Emails and documents released by the city show that there's a far more focused effort to bring an NBA team back to Seattle and build a new arena than previously known.
A wealthy San Francisco hedge-fund manager and officials in the Seattle mayor’s office have been working behind the scenes for eight months to bring an NBA team back to the city as early as next fall and build a new arena, according to emails and documents that reveal a far more concerted effort than previously known.
A Dec. 13 agenda for a meeting between the parties shows they were talking about details such as a “Review of Basic Deal Structure,” “Financing Issues,” including “City Debt Capacity,” and “Security for Public Financing.”
The documents, released Friday to The Seattle Times under a public-disclosure request, also provide the first glimpse of how the largely unknown hedge-fund manager, 44-year-old Seattle native Christopher Hansen, approached the city about his desire to buy an NBA team and build an arena south of Safeco Field.
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In an initial email laying out his vision, Hansen told city officials an arena could be built with minimal impact on taxpayers.
“Thanks for spending the time today guys,” Hansen wrote in a June 16 email to Julie McCoy, chief of staff to Seattle Mayor Mike McGinn, and Ethan Raup, the mayor’s director of policy and operations.
“I really appreciate it and look forward to making this happen in Seattle,” wrote Hansen, a multimillionaire who built a fortune in the private investment world. “I genuinely mean that and am confident that with a little effort and creativity we can find a solution that meets our needs and the City’s /State’s desire to get a team back to Seattle without a large public outlay.”
Hansen offered to provide information on “recent municipal arena deals that have been put together and some of the direct and indirect contributions that the city can make that don’t require incremental taxes or direct public funding.”
Those issues were on the table at the key Dec. 13 meeting, which was attended by McCoy and Raup and set up by Carl Hirsh, a New Jersey arena consultant hired by the city in July.
It was held at the law offices of Foster Pepper, one of Seattle’s prominent law firms. An attorney with the firm, Hugh Spitzer, had been hired by the city in September to provide advice on selling construction bonds.
The agenda also included discussion of KeyArena, where the Seattle Sonics played before owner Clay Bennett moved the team to Oklahoma City in 2008 after failing to secure a new arena. Bennett said KeyArena lacked amenities to support an NBA franchise.
No details were listed on the agenda, but KeyArena could be used as a temporary home for a new team with the permission of the NBA, which considered it an unsuitable permanent venue even before the Sonics departed.
Kings up for grabs?
Although the documents don’t mention how Seattle would obtain a team, they show the city has been following developments in Sacramento, which is under a March 1 deadline to come up with a viable proposal to build an arena for the Sacramento Kings. In September, Hirsh emailed a copy of an Associated Press story to Raup that outlined the Sacramento situation.
If Sacramento fails, the Kings could be playing in Seattle next fall if the city and Hansen reach an agreement, according to a Seattle City Hall source who has been briefed on the matter.
In addition, National Hockey League Commissioner Gary Bettman has expressed a strong interest in placing a team in Seattle, leading to widespread speculation that the financially struggling Phoenix Coyotes could be moved here.
Bettman, speaking after a board of governors meeting in Ottawa last week, said the league hopes to find a buyer before the end of the season to keep the Coyotes in the Phoenix area, according to news reports. “I don’t see any reason to discuss a Plan B at this point,” he said.
But, according to ESPN.com, Bettman said, “There are a lot of people who think Seattle would be a great place to have a team. The Pacific Northwest, the natural rivalry with Vancouver, another team in the Pacific time zone … but there’s no building.”
Seattle has been mentioned as an NHL destination along with Kansas City and Quebec City.
While many observers consider an NHL team, as well as concerts and entertainment events, to be a crucial component for the financial success of a new arena, the documents obtained by The Times focus on basketball.
The last item listed on the Dec. 13 agenda was, “Terms for Consideration from Development Team.”
No final offer from Hansen’s group has been presented to the city. Hansen heads Valiant Capital Management LLC, but his effort is said to be a personal endeavor.
McGinn said Saturday he is taking the proposal “very seriously,” but doesn’t want the city to be left “holding the bag.”
He said he couldn’t predict the timing for the next step.
