THIEL: $1 BILLION QUESTION NBA WILL ASK OF SEATTLE
Adding Kings’ price to arena drives project cost to more than $1 billion. Seattle’s ardor for NBA hoops was waning before Bennett; will owners buy Hansen — and busy Seattle?
At the height of their glory in KeyArena, the Sonics sold out their 17,072-seat capacity for three seasons in a row. With Gary Payton, Shawn Kemp and coach George Karl, the joint rocked, the drama rolled and Seattle was right there with the Bulls and Lakers at the acme of the NBA.
But that was more than 15 years ago — 1995-96, 1996-97 and 1997-98. Then came the lockout in fall of 1998, and the NBA and Seattle have never been the same.
The hope behind Chris Hansen’s pursuit of an existing team that will fill his proposed dream palace in SoDo is that the Seattle marketplace will re-smooch with pro hoops as it did in the mid-90s.
But now that a team seems within reach — Hansen has offered a $525 million value for the terrible but mobile Sacramento Kings — an apparent battle of wills has begun between the towns, to be decided, perhaps, in mid-April by a vote of the NBA owners. But as the daily developments play out over the next three months, one question will be asked more frequently:
At a commitment of more than $1 billion and growing, is the NBA worth it?
To the legion of hoophounds, of course it is. Without question. Forty-one years, baby. Lenny. Slick. Fred. Gus. Jack. X. Nate. The Glove. Reign Man. Ray. First-name friends.
Also in the marketplace is a legion of who-cares types and a subset of active haters, thanks in part to the bloody, two-year extraction that has left a hole of four years and reinforced every stereotype of sports leagues as arrogant oligarchists.
Now that the Kings have been formally targeted, Seattle no longer can play the lost-virtue card. Fans who called out NBA Commissioner David Stern and his cloying acolyte, Clay Bennett, for destroying a good relationship have to shut up before being readmitted.
Stern, Bennett and the other owners will consider the $1 billion question from their perspective:
Is this extraordinary private investment, one of the biggest ever in team and building, sustainable in a busy sports market that faded on the NBA in better economic times than now?
The NBA will be certain to review the history of decay, which is outlined here:
Regarding the simple metric of attendance, after the ’98 lockout ended and Seattle played a 25-game home schedule, the Sonics were credited with a full-capacity sellout in ’99. But those tickets were largely sold pre-lockout. Anyone who attended that Fat Man’s Fantasy Camp of a season knows the joint was about half-full most of the time.
The next seven full seasons of mediocre ball showed a decline in ardor:
The seasons of 2006-07 and 2007-08 under Bennett were virtually irrelevant, as his ownership deliberately undercut the roster and the gate to help make the argument that the NBA was no longer working in Seattle.
The decline in popularity was felt most acutely in the luxury suites, which was a critical development. Premium seating was, by terms of the lease, the primary source of revenue paying off the 20-year construction bonds issued for the 1995 remodel of the Coliseum into KeyArena.
The pay-as-you-go-plan worked nicely for four years. Then came the lockout, and weak ball. It never worked again. Suite revenues failed every year to cover the mortgage.
Besides the poor play — after the lockout, the Sonics won only one playoff series until leaving for the plains — many factors bore down on the franchise.
*In 1999, the Mariners opened a new stadium and sold all its suites and most of the Diamond Club seats behind home plate;
*In 2000, Barry Ackerley, who spent respectably on players, coaches and facilities, sold the team to Howard Schultz, who talked a great game about public stewardship but failed miserably;
*In 2000, despite being declared unconstitutional by the state Supreme Court, Initiative 695′s intent — elimination of the motor vehicle excise tax — was made into law by the Legislature because the measure had 56 percent of the vote. But the revenue loss blew a hole in the budget that has permanently crippled the state’s ability to help fund services and projects, including stadiums/arenas and their upgrades;
*In 2001, a recession made some companies re-think where to spend on sports entertainment;
*In 2002, the Seahawks opened a new stadium and sold all of its suites;
*Changes in federal tax laws made business-expense deductions of suites more difficult for some companies and individuals;
*In 2006, after repeated failed attempts to get public instead of private financing to upgrade economically obsolete KeyArena — he claimed that even a full-season sellout would not allow the Sonics to break even in the NBA’s broken economic model – Schultz sold the club to Bennett in for $350 million. Schultz paid $200 million six years earlier;
*In 2006, Initiative 91 passed in the city with a 74 percent yes vote. The new law mandated a small positive return in every lease of a city facility by a pro sports team (a workaround was made for the Seattle Storm), effectively killing sweetheart leases that would likely have been necessary to renew the Sonics deal in 2010. The lease was deliberately designed to end five years short of the retirement of the 20-year life of the construction bonds, so that whoever owned the Sonics had leverage over the city.
*In 2008 . . . well, you probably recall the lawsuit, the trial and the $45 million settlement that let the Sonics out of the final two years of the lease.
As you can see, the failure to retain the Sonics was years in the making, layered by failures internal to the club and the league as well as external market factors. Some are common in most or all markets, but one thing unique to Seattle was I-91.
Despite being poorly written and poorly understood, with no organized opposition, I-91 sent a message Stern and the owners took only one narrow way: The vast majority of Seattleites don’t want pro hoops.
The law’s ambiguity or misinterpretation didn’t matter; it only matters that 27 men (Mark Cuban and Paul Allen voting no) felt Seattle told them to drop dead.
To his credit, Hansen got the I-91 message. He built a complicated proposal that relies mostly on private wealth to take the operational risk, with $200 million loaned from the city and county on a lease-purchase deal. His lawyers and lawyers for the governments think the deal exceeds I-91′s requirements. But an I-91 backer doesn’t think so, and filed suit a couple of weeks ago to stop the SoDo arena deal.
Independent of the legal outcome, Hansen has to satisfy his pending lodge brothers, who will ask again about Seattle’s intent and ability. They don’t care about pep rallies in Pioneer Square. They don’t care about injustice, unfairness or sentiment. They care about making money.
They must decide in April whether it is wise to relocate a team from the No. 20 TV market where it was the lone big-time sport, to the No. 12 market that shunned them in 2006 and now has added, in contrast to conventional American sports wisdom, a pro soccer team that pulls in 38,000 a game — plus a college football team that is in the commercial fray big time, in order to pay down $200 million in stadium renovation bonds.
Reputationally, the owners have to like Hansen and Steve Ballmer, especially compared to the Maloofs who own the Kings. But the Seattle ownership will bear a financial burden for team and arena that is nearly unprecedented, and they must do it with a bad team that has to be broken down and built up on Seattle’s watch, not on Sacramento’s.
All is possible; Hansen has shown extraordinary patience and skill in maneuvering a difficult project to get this far, this fast. But now, there are people beyond the Mariners and the Port of Seattle who don’t want him to succeed; rich people who may like basketball in their town as much he likes his in Seattle.
Getting back together with the ex is never easy. Much must be forgiven and forgotten. And the way forward may be harder still.