The March 1 deadline for the City of Sacramento to present a complete new arena proposal for the Kings and the NBA to consider has pushed at least one city to react in anticipation. Last year it was Anaheim, this year it’s Seattle. Seattle has been rumored for the last few weeks to have a big-money white knight getting ready to lure a team to the Emerald City. That white knight’s name is Chris Hansen, a Seattle native and SF hedge fund manager.
Seattle and King County held a joint press conference today to give details on the plan. Mayor Mike McGinn’s website has the presser and some backing info. The arena would cost up to $500 million, with $290 million by Hansen and his team(s). The big key to the plan is that unlike KeyArena on the other side of downtown, the new arena would be designed to house both NBA and NHL franchises. While there aren’t specifics about the financing, it’s clear that the arena deal would only work if teams from both leagues relocated there so that revenues would be high enough to cover debt service. Naturally, ensuring 82 regular season games, 3-4 preseason games, plus a good likelihood of at least one playoff series every year, would go a long way towards covering the loans that will be necessary. KeyArena would serve as a temporary home while the new arena was under construction.
Seattle and King County would partner up for $200 million in public financing, which would be backed by ticket and sales taxes. While they didn’t get specific, both City/County and Hansen and public financing as it relates to I-91, the 2006 ballot initiative that only allowed for such financing if the City could get a reasonable ROI (3.1% currently).
Hansen and associates have bought a three acre property south of Safeco Field in the city’s SoDo district. Three acres isn’t large enough for a new arena, so additional land will have to be acquired. The unacquired land includes Showbox SoDo, a warehouse concert venue. It would appear that Showbox SoDo, which was purchased by Showbox in 2007, would have to make way for the new arena.
For its part, the City of Sacramento has put out some basics from its new arena term sheet, which is still in the works and to be presented to the City Council on February 28. The upshot from the $387 million proposal is that the Kings owners, Joe and Gavin Maloof, will have to put up $60 million in cash and donate $25 million in land to make the deal work. It’s unclear if the Maloofs, who already have sold off numerous assets and remain in debt to the City, have the resources to pull this off. The total cost of $387 million also feels rather low, at least by California standards. $200 million in public financing would come from the advance sale of downtown parking revenues.
Both plans have major questions attached. Besides the Maloofs’ outlay, there is a question of whether or not the NBA would sign off on such a deal, especially if the Kings’ low revenue position coupled with debt keeps the team at a competitive disadvantage. The Seattle plan’s dependence on having both NBA and NHL teams in-house sounds looks like a major potential stumbling block due to the complexity of catering to both. Both leagues currently have teams up for sale (NBA’s New Orleans Hornets, NHL’s Phoenix Coyotes), but both would prefer to keep them local if at all possible. Seattle’s plan makes the most sense if there’s only a single ownership group for both teams, as that would prevent competition between two ownership groups from derailing negotiations.
Chances are good that among the Hornets, Coyotes, and NBA Kings, at least one of them will move in the next few years, perhaps two or all three. When that happens it’ll be a tragic day for the adversely affected fans. The cycle of heartbreak continues.