“It’s a pretty substantial commitment that would have to be made by the investors,” McGinn said, emphasizing that the city budget can’t be tapped to fund an arena.
Voters have spoken
McGinn said the offer also must honor the will of Seattle’s voters, who in 2006 overwhelmingly approved an initiative that says the city must make a profit on any investment it makes in a sports arena. McGinn noted that he voted for the initiative.
Hansen, a 1986 graduate of Roosevelt High School with deep roots in the city, has not publicly spoken about his plans.
But in his June 16 email, Hansen referred Seattle officials to an aide who would be willing to talk about arena deals in other cities, identifying the representative as Dave Perez.
On June 18, Perez wrote to McCoy and Raup that he was “eager to spend some time with you guys discussing recent PPP solutions that have been used to deliver sports facilities,” an apparent reference to public-private partnerships.
The documents don’t provide a breakdown of how the partnership would work, but the public end could include admission taxes and increased tax collections tied to a boost in Sodo property values. Some fiscal-analysis materials were withheld from The Times by the city as confidential. McGinn said no new tax source would be used to fund an arena, while acknowledging the city already collects admissions and property taxes.
Hansen has acquired property south of Safeco Field’s parking garage, between South Massachusetts and South Holgate streets east of First Avenue South, records show.
While sources have previously said at least one business owner has declined to sell, the issue of the city using its power of eminent domain to acquire the land is no longer a concern of Hansen’s group, Seattle City Attorney Pete Holmes said during a recent interview with The Times editorial board.
Holmes did not elaborate, but his comments suggest Hansen’s representatives have reached some sort of agreements.
Hirsh, managing partner of Stafford Sports LLC, who has extensive experience with arena deals, has estimated the cost of building a state-of-the art facility at about $400 million.
City Councilmember Richard Conlin said intense public scrutiny would be given to any arena proposal and that the investment group must be willing to vet its plans with the public.
“They’re going to have to expect a lot of publicity in the final stages,” Conlin said.
Councilmember Nick Licata, a vocal critic of previous stadium deals that involved public financing, said he’d support a plan to build a new arena that provided the city with a return on its investment as required by the 2006 initiative.
McGinn has said that once the city receives a firm proposal, it will open discussions with the City Council.
Eyes on Sacramento
What happens in Sacramento could drive the process.
Sacramento is attempting to secure the financing to build a new downtown arena for the Kings, who have played since 1988 in what is now known as Power Balance Pavilion, formerly Arco Arena. At 17,317 capacity, it is the smallest arena in the NBA and is also one of the oldest, and lacks many of the revenue-generating amenities of new arenas.
The Kings are owned by Joe and Gavin Maloof, who have run into some well-documented financial issues in recent years, specifically concerning their investment in the Palms Casino in Las Vegas, and they are pressing for a new arena to be built immediately or to relocate the team somewhere it will make more money.
The Kings almost moved to Anaheim last season before NBA Commissioner David Stern stepped in and said the city should be allowed more time to try to keep the team. Given that the Los Angeles Lakers and Los Angeles Clippers already play in the Southern California market, the owners of those teams might balk at a competitor.
The Kings are an original member of the NBA, which dates to 1949, and are one of the most well-traveled, having played in Rochester, N.Y.; Cincinnati; and Kansas City-Omaha before Sacramento.
Under the NBA’s March 1 deadline for Sacramento to present a viable financing plan, a new arena would be located at the downtown rail yards at a cost of roughly $400 million. The city has proposed to raise about $200 million by leasing the rights to the city’s parking spaces for 50 years.
On Friday, the city announced the names of 13 companies that have submitted proposals to win those rights. The city is expected on Feb. 14 to present to the City Council the proposals it considers the most viable. It also has been expected that a proposed arena builder would donate roughly $50 million to the project.
The Kings are struggling on the court, with a losing record, and attendance has suffered, with its average of 14,267 per game through Feb. 3 ranking 26th among 30 teams.
Seattle Times reporters Bob Condotta and Emily Heffter contributed to this story, which also includes material from Times archives. Steve Miletich: 206-464-3302 or firstname.lastname@example.org. Lynn Thompson: 206-464-8305 or email@example.com