Friday, October 24, 2008

Seattle PI: A new NBA team here?

Reported in the Seattle PI today, front page, above the fold was a story titled A new NBA team here?
Guys with little else to do right now, that happen to be newspaper reporters, were noted sports columnist Art Thiel, and former Sonics Beat reporter Gary Washburn.

This is the time that I expected stories to come out, to quote myself from Saturday, September 13, 2008:
The reality for the city, Hunter, Chris Gregoire, Rossi, Seattle Mayor Greg Nickels, and Brian Robinson, is that the first NBA season without the Sonics in Seattle is Tuesday, October 28th, one full week before election day. This is in time to be right in front of the majority citizens that vote by mail.

The first NBA preseason game is October 5th (I had to look it up). The sports columnists, reporters, journalists, bloggers, sports radio, will have nothing much to cover in the two weeks leading up to that because the Seattle Seahawks have a bye week the prior Sunday. That is two weeks without meaningful local NFL coverage. The Seattle Mariners season officially ends September 28th. The NBA, and the missing team story, will fill the hole in the sports section at some point during that period. What else are they going to write about?

Well, Mr Thiel and Washburn have made great use of their downtime between baseball season and whatever it is that is being called football right now. I was worried that the kind of story that would be written would rip down any real hope, or present such an incomplete story that the average reader would dismiss future efforts out-of-hand.
Thankfully, this is not the case.
The dynamic duo did a reasonably thorough job of stating the basic parts of the tax elements, and the needed quotes from the three legs that an NBA deal is set on: political figures, ownership, and David Stern.
Many of the details I have speculated about here, or re-reported from a variety of places.

Let's take a look at the meaty bits from the report.

A new plan to divert a portion of hotel-tax money from the state convention center to a remodel of KeyArena could help Seattle begin pursuing a replacement NBA team as soon as 2010.

That is pretty solid: tax revenue, Key Arena, replacement team as soon as 2010. My early guess was 2011, I would feel good about being wrong there.

NBA Commissioner David Stern said Thursday "positive" talks have gone on between the league and a potential ownership group headed by Microsoft Chief Executive Steve Ballmer, who led an ill-fated plan to save the Sonics earlier this year.

Stern, and Ballmer have talked according to Stern. This really should put to rest the fretting some fans have been doing about this situation.

Deputy Mayor Tim Ceis confirmed the talks, and said he was optimistic that this time around the city's request for state authorization will meet little resistance when the Legislature convenes in January.

"It should be noncontroversial, because it's a city-only tax that already exists and will not be an increase," Ceis said of the latest attempt to find a long-sought public portion of a proposed $300 million renovation for a building currently deemed financially obsolete by the National Basketball Association.

"If we can get our funding package together this session, we can start to work with the Ballmer group on identifying a team for Seattle, but probably not until 2010."

Stern, speaking to reporters on his annual season-tipoff conference call, made his first public comments on Seattle since the Sonics left.

"I don't want to mislead, so I will say that we have had some contact and we're aware of what's going on," he said. "I'd rather not deal with the specifics of it at this time, but we have had some positive contact."

While no city official has talked to Stern, Ceis said standard procedure always has been for Stern to go through the owner, or potential owner. He confirmed that Stern and Ballmer have talked, and Ballmer conveyed the new funding plan for the public portion of the remodel.

That is your deal right there. The city has insulated a funding resource from as many people that thought they had a right to say no about it. Until there is an official source for the money you are not going to get solid responses from David Stern, and why should he.
Here is the tax:
The tax under consideration is different from the so-called stadium taxes from King County that the Sonics, as well as the University of Washington, pursued in recent sessions to fund their sports building projects.

A 7 percent tax on all hotel bills within the city long has been dedicated to convention center operations. The city, which is still negotiating with the hotel industry and center officials on the proposal, seeks to divert one-tenth of the revenue to Seattle Center and the KeyArena project.

Ceis said that growth in hotel-room rentals over the past 10 years is generating enough revenue for the diversion to produce over a 15-year period the $75 million necessary to finance construction debt without compromising convention center operations.

There is more than was planned, nobody gets hurt, and he didn't mention that the tax really can't be used for anything else, not for schools, not for lost puppies. It doesn't come from there and the hotel owners that are impacted by its application don't want it going there. That's a general fund responsibility, this isn't general fund money. It's the law.

