Inside sports business
One thing the NHL hoped to do with its expansion process was to determine which ownership groups had some cattle to match their big cowboy hats.
From that perspective, mission accomplished.
The league received two $10 million applications — $2 million of which is nonrefundable — from corporate heavy hitters in Quebec City and Las Vegas, where arenas are being built. Meanwhile, our region’s arena efforts in the Sodo District, Tukwila and Bellevue proved more chaff than wheat.
Make no mistake: The three Seattle-area groups not only lack arenas but also the financial wherewithal to meet the NHL’s asking price of $500 million for an expansion franchise.
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Chris Hansen and Victor Coleman in Sodo couldn’t come to a financial arrangement where they felt comfortable paying that fee alongside the arena’s $500 million price tag.
Tukwila arena builder Ray Bartoszek scoured Seattle and elsewhere in recent months seeking additional investors. From what I’ve heard, those courted wanted to know how a billion-dollar pledge toward hockey and an arena would prove profitable and they weren’t satisfied with the answers.
In Bellevue, they’ve had longtime NHL and NBA “power broker” Jac Sperling of Colorado offering to gift-wrap them a team-ownership group for months. The problem was finding somebody willing to pay staggering Bellevue real-estate prices to amalgamate land in the city’s Wilburton District and get an arena project launched.
So, talk as we may about being wealthier than other regions, we aren’t deep-pocketed enough. When Steve Ballmer dropped $2 billion on the Los Angeles Clippers and took his rooting interests to California, this region lost a rare financial “whale” caring enough about sports to replace mouth with money.
Given that, it would be tough to fault local sports fans for rolling their eyes at further lip service about the NHL or NBA coming — and they will hear it — without the dollars to back it up.
Monday’s developments hurt the credibility of all three groups when it comes to their resources.
Talk to anybody in town who knows what’s going on, and you’ll hear the skepticism. About these groups being more talk than action; how their projects sound great until it’s time to open their wallets. How they and their courted investors were banking on the NHL’s $500 million franchise fee being a “bluff” that could be renegotiated.
But when it came time to put up or shut up, the league didn’t lower its fee. And groups from Las Vegas and Quebec City put up.
From that perspective, we aren’t ready. Not even close.
So what happens now?
Well, for starters, the world didn’t end. The NHL has said this process is consultative and won’t automatically lead to the awarding of expansion teams, and the Arizona Coyotes and Florida Panthers still eventually could need relocation spots.
An NHL source tells me the league invited Bartoszek to its New York offices for a chat Tuesday. So there’s still a relationship there.
And yes, this region does have wealth the NHL still covets. Maybe not enough in one place to purchase teams and arenas simultaneously, but enough to warrant further looks.
But there’s always been risk in the NHL coming here. And amid the hoo-ha about adding teams, we haven’t paid that risk enough heed.
We should be questioning how saturated the Seattle sports market already is with the Seahawks, Mariners, Huskies and Sounders attracting major dollars. There’s a reason intelligent business types employing teams of financial analysts among the Sodo, Tukwila and Bellevue groups can’t make the NHL “pencil out” to their satisfaction.
And that applies to the NBA as well. Yeah, we have a great Sonics history. But also a history of losing that team because of arena and money issues when it came to making things work here in the 21st century.
An NBA expansion team could cost $1 billion — twice as much as an NHL franchise. Hansen’s group wants $125 million in public-bond financing for the arena if the NBA comes.
The Bellevue effort likely would have needed some public money. In Tukwila, Bartoszek’s “private” venture undoubtedly will involve public infrastructure add-ons.
So it’s time to figure out how much more these groups need and whether it’s worth it. Right now, they clearly can’t compete with Quebec City and Las Vegas on NHL expansion.
King County councilmember Pete von Reichbauer has suggested the groups pool resources. And yeah, combining capital should make for a stronger bet.
Whether that’s doable remains in question.
Bartoszek says he’ll continue getting his Tukwila arena shovel-ready. His plan, ever since Hollywood producer Thomas Tull balked at joining his venture, has been to get arena approval and then use it to lure bigger investors.
Hansen’s plan in Sodo is similar: Get his arena shovel-ready, then hope the NBA offers a team to trigger more investors plus the public-bond money.
Bellevue’s plan? It has to progress beyond cocktail napkins and scribbling.
But nobody is ready. So Monday’s 0-for-3 showing relegates this market to minor-league status on the expansion front for now.
Not to worry, we’ll get called back up for another shot at the NHL and NBA, maybe sooner than anyone thinks.
By that time, those looking to bring teams here hopefully will have gotten their acts together — to where they can actually compete on their own in this mega-money game we call pro sports.