services for Seattle, said if there's a revenue shortfall, taxpayers would still be protected by an agreement that investors would pay the difference.
The deal also requires a "security fund" set up by the investors, which would eventually include three year's worth of debt payments. The investors would also have a fund for upgrades, so the city wouldn't be responsible for fixing up the arena as it ages.
The contract would require the NBA team to stay for 30 years -- the duration of the lease.
24
@15: Yawn. It's convenience of speech not an ignorance of bonds. Spare $200 lying around is less depressing to write than 30 years of debt.
25
@19, the downside is the risk that these promises turn out to be pie in the sky, as so often has been the case when it comes to public financing of sports arenas.
26
Thank you 15. There is no $200 million lying around. It would be raised via tax on revenue generated by the facility itself. Also, no basketball or hockey patron is going to pay a luxury tax or seat license or whatever to fund schools or libraries. That's what we all pay taxes for. This is an example of a user fee, as the pro-tolling people like to call it.
27
Sharia home loans probably would have allowed a lot of people not to have their houses foreclosed.
29
Thanks Fnarf! I thought it was something along the no usury line. However, I don't think there is too many "Sharia compliant" readers here...
30
Since we are going to steal two teams loved by others, do we now officially forgive Clay Bennett?
http://www.dailymotion.com/video/xae1h_f…
http://www.dailymotion.com/video/xae1h_f…
32
Odd that this was approved without yet having a team (NBA or NHL) slated to come to the city.
On the radio this morning, I heard that as far as basketball goes it's more likely that the Hornets would relocate here than the Kings, as the Hornets are owned by the NBA (co-owned by all team owners), and currently it's losing everyone money. Their average attendance is just 14K, 4th lowest in the league. But that actually beats what the Sonics got over their 40-year span, so it makes one wonder about the strength of this "investment."
Regardless, I hope they reuse Sonics as their team name.
On the radio this morning, I heard that as far as basketball goes it's more likely that the Hornets would relocate here than the Kings, as the Hornets are owned by the NBA (co-owned by all team owners), and currently it's losing everyone money. Their average attendance is just 14K, 4th lowest in the league. But that actually beats what the Sonics got over their 40-year span, so it makes one wonder about the strength of this "investment."
Regardless, I hope they reuse Sonics as their team name.
36
@19 TRAFFIC.
Fuck this shit. If we're not going to own the teams, who's to say the teams won't desert again. I want the city to own the teams as well. If we're going to fuck up our roads some more, reduce capacity, and increase attractions causing everybody to suffer, then let's at least make some real money on this bitch.
Fuck this shit. If we're not going to own the teams, who's to say the teams won't desert again. I want the city to own the teams as well. If we're going to fuck up our roads some more, reduce capacity, and increase attractions causing everybody to suffer, then let's at least make some real money on this bitch.
37
And don't forget, Seattle already has I think an hockey team's name and history -- including a Stanley Cup -- waiting:
http://en.wikipedia.org/wiki/Seattle_Met…
http://en.wikipedia.org/wiki/Seattle_Met…
38
@16, @18, @29:
That ad has likely been selected especially for you because of a Google search you did.
I noticed RackSpace ads popping up on SLOG shortly after I had been searching for internet hosting providers.
That ad has likely been selected especially for you because of a Google search you did.
I noticed RackSpace ads popping up on SLOG shortly after I had been searching for internet hosting providers.
39
Can we have a referendum on this? It's the Seattle Way!
@ 19 the devil is in the details. The house always wins, and the City of Seattle isn't the house. We'll be losing $ somewhere I'm sure, if it isn't by the teams leaving us holding the bag in under 10 years or threatening to leave and renegotiating favorable terms for them, then likely in the fine print there is something like how we end up paying for everything if they make it into the playoffs like how the Mariners cost us a quarter of a million bucks every playoff game.
@ 19 the devil is in the details. The house always wins, and the City of Seattle isn't the house. We'll be losing $ somewhere I'm sure, if it isn't by the teams leaving us holding the bag in under 10 years or threatening to leave and renegotiating favorable terms for them, then likely in the fine print there is something like how we end up paying for everything if they make it into the playoffs like how the Mariners cost us a quarter of a million bucks every playoff game.