The settlement, which paid off the $34 million in construction bond debt remaining from a remodel completed in 1995, included a provision for another $30 million to the city by 2013 if an NBA team had not moved to Seattle. But the city had to have an NBA-ready arena, or the funding committed for one, by Dec. 31, 2009.

For practical purposes, that means the pending session in Olympia will be last chance for any funding requiring state authorization.

Asked why the city didn't come up with this idea while the Sonics were still in town, Ceis said the focus was on finding revenue that didn't require state approval. Even though this revenue still requires a legislative OK, the source is strictly city taxes, not county, and provides an upgrade for a city-owned building that helps draw tourists to city hotels.

"It's the path of least resistance, and there's no competition for the funds," he said.

At the time of the settlement, which was widely criticized as insufficient for the loss of a 41-year civic institution, the city defended itself in part by saying it was necessary to repair the damaged relationship with the NBA in order to have a shot at another team. The $30 million penalty gave the NBA and Bennett a financial incentive to help fill the void.

Ceis said that if the $300 million funding were in hand, the city would firm up the remodel plans that would allow Ballmer to pursue a team. He stressed that the city would not go forward with the remodel until an ownership group secured a team.

What Ceis is not saying is that the law that this funding was part of, and Safeco Field that the University of Washington wants, wasn't changed until March, and didn't go into effect until July 1, 2009. The source was there, but not available to Seattle to use.
Senate Bill 6638
Passed by the Senate March 13, 2008

Now, bring in the undertaker:

Since the NBA has no current plans to expand domestically, the only option would be to relocate a team from another city.

As many as half the teams in the NBA may have had operating losses last season, and some of the smaller-market teams have been in financial trouble for a while, including Memphis, New Orleans and Milwaukee. The Sacramento Kings also have been stymied in securing public funding for a replacement building for Arco Arena.

Unless a team is at the end of its lease, the Ballmer group would be in the same position Bennett was in Seattle -- an out-of-town owner attempting to pull away a team under contract with its city.

Ceis said that if a team is secured, the city has provisions to do the remodel before arrival, or to work around a six-month NBA regular season.

Matt Griffin, a Seattle real estate developer and Ballmer friend who served as his spokesman in the earlier attempt to save the Sonics, confirmed by phone Thursday night the group's awareness of and interest in the city's new initiative, but said little about the potential pursuit of a team.

"The first thing has to be the funding," he said. "We told the mayor in April that we were interested in keeping KeyArena from becoming a white elephant that drags down Seattle Center and lower Queen Anne.

"We can't take step two before we take step one. Once the funding happens, we can roll up our sleeves and take a look at what needs to be done."

A new NBA team here?
Tax diversion plan could give city the money for KeyArena

That's right, Seattle will likely take a failing franchise from another city, a city that will be a smaller market, that may have been placed in that market by design of David Stern's plan to have his teams be the big show in smaller towns. Well, some of those towns simply can not afford David Stern's NBA, even when they supply a new building.

What David Stern wanted in Seattle was a building that can support a franchise. Hopefully the lesson beyond the building, that will be the second relocation to a remodeled building, is that it isn't always the newness of the building, but the community and businesses that support it. Not being able to make the NBA work here for the Sonics has everything to do with the NBA's business model of growing beyond its habitat and always expecting the place to be more plentiful.
If there is a bubble economy, it is the NBA, and doing anything for them beyond a remodel is foolishness. So, unless you have a much bigger reason to build a new and bigger building, don't build one.

I rank the possible related team by who is most likely to come here after 2010:
Memphis Grizzlies, New Orleans Hornets, Charlotte Bobcats, and Milwaukee Bucks have been walking the tightrope for as long as I can remember, I think they stay. The Sacramento Kings are more likely to be the team to get to Las Vegas.

Have a great day,
Mr Baker
Sent from my iPhone


Isaac Alexander said...

If the "goal" is to have the Sonics and or a new NHL Franchise to come to Seattle, why is the "only" option that's put forth by the current Mayor is a renovated Key Arena? Former Sonic Fred Brown offers another option that I really wish the Mayor as well as others in the city would listen to.

Mr Baker said...

they can not get enough public money to build such an arena, but they can get enough money to remodel Key Arena.
The city is not going to help somebody else build a better arena by giving away land, because that would make Key Arena obsolete.

I really think this is the city's last shot at getting an arena solution funded for Key Arena. If they can not get it done by the end of 2009 I think they then get out of the way, what other choice do they have at that point.
But, I think they do have a very good chance of getting the funding plan proposed in December.