Inside sports business
A recent income levels study by American City Business Journals found Seattle likely to financially accommodate NBA expansion or relocation, but only “borderline” at sustaining the NHL.
That’s worth noting as the city of Seattle prepares a May 7 release of the final Environmental Impact Statement (EIS) on a Sodo arena proposed by entrepreneur Chris Hansen. The EIS won’t determine whether the arena gets built, but it’s sure to re-ignite debate over whether the city and King County should fund the venue if only an NHL team starts off there.
And that’s where this new Business Journals study and our supposed borderline capacity to accommodate an NHL team come into play.
A Memorandum of Understanding between Hansen, the city and county calls for up to $200 million in bond funding as long as an NBA team plays here. But the NBA isn’t coming near term, so any funding requires changing the agreement to cover an NHL team arriving first.
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Mayor Ed Murray insists such an amendment must “pencil out” financially. And the newly released income study underscores how uncertain that is.
The study calculated the “Total Personal Income” (TPI) levels of 83 U.S. and Canadian cities based on money earned by the populace within their greater metropolitan area. It gauged how much of that income supports existing professional and major-college teams and whether there’s enough left over to accommodate new franchises.
Cities are rated on a 100-point system: 100 indicating “full capacity’’ to take on a new team; 70-99 showing “borderline capacity”; sub-70 meaning “inadequate capacity” and a non-starter.
Seattle scored 88 overall, the mid-range of “borderline” capacity to acquire new teams. The study says basketball is less costly than the NHL, so it’s hardly surprising the NBA is considered the better bet here.
The study says it takes $45 billion to accommodate the NBA, but $50 billion for the NHL.
The Seattle-Tacoma region, according to the study, has 4.4 million residents and a total population income of $236 billion. It takes $192 billion to accommodate the Seahawks, Mariners, Huskies and Sounders, leaving a $44 billion surplus for a new franchise.
That’s only $1 billion shy of the $45 billion needed to absorb an NBA team — earning us a strong 98 score in NBA capacity. But we’re $6 billion shy for the NHL.
“A score between 70 and 99 is a sign of a borderline income base,’’ the study states, “meaning that a market may or may not be able to support a franchise, depending on the team’s ability to reach fans beyond the market’s boundaries.’’
There’s been some discussion here about our sports market becoming oversaturated.
An NHL team would start No. 4 or 5 in town popularity-wise behind the Seahawks, Mariners, Huskies football and possibly the Sounders. We aren’t counting NBA yet, or the NHL squad might rank No. 6.
Now, this doesn’t mean pucks are doomed.
“Keep in mind that economic capacity is only one facet of any decision to expand or relocate,’’ the study says. “Other considerations would obviously be of similar importance, such as the proximity to existing teams, the availability of stadiums or arenas, and unique local factors.’’
Our hockey intangibles include fans potentially traveling here from throughout the Seattle-Vancouver, B.C., corridor and as far south as Portland. We have ample junior hockey history and one of the nation’s largest adult recreational programs.
But just as our NBA history is a plus, our lack of NHL pedigree clouds the issue.
Also, if absorbing the NHL alone is questionable, how can Seattle ever afford hockey and the NBA? It’s worth further discussion, since most arena talk involves both sports eventually playing here.
Other cities have issues as well.
Louisville gets mentioned as Seattle’s NBA expansion rival, but scored only 70 overall and 78 for NBA capacity. That’s because Louisville has only a quarter of our city’s income, limiting capacity for teams.
Then again, potential NHL expansion candidates Las Vegas and Houston scored 100 both overall and for NHL capacity. Houston has more people and total income than Seattle while smaller Las Vegas has no existing pro teams eroding its money base.
Las Vegas is also building an arena.
Until that happens here, we’d best worry about Seattle ahead of other places. And make our financial ability to accommodate new teams part of arena funding discussions.
Those $500 million expansion fees the NHL is rumored to want from potential owners also risks becoming an issue. The more it costs owners up-front for a team, the more they’ll need to make back off a population already having its sports dollar stretched.
Hence, Murray’s demand that public funding requests pencil out.
Which means, those pencils had best be hard at work scribbling down math that counters this latest report’s skeptical outlook.
|Can Seattle support more sports teams?|
|A new study by American City Business Journals rates the ability of U.S. and Canadian markets to support major sports teams. A score of 100 indicates that a market’s income base is fully sufficient to support a new team. A score between 70 and 99 is a sign of a borderline base.|
|NBA team in Seattle||98/100|
|NHL team in Seattle||88/100|
|Note: Seattle’s population ranks No. 14 out of 83 North American sports markets analyzed.|