40
@30 - For lying through his crocodile smile that he fully intended to keep the Sonics in Seattle, all the while making plans to move them to OKC?
Um, no.
And, although it would do my cranky heart a world of good, I suppose we shouldn't name the new stadium "FUCK YOU HOWARD SCHULTZ", either...
I mean, I don't relish taking a team away from a city, any city, but I highly doubt that the lying, back-room dealing, back-stabbing, underhanded-ness of the way that Schultz/Bennett deal went down will EVER be replicated..
HOOPS'N'PUCKS FTW
Um, no.
And, although it would do my cranky heart a world of good, I suppose we shouldn't name the new stadium "FUCK YOU HOWARD SCHULTZ", either...
I mean, I don't relish taking a team away from a city, any city, but I highly doubt that the lying, back-room dealing, back-stabbing, underhanded-ness of the way that Schultz/Bennett deal went down will EVER be replicated..
HOOPS'N'PUCKS FTW
41
Also, Mr. Szilagyi, just because there's a contract for 30 years, doesn't mean they couldn't desert and pay the penalty if the prospects were more financially lucrative in other sections. I mean, come on...contracts are only pieces of paper with a system of fines and penalties for breaking them.
42
At least King Kemper didn't get to aid a pro sport to his Eastern Washington kingdom. Say what you will about the financing and the payoff, it will bring suburban $ into Seattle, and that's good.
43
I'm with @39. If this really were such a great deal for the city to borrow a ton of money to finance this, why wouldn't the private ownership just finance it their damn selves?
44
@19: What is the downside?
The art and theater kids hate sports.
@30: do we now officially forgive Clay Bennett?
Howard Schultz is responsible for shipping the Sonics to Oklahoma, and no, we don't forgive him.
The art and theater kids hate sports.
@30: do we now officially forgive Clay Bennett?
Howard Schultz is responsible for shipping the Sonics to Oklahoma, and no, we don't forgive him.
47
This is great--the current crop of stadiums have given us a pile of championships and strong attendance figures.
49
It is simple. You put a $200 tax on each hockey or basketball ticket sold and then the thing pays for itself in no time.
Sounds reasonable to me.
Sounds reasonable to me.
50
@40, you know it'll be awfully close to Starbucks headquarters. I wonder if it could possibly be designed such that when viewed from the angle of Starbucks the arena facade resembles a middle finger.
52
This is all fine and dandy, but my season ticket dollars went to the Huskies when the NBA left town, and they are staying with the Huskies.
54
If this really were such a great deal for the city to borrow a ton of money to finance this, why wouldn't the private ownership just finance it their damn selves?
Because the city benefits from it.
As an analogy, if you and your neighbors share a clogged sewer line, wouldn't you ask your neighbors to chip in to get it fixed?
And if they responded "if it's such a great deal to have a working sewer, why don't you pay for it?" you'd rightly think they were assholes.
Because the city benefits from it.
As an analogy, if you and your neighbors share a clogged sewer line, wouldn't you ask your neighbors to chip in to get it fixed?
And if they responded "if it's such a great deal to have a working sewer, why don't you pay for it?" you'd rightly think they were assholes.
56
Call their offices and tell them what you think, good or bad. If you think for one second the tax payers won't be on the hook, there is a bridge for sale you should buy.
#54 The City MIGHT JUST MAYBE benefit. Citizens won't benefit at all once they are given the bill to pay.
#54 The City MIGHT JUST MAYBE benefit. Citizens won't benefit at all once they are given the bill to pay.
59
I call/scream bullshit. The $200 million is funded by taxes on tickets, concessions, whatever. "Self-funding"... Sooooooooo, why don't they just self-finance this boondoggle? With a little help from that traditional money source for construction projects, the banks? Why is the city/county/etc. even involved, except for help with zoning, traffic, and so on? This is a scam, and you sports groupies waving the flag for this bullshit should go fuck yourselves.
60
Least Bad Financial Package in recent memory (tentatively, in early drafts) is still Bad Financial Package.
