Why is Seattle offering to lock up KeyArena with no NBA team in sight? Doing so will hurt chances of seeing the Sonics back at Seattle Center.
Seattle’s effort to upgrade KeyArena may sound like another chance to lure an NBA team to replace the Sonics.
But the city is going about it the wrong way.
By offering to lease KeyArena and its valuable parking garage to developers and not a team owner, the city is hurting chances of ever returning the NBA to Seattle Center.
The deal offered by Mayor Ed Murray reduces the arena’s appeal to team owners, because they’d have to share revenues with developer-managers he’s now courting. The team would get a smaller share of proceeds from the arena, garage and adjacent development.
Contrast that with CenturyLink and Safeco fields, which are managed by the Seahawks and Mariners owners.
Handing over the garage is especially foolhardy, if Seattle truly wants to lure the NBA and, potentially, the NHL to Seattle Center.
The garage is a crucial source of revenue that leagues share among teams. If parking profits are cut or taken by a third-party leasee, the venue is less viable for owners and leagues.
Several experts on sports business and stadium deals confirmed my suspicions.
Leasing the KeyArena to a developer-manager in hopes that an NBA team will follow and share facility revenue isn’t realistic, according to Roger Noll, a Stanford economics professor emeritus.
“No, that’s a pipe dream,” he said.
That’s also the view of Brad Humphreys, associate professor of business and economics at West Virginia University, who studied KeyArena and gave expert testimony when the Sonics left.
“I would say it would substantially diminish the chances of getting an NBA team,” he said.
Exploring options for KeyArena is smart. But signing away the venue before a team is in hand is a terrible idea.
So why is this happening? A cynic might speculate it’s because Murray is running for re-election and the deal is seemingly pro-Sonics. Its outcome won’t be clear until after the election.
If those experts are correct, and the deal is unlikely to draw the NBA, Seattle should start discussing its actual merits. Who benefits from developing a more lucrative event venue and mixed-use buildings on the center’s southwest corner?
While KeyArena may need upgrades for the NBA, it’s still one of the world’s top event venues, as-is. With the garage, it’s also profitable, netting up to $1 million a year.
That’s a lot for a city that can’t afford parks, libraries and streets without begging for special levies. Seattle shouldn’t make any deal without getting more direct, net revenue.
If NBA is the goal, Murray’s request for proposals should have said any arena lease is conditional upon obtaining a team, similar to conditions placed on Chris Hansen, who has proposed an arena in the Sodo neighborhood.
But like many City Hall proposals, this is probably about helping developers. There’s not much prime real estate left to develop, so Seattle Center is in the crosshairs.
I fear the region’s central park and cultural center may soon be ringed by those generic towers sprawling across town — street-level banks and dog nurseries, topped by apartments, with “affordable units” facing walls or alleys.
A spiffed-up arena, flanked by new chain restaurants, would be an amenity for these developments, NBA or not.
At least two venue managers have expressed interest in redeveloping KeyArena and other Seattle Center property offered by Murray.
One is AEG, a Los Angeles-based entertainment giant that already books events at the center, including Bumbershoot.
Several recent AEG deals are instructive. It partnered with Los Angeles to develop a stadium and lure the NFL Rams. The team instead chose to develop its own complex in a nearby city.
Glendale, Ariz., hired AEG to manage its arena used by the Arizona Coyotes hockey team in early 2016. There was already friction between Glendale and the struggling Coyotes, but hiring AEG didn’t resolve things. The Coyotes dumped Glendale in November to develop a mixed-use arena complex in Tempe.
KeyArena gives Seattle leverage to lure an NBA team. The league commissioner has said it would be a great location if a team becomes available.
Why sign it away now, and make a development deal that hurts chances of getting the Sonics back at the Center?