Sorting out the financial risks of the Sodo sports arena
The Municipal League of King County does not say "too good to be true," but its useful report raises questions about the risks and uncertainties behind the Sodo sports-arena proposal.
Seattle Times Editorial
APPROPRIATELY skeptical questions about the proposed sports-and-entertainment venue in Sodo are being raised at City Hall and by thoughtful citizens.
The Municipal League of King County continues a valued tradition of pointed inquiry with a six-page review of the arena proposal offered by hedge-fund manager Chris Hansen.
Questions from the Municipal League go to the heart of the community's capacity to support a National Basketball Association team and, perhaps, a National Hockey League franchise.
Where will consumers find the money to buy tickets, and at what cost to Mariners baseball and Seahawks football? The arena and its tenants and events are competing for a finite amount of entertainment dollars. Who loses in the economy when one is substituted for another?
Basic questions about how consumer dollars get spent also track through the arithmetic of tax revenues and the presumption that this project pays for itself. As the report notes, county "general funds will be affected because all the arena-related revenues are to be committed to arena expense and non-arena revenues will be diminished." Somebody will be asked to make up the difference.
Multimillion-dollar questions abound and they demand answers. How well does the deal protect local governments and taxpayers from investor default and bankruptcy?
Financial risks come in unexpected ways. Consider the power of glitz. KeyArena lost favor in 13 years because it did not stay current with NBA and owner expectations of amenities and lucrative frills. Should money, a great deal of money, be set aside in anticipation of upgrades and remodeling over the 30-year contract? Who pays to stay first-class?
Unresolved and unexplained are core issues about traffic and mobility around the arena, and the impacts on industrial property and the Port of Seattle. Parking and traffic improvements are basic concerns as more activities are planned.
Seattle City Council members were scratching their heads about the city potentially paying Hansen $100 million for property he bought for $40 million. Stay tuned for "Flip This Arena" on ESPN. How much else in this deal is similarly inflated?
Words count in this proposal. How much will things cost, who truly pays over time, and whose resources are put at risk in the meantime? Can this metropolitan area support this banquet of professional sports and busy collegiate schedules?
The Muni League questions await answers, along with others about the future of KeyArena and how a first-class property maintains its appeal.