61
I admit as an NHL fan, it has an allure. But, given the recent history of sports stadiums and Seattle, I'm not so enthusiastic. I do believe there are more important issues.
63
How many times do we have to say "NO!" to this crap? Vote after vote after vote makes it clear: we don't want these expensive monstrosities in our city!!
64
@58: The City doesn't benefit nearly as much as the team owners
Depends. Some teams break even or lose money, others are profitable. Usually the city's return is tied to the owner's return, both of which tend to go up or down depending on the number of empty seats.
Admittedly, even the owners of a money-losing team usually end up in the black once they sell the franchise at a profit. That's why Howard Schultz dumped the Sonics.
Depends. Some teams break even or lose money, others are profitable. Usually the city's return is tied to the owner's return, both of which tend to go up or down depending on the number of empty seats.
Admittedly, even the owners of a money-losing team usually end up in the black once they sell the franchise at a profit. That's why Howard Schultz dumped the Sonics.
65
Can we have some concrete examples, from the details of the proposal we know, of how this is a scam please?
66
There's an incurable virus that infects every sports team in Seattle. Building a third stadium to host more infected teams is a ridiculous idea.
67
@65 No because that would require these dummies to inform themselves instead of impotently shriek on the innerwebs.
68
City FAQ about the proposed deal:
http://www.seattle.gov/mayor/media/PDF/1…
Again, examples from this document about how this is a scam?
http://www.seattle.gov/mayor/media/PDF/1…
Again, examples from this document about how this is a scam?
69
@63 - Yeah! Each football, baseball, and soccer season you can see people staying away in DROVES from those terrible stadia! Why, the area around Safeco and the Clink is a veritable ghost town on game days!!!
/satire
/satire
70
I'd rather the city pay for a tunnel that I can sit in stuck in traffic! think of the profit we could reap from the tunnel!!!!!!!!!!!!
71
There was no discussion of vegetarian options for the concessions. There needs to be a committee to discuss forming a committee to discuss this. It's the Seattle way.
72
Sounds like the deal that the City of Glendale gave the then-owners of the Phoenix Coyotes about ten years ago. The same Coyotes that are the potential candidates to move to Seattle. It's amazing how bankruptcy can dissolve all of these commitments. So, City of Seattle, tread lightly.
73
Honestly and objectively you think is looks "damn good"?
These deals are NEVER, and that is not hyperbole, a good deal for the public.
I'm just waiting for this website to be updated:
http://www.fieldofschemes.com/
This is the foremost authority on arena/stadium funding and their effect on the public.
200 million is 200 million too much.
These deals are NEVER, and that is not hyperbole, a good deal for the public.
I'm just waiting for this website to be updated:
http://www.fieldofschemes.com/
This is the foremost authority on arena/stadium funding and their effect on the public.
200 million is 200 million too much.
76
Fuck corporate welfare. If the NHL or NBA want a team here they can pay for their housing the same way I pay mine.
77
A bunch of 'tards dont understand financing - this is a great deal that the city and region will benefit from greatly! Good paying construction jobs for a while, and some additional decent part time and service jobs in Pioneer Square and SoDo.
For better or worse, City services are funded thru sales taxes and prop taxes. The more retail sales and higher prop values, the more $ there will be in the till for libraires and homeless shelters and puppies. Not everyone can work for a non-profit!
For better or worse, City services are funded thru sales taxes and prop taxes. The more retail sales and higher prop values, the more $ there will be in the till for libraires and homeless shelters and puppies. Not everyone can work for a non-profit!
78
was mcginn getting a haircut on the calabro show there a minute ago? it was all, bzz, snip, bzz bzz in the background?
79
"Why would the city finance this instead of the private owners?"
Simple. Government bonds get preferred tax treatment, hence lower interest rates, saving crap loads of money on $200 million in bonds.
I'm extremely skeptical about deals such as this, but this one seems to provide protections for the public. In particular, the public contribution is capped (in addition to being paid off without new taxes), the teams have to cover any shortfalls, and the teams even pay for upgrades to the facility. Sure, we should go over the final agreement with a magnifying glass to look for problems, but at first glance, it looks good. (And I don't even like basketball or hockey.)
