Bellevue arena would need a ‘white knight’ | Part 2

For State Rep. Ross Hunter, the Seattle Supersonics leaving town was heartbreaking. He was a longtime fan, but like other Washington lawmakers he refuses to be held for ransom by the National Basketball Association.

When the Seattle Supersonics left town, a trail of broken-hearted fans laid in the wake. State Rep. Ross Hunter was among the most passionate of them. He proudly called himself a fan for decades, but like other Washington lawmakers he refused to be ransomed by the National Basketball Association.

“The current NBA model is they extort cities to get them to pay for arenas,” said Hunter, the chair of the House Ways and Means Committee. “With the fiscal reality that cities, counties, and states are in right now, it’s hard to imagine any state would put money into funding an NBA arena rather than paying for public education, as an example.”

Though three years removed for losing the team, the bitter memories throughout Seattle and the rest of the state remain. Fans blame politicians who fought to keep the team, and the league that has developed a model to coerce residents into spending billions on arenas, even as governments are forced to cut down to the bare bones due to economic recession. Legislators have worked on plan after plan to bring a team back, but thus far, nothing has come to fruition. Local and state legislators have maintained that they will not spend tax dollars on a new arena, and it will be up to a knight in shining armor – one or a number of heads of the area’s largest companies, or an outside observer – to bring professional basketball back to the Puget Sound region.

In the past, arena money came out of public pockets. New arenas for both the Mariners and Seahawks received tax dollars in the 1990s. The $430 million CenturyLink Field came to be following a special election in 1997 after Microsoft cofounder Paul Allen stepped in to buy the team if a new arena could be built. Allen pledged responsibility for any cost overages, and the vote passed with more than 51 percent.

The Kingdome’s other team, the Mariners, were on their way to Tampa Bay in the mid 90s, but the magical 1995 season galvanized the Legislature. Even after the public rejected a funding measure, to vote in favor of a half percent sales tax increase and 2 percent car rental tax to build SafeCo Field, which opened in 1999.

But when the NBA stepped in and began to grumble about Key Arena being out of date, the public blowback was immediate.

Seattle City Council members showed a level of distaste toward the team, with then Council President Nick Licata going as far as to say the Sonics provided zero economic or cultural value to the city. He fought against a bill to bring in $200 million in state subsidies to keep the team financially viable.

Developers say these issues are why politicians and arenas don’t mix.

Bob Wallace, president of Wallace Properties and a board member for both the Kingdome and SafeCo, saw first hand how political bodies can interfere in sports activity. He said King County deferred much of the maintenance for the arenas because they had other budget priorities to fill. Taxes collected from the old stadiums are often talked about as means to fund other projects, not always related to the arenas.

“Whenever you’ve got a political body involved, they want to get their mitts on it and control it,” he said.

The Legislature too took a stand against the league after the citizens of Seattle in 2006 voted in favor of Initiative 91, which prohibited Seattle from supporting teams with city tax dollars unless such investments yield a profit on par with a 30-year U.S. Treasury bond, currently about 4.75 percent.

Behind Speaker of the House 43rd District Rep. Frank Chopp, the Legislature pledged not to pay for a new arena, a sentiment that stands to this day.

“I don’t think there’s a role for government in financing an arena,” Hunter said.

Seattle has maintained this stance as well, with Mayor Mike McGinn continuing to lobby for a Sonics return, with a clear mandate that public funding is not an option.

Bellevue too is open to bringing an arena to town, but again, only if it comes without expense to the public. At a recent City Council candidate forum, six sitting members and candidates were united in their views that a building could be great for Bellevue, as long as Bellevue doesn’t have to pay for it.

“If a plan came forward, and it meant not spending tax dollars, I would certainly work hard to try and find a way to make it happen, I think it’d be exciting,” said Bellevue Council Member Claudia Balducci.

Battling the budget

The State Legislature has dealt with a $12 billion shortfall between 2009 and 2011, with another $2 billion hole to fill this year. It is looking at chopping millions from schools, social services and other organizations. Using tax dollars to fund an arena would create a political fiasco.

“There are cities that have laid off police officers, firemen and teachers, and you are going to raise taxes to pay NBA players? That’s not going to be acceptable in this political climate,” said Victor Matheson, professor of sports economics at Holy Cross University.

But a group of legislators is working on finding a solution that doesn’t take money from the taxpayer.

The coalition, known as the Sonics Taskforce, is led by Reps. Dave Frockt (D-Seattle) and Mike Hope (R-Lake Stevens), and is dedicated to finding money for an arena without spending public tax dollars. Hope will likely propose a measure known as the “jock tax,” an income tax system that charges visiting professional athletes for money made in the state. This could raise approximately $175 million, according to the proponents.

That won’t be enough.

According to research compiled by Matheson, the average NBA arena since the year 2000 cost $302 million, with an average of 51 percent public investment. And the trend over the past decade has seen greater public investment in arenas. Since 1999 only a single NBA-only arena has been funded by 100 percent private dollars, the Air Canada Center in Toronto. But this was a special case, with the owners buying up a partially built arena and established team. Rarely, if ever, is the case that an owner will build an arena, without the promise of the team, and then buy a team and bring it to the area.

The hope is that the jock tax package would present the motivation to an investor to come in and fill the void.

Matheson has shown in his research a variety of ways in which public money could be used to augment private investment. According to his research, the use of a number of methods, including hotel and gambling taxes, ticket charges, sin taxes on goods such as cigarettes and alcohol, and personal seat licenses – a system in which fans purchase the rights to later buy season tickets at a designated seat – often makes up a cocktail of funding sources to put together a public contribution.

Attaching a professional hockey team to the proposal seems to spur more private investment as well. According to Matheson’s research, of the 10 new arenas since 1990 that house both hockey and basketball teams, the average public contribution was 14 percent.

Stepping up

That leaves any remainder up to a wealthy individual or individuals. And while there’s no shortage of wealth on the Eastside, one name often comes up: Steve Ballmer.

The CEO of Microsoft, Ballmer has been a big part of Sonics discussions in the past. He helped organize a consortium of individuals to fund a Key Arena renovation, but that still couldn’t get it done.

Ballmer could not be reached for this story, but the Microsoft magnate did touch on the issue of an arena on the Eastside at a Seattle Rotary Club meeting over the summer. He characterized the problem not as a money problem, but a real estate problem of an arena to house the team. He also indicated he was not likely to be the man to build an arena to make way for the team.

“If somebody could solve the real estate problem, someone could solve the NBA problem,” he said, and he added it’s up to the real estate industry to solve it. “If you find an answer to that problem, I’ll buy the first season ticket.”

Wallace watched the process that sent the Sonics to Oklahoma City. All of these interests, he said, have been around throughout the process and could have come in and saved the team.

“I believe we have the market, we have the capacity, all we need is the motivation, but I haven’t seen any evidence of that.”