Simple. Government bonds get preferred tax treatment, hence lower interest rates, saving crap loads of money on $200 million in bonds.
I'm extremely skeptical about deals such as this, but this one seems to provide protections for the public. In particular, the public contribution is capped (in addition to being paid off without new taxes), the teams have to cover any shortfalls, and the teams even pay for upgrades to the facility. Sure, we should go over the final agreement with a magnifying glass to look for problems, but at first glance, it looks good. (And I don't even like basketball or hockey.)
80
Maybe I don't comprehend high finance, but as I understand this deal, neither the city nor the county has to put up one thin dime until there are both NBA and NHL franchises signed, sealed, and delivered. Until that time -- which is unlikely to happen for at least half a dozen years -- all costs will be borne by Hansen and his colleagues. Who knows what the financial status of city, county, state, nation, and world will look like that far in the future?
Since contractors and construction companies don't work for free, and since the professional leagues aren't going to grant franchises to a city until it has an up-to-standards facility just about ready to open, this implies that Hansen will actually front the public contribution. He'll be in for about $500 million, with the city and county refunding his $200 million security deposit only after the whole thing -- arena and two teams -- is ready to start generating revenues.
This sounds to me like an extraordinarily good deal, if you assume (as I do) that professional sports are enough of a boon for civic culture that they contribute positively to the city's and region's well-being.
One monkey wrench ... an NHL-quality rink simply cannot be shoehorned into Key Arena. Would the NHL really go for a deal where an acceptable rink wasn't available from Day 1?
Since contractors and construction companies don't work for free, and since the professional leagues aren't going to grant franchises to a city until it has an up-to-standards facility just about ready to open, this implies that Hansen will actually front the public contribution. He'll be in for about $500 million, with the city and county refunding his $200 million security deposit only after the whole thing -- arena and two teams -- is ready to start generating revenues.
This sounds to me like an extraordinarily good deal, if you assume (as I do) that professional sports are enough of a boon for civic culture that they contribute positively to the city's and region's well-being.
One monkey wrench ... an NHL-quality rink simply cannot be shoehorned into Key Arena. Would the NHL really go for a deal where an acceptable rink wasn't available from Day 1?
81
@79 nailed it. The people that like this deal are not all just "sports groupies" that would be celebrating any possible stadium deal, no matter how bad it fleeced the city.
It just turns out that from what we know so far this proposed deal is really fucking good for the city, so we're excited.
It just turns out that from what we know so far this proposed deal is really fucking good for the city, so we're excited.
84
I like you people. I sincerely hope you're not fucked raw and left to die. That said, was there a periscope of perspicacity anywhere in the roiling sea of credulous hackery? Did anyone at that presser ask hard questions to which there were less-than-satisfying answers? (Goldy was apparently in the throes of multiple orgasms.)
Will the entire agreements be available for public dissection before final approval? Whom did (or will) the city use as their expert negotiator (nobody?) for this deal? Is Chris Hansen using personal funds in this endeavor, and if so, how exactly did he accumulate hundreds of millions of scratch in just 14 years as principal of a smallish hedge fund ($3B under management)? Or is this a major undertaking of Valiant Capital itself?
Chris Hansen is an idiot if he doesn't have 15 different escape clauses in this ironclad 30-year commitment, and if he is an idiot, well... as someone else pointed out, there's always bankruptcy.
"The study rob! likes to cite" (thanks gg!) is here if anyone's interested. There's also this (warning! NYT link!!!!!1!).
Will the entire agreements be available for public dissection before final approval? Whom did (or will) the city use as their expert negotiator (nobody?) for this deal? Is Chris Hansen using personal funds in this endeavor, and if so, how exactly did he accumulate hundreds of millions of scratch in just 14 years as principal of a smallish hedge fund ($3B under management)? Or is this a major undertaking of Valiant Capital itself?
Chris Hansen is an idiot if he doesn't have 15 different escape clauses in this ironclad 30-year commitment, and if he is an idiot, well... as someone else pointed out, there's always bankruptcy.
"The study rob! likes to cite" (thanks gg!) is here if anyone's interested. There's also this (warning! NYT link!!!!!1!).
85
I don't buy it. And don't WANT to buy it. The safest thing for taxpayers to do at this point is to be as skeptical as possible.
And another thing-- traffic is already miserable through this area already, and now we're talking about yet another multimillion dollar construction project that will impact it? No. Thank. You.
BTW, according to every source I could find, the Kingdome won't be paid off until 2015, not this year, as some other commenters have suggested. The debt may be retired this year, but that's a different thing.
And another thing-- traffic is already miserable through this area already, and now we're talking about yet another multimillion dollar construction project that will impact it? No. Thank. You.
BTW, according to every source I could find, the Kingdome won't be paid off until 2015, not this year, as some other commenters have suggested. The debt may be retired this year, but that's a different thing.
86
@80... It might happen sooner than you think. Both the NHL and NBA own teams that need owners (New Orleans in the NBA and Phoenix in the NHL).
Of course we do need to find a group to buy the NHL team and there is where will they play until the new arena is ready - ShoWare, Everett Events Center...
Of course we do need to find a group to buy the NHL team and there is where will they play until the new arena is ready - ShoWare, Everett Events Center...
88
@26 And every time I buy lunch at the UW hospital cafeteria and pay an extra stadium tax for a facility I've never set foot in, that's a user fee how? We'll all get fucked for this corporate welfare, as usual.
89
rob! Thank you again - those are great. I think those suggest the secret to our Mayor's cheerful smile at the presser. It may be that he realized how well-worn a path to reelection he's just stepped onto. And he needed it, too. Which also goes to explain why our County Exec behind him was a bit dour - this might be the first time Dow's seen a real chance he may have to spend another term dealing with that man.
91
@77, and a bunch of other "tards" don't understand sports stadium economics at all. Like you. This facility, like every other sports facility, will not bring an appreciable amount of new money into the city, period. Most of the money it generates will be diverted from other things. Sports stadiums are not good investments, period.
Good jobs? In construction, at first, but those go away. After that it's minimum wage or less concessions and cleanup staff. You ever see the crowd of laborers hanging around the back of Qwest or Safeco, waiting for the fans to leave? Those are not "good jobs".
The players make good money, of course, but there's not very many of them, and they mostly won't live in Seattle. Chris Hansen doesn't either.
This is a pure gift to Hansen & Co., who will make hundreds of millions if they get the teams, and to the mayor, who needs this deal to get reelected.
Good jobs? In construction, at first, but those go away. After that it's minimum wage or less concessions and cleanup staff. You ever see the crowd of laborers hanging around the back of Qwest or Safeco, waiting for the fans to leave? Those are not "good jobs".
The players make good money, of course, but there's not very many of them, and they mostly won't live in Seattle. Chris Hansen doesn't either.
This is a pure gift to Hansen & Co., who will make hundreds of millions if they get the teams, and to the mayor, who needs this deal to get reelected.
92
DON'T TRUST A HEDGE FUND MANAGER!!!
haven't we learned anything from the economic downturn?
his fund is going to buy up the bonds from the city and turn it into a collateralized debt obligation and sell the derivatives to sucker investors who don't know the AAA rated bonds are really junk and the property will go into default and the taxpayers will foot the bill while the hedge fund manager will get a massive payout because he bet against it!
AHHHHHH!!!! WE'RE GETTING PLAYED!!!
haven't we learned anything from the economic downturn?
his fund is going to buy up the bonds from the city and turn it into a collateralized debt obligation and sell the derivatives to sucker investors who don't know the AAA rated bonds are really junk and the property will go into default and the taxpayers will foot the bill while the hedge fund manager will get a massive payout because he bet against it!
AHHHHHH!!!! WE'RE GETTING PLAYED!!!
93
@88 The reason to be excited is that there is no "stadium tax" this time around. If you'd read about the proposal, you'll find that it is fundamentally different from how the Clink and Safeco were paid for.
94
@ Fnarf - Of course Hansen is going to make money. He wouldn't be doing this if he wasn't going to make money.
But he's going to be making money by returning the Sonics to Seattle and, bonus! adding an NHL franchise to the city. Why shouldn't he reap the benefits of his investment?
We can argue whether or not pro sports teams are a boon to a metropolitan area (I think they are) but that's not really the issue here. This deal, from what we can tell at, what, the third hour of its existence, is a pretty damn good one as far as sports stadium deals go. Why not get with the positive? Why be all Grampa Grumpypants so soon, before we know conclusively that we've been fucked (which I don't think we will be)??
@79 has it right - there's a difference between approaching something with due caution and flat-out screaming bloody murder at the outset of a proposed enterprise.
But he's going to be making money by returning the Sonics to Seattle and, bonus! adding an NHL franchise to the city. Why shouldn't he reap the benefits of his investment?
We can argue whether or not pro sports teams are a boon to a metropolitan area (I think they are) but that's not really the issue here. This deal, from what we can tell at, what, the third hour of its existence, is a pretty damn good one as far as sports stadium deals go. Why not get with the positive? Why be all Grampa Grumpypants so soon, before we know conclusively that we've been fucked (which I don't think we will be)??
@79 has it right - there's a difference between approaching something with due caution and flat-out screaming bloody murder at the outset of a proposed enterprise.
96
I've only read the first couple dozen comments, and can't believe how many people here don't get it. Or at least, pretend that they don't.
This is not money diverted from any other government service. The city/county would sell up to $200 million in bonds, the debt service secured by taxes generated by the facility (admissions, sales, property, B&O, etc.) plus rent paid by the operator and the teams.
Without the revenue from arena, there is not money to securitize the bonds, and without the arena, no need to issue them.
This proposal is structured to have zero impact on city/county revenues, either general fund or other accounts. I asked county budget director Dwight Dively if they had accounted for entertainment dollars being drawn from other venues, that generate revenue to the general fund, and he said that they had. As for the state, it's a sweet deal. It collects its full share of sales, property and B&O tax from the Arena and its activities.
This is very different from the two stadiums down the street, whose bonds were secured and paid off by new taxes on hotels, car rentals and restaurants.
Argue all you want whether this is good investment, but this is simply not $200 million that we could've spent on something else.
This is not money diverted from any other government service. The city/county would sell up to $200 million in bonds, the debt service secured by taxes generated by the facility (admissions, sales, property, B&O, etc.) plus rent paid by the operator and the teams.
Without the revenue from arena, there is not money to securitize the bonds, and without the arena, no need to issue them.
This proposal is structured to have zero impact on city/county revenues, either general fund or other accounts. I asked county budget director Dwight Dively if they had accounted for entertainment dollars being drawn from other venues, that generate revenue to the general fund, and he said that they had. As for the state, it's a sweet deal. It collects its full share of sales, property and B&O tax from the Arena and its activities.
This is very different from the two stadiums down the street, whose bonds were secured and paid off by new taxes on hotels, car rentals and restaurants.
Argue all you want whether this is good investment, but this is simply not $200 million that we could've spent on something else.
97
$500 million seems like a really high estimate for what, 20K seats? That's what Qwest & Safeco each cost.
98
@96, see, there's a public servant I can trust completely. Get Dively to say he's not worried about it, and I'll quit worrying. Thanks for mentioning him.
100
FYI, Pittsburgh's Consol Energy Center, which opened in 2010, bears a $321 million pricetag. It's LEED Gold Certified.
Land is probably less costly in Pittsburgh than in Seattle, though Consol Energy is closer to downtown than the proposed Sodo site. There's very little, if any, need to earthquake-proof anything in Pittsburgh.
Also, its only professional tenant is the Penguins. I have the feeling that an NBA team's locker room, offices, and training facilities would be a good bit more costly than whatever they've provided for Duquesne University hoops at Consol Energy.
Land is probably less costly in Pittsburgh than in Seattle, though Consol Energy is closer to downtown than the proposed Sodo site. There's very little, if any, need to earthquake-proof anything in Pittsburgh.
Also, its only professional tenant is the Penguins. I have the feeling that an NBA team's locker room, offices, and training facilities would be a good bit more costly than whatever they've provided for Duquesne University hoops at Consol Energy.
102
@96, Dively is flat-out lying, then. The revenue IS diverted; it is ALWAYS diverted. That's how every sports stadium ever built has worked. We KNOW this; it's the conclusion of every honest study of sports team economics ever done. The extra money generated by a stadium, any stadium, is somewhere between "zero" and "hardly any at all".
Look, I can prove it: if it was such a great investment, Hansen wouldn't let the city anywhere near it -- he'd keep it all for himself. He knows that unless the city and county fork over the big dough, it doesn't pencil out.
Look, I can prove it: if it was such a great investment, Hansen wouldn't let the city anywhere near it -- he'd keep it all for himself. He knows that unless the city and county fork over the big dough, it doesn't pencil out.
103
Not to mention that the extremely fragile Pioneer Square district is HARMED, not helped, by swarms of sports fans. A handful of bars make out OK, but sports fans don't buy art and they don't buy books. They don't buy much of anything, unless you think shops selling team jerseys constitute a thriving retail neighborhood. Mostly they just pour through like storm overflow through a culvert, scouring everything out of its path.
104
"Again, based on @23 and the Seattle Times... what is the material downside again...? "
The downside is PEOPLE ENJOYING THINGS I DO NOT ENJOY!!! WAAAAAAAHHHHHHH *attends Sounders game*
The downside is PEOPLE ENJOYING THINGS I DO NOT ENJOY!!! WAAAAAAAHHHHHHH *attends Sounders game*
105
Also: because luxury-box sales are a zero-sum game, I absolutely guarantee that the Mariners and Seahawks will be back at City Hall with their hands out for upgrades to their stadiums, so they can compete with the sybaritic velvet-and-KY-jelly-lined sky palaces the new arena will undoubtedly provide. That's what drove the Sonics away in the first place: they couldn't compete for skybox money anymore.
Key Arena: 1995
Safeco: 1999
Qwest: 2002
new arena: 2013?
Just how many new stadiums do we need, and how often?
Key Arena: 1995
Safeco: 1999
Qwest: 2002
new arena: 2013?
Just how many new stadiums do we need, and how often?
106
"traffic is already miserable through this area already, and now we're talking about yet another multimillion dollar construction project that will impact it? No. Thank. You."
Stadium Construction Debate - wherein Stranger readers cry crocodile tears for car owners' lost convenience
Stadium Construction Debate - wherein Stranger readers cry crocodile tears for car owners' lost convenience
107
From a hockey perspective, joint arenas always result in shitty ice surfaces.
Anyone have an idea what the chances of attracting an NHL and NBA franchise actually is? On the hockey front the Phoenix Coyotes are looking for a solution, but my guess is Quebec gets that call before Seattle, especially when Vancouver is so close. And I don't see the league expanding any time soon, not with the restructuring still up in the air and the CBA getting set to expire.
I have no idea what the NBA picture is.
Anyone have an idea what the chances of attracting an NHL and NBA franchise actually is? On the hockey front the Phoenix Coyotes are looking for a solution, but my guess is Quebec gets that call before Seattle, especially when Vancouver is so close. And I don't see the league expanding any time soon, not with the restructuring still up in the air and the CBA getting set to expire.
I have no idea what the NBA picture is.
108
@Fnarf -
You're bitching about something that will create thousands of jobs because those jobs aren't good enough? Try that one out on the people working at Safeco and CenturyLink, and see how far it flies, or rather, see how far your glasses fly when one of the employees slaps you.
Your point about stadiums bringing too many people into Pioneer Square is equally compelling.
And lastly, you're fucking Sounders fan, remember?
You're bitching about something that will create thousands of jobs because those jobs aren't good enough? Try that one out on the people working at Safeco and CenturyLink, and see how far it flies, or rather, see how far your glasses fly when one of the employees slaps you.
Your point about stadiums bringing too many people into Pioneer Square is equally compelling.
And lastly, you're fucking Sounders fan, remember?
109
Fnarf @102, You miss the point. Dively said that they are accounting for some entertainment dollars being diverted. That's part of the calculation.
Whether they're accounting enough, I don't know. But they are taking this into consideration.
Whether they're accounting enough, I don't know. But they are taking this into consideration.
110
What a shitty deal (as all stadium deals are). And completely against Initiative 91. Of course this is a subsidy. If one party with a decent credit rating (or assets) borrows money on behalf of another party with a shitty credit rating (or without assets) and doesn't charge them a rate that matches their shitty rating then the first party is subsidizing the second.
111
Bullshit, irrationally-enthusiastic Goldy @109.
Every consumer dollar spent at this stadium will be an "entertainment dollar diverted." Every last motherfucking one.
Unless they admitted that, explicitly, then their "accounting for it" was a lie.
Every consumer dollar spent at this stadium will be an "entertainment dollar diverted." Every last motherfucking one.
Unless they admitted that, explicitly, then their "accounting for it" was a lie.
112
@111, I've read those studies. I've cited in arguing against previous arena proposals. But you're doing your argument a disservice by claiming that every consumer dollar spent at the arena will be an entertainment dollar diverted. A lot of them will. Maybe more than the city/county officials will admit. But not all.
113
Sorry, Goldy, but yes, all.
As in all.
Consumer discretionary income is fixed. Discretionary income budgeted to live entertainment expenses and incidentals is especially fixed -- even in the "put it on my credit card" 2000s, people did not borrow for ephemeral entertainments the way they did for autos, houses, and consumer electronics.
Every local dollar spent at the arena is siphoned from elsewhere. Period.
And the extra-regional revenue generating power of sports arenas -- the so-called "tourism effect" -- is negligible.
But way to toss all of your critical faculties in the incinerator because you happen to like the thought of padded people skating around and hitting things with sticks.
As in all.
Consumer discretionary income is fixed. Discretionary income budgeted to live entertainment expenses and incidentals is especially fixed -- even in the "put it on my credit card" 2000s, people did not borrow for ephemeral entertainments the way they did for autos, houses, and consumer electronics.
Every local dollar spent at the arena is siphoned from elsewhere. Period.
And the extra-regional revenue generating power of sports arenas -- the so-called "tourism effect" -- is negligible.
But way to toss all of your critical faculties in the incinerator because you happen to like the thought of padded people skating around and hitting things with sticks.
114
Boy, I really hate coming to Goldy's defense on much of anything here, but he's right. There will be some number of people who will put off buying that new deer rifle, or a new pair of shoes, or whatever they need for a month or two so they can catch a game. How do I know this? Because I've done it myself.
115
Actually, 5280, you just proved my point.
You just shuffled your dollars around, put them in one corporate coffer rather than another, paid a ticket seller's salary rather than a store clerk's.
Economic activity generated: zero.
You just shuffled your dollars around, put them in one corporate coffer rather than another, paid a ticket seller's salary rather than a store clerk's.
Economic activity generated: zero.
116
The only positive thing about this: At least it's not another Monorail ....
... though it's about the same type of fiasco.
... though it's about the same type of fiasco.
Advertisement
Most Commented on Slog
-
Foie Gras Tastes Like Cat Food by Callan Berry
-
SL Letter of the Day: The Tell-Tale Handjob by Dan Savage
-
Cap Hill Is Becoming a Little Like What? by Charles Mudede
-
Pizza Update: Breaking the 5-Minute Barrier by Goldy
-
President Obama Says NSA Spying Is "Transparent" by Paul Constant
-
Today in the Surveillance State: The "War on Reality" by Brendan Kiley
-
Slog Bible Study: Leviticus 20:9 by Goldy
-
The Full Text of David Guterson's Controversial Commencement Speech by Dominic Holden
-
The Monday Morning News by Goldy
-
Egyptian Theatre to Close at the End of This Month by Paul Constant
Stranger Personals
The Stranger
RSSSeattle Art & Performance Quarterly
A complete guide to Seattle's current art, film, dance, and theater season.
Facebook
Twitter
Comments (116) RSS