As many of you know I am a strong supporter of Chris Hansen’s proposed SODO Arena. Not only does this deal get Seattle a NBA/NHL level arena, it has a one of the best arena deals that this state had ever seen. That being said, I feel like it would be a good idea to go out and get a different perspective on it.
This is where Neil deMause comes in. He is an author of a book and blog that take a critical look at publicly financed arena/stadium deals. He was kind enough to do an email interview with me outlining his thoughts on the SODO deal and how it compares to other arena deals in Seattle.
NdM: I’m the furthest thing from a lawyer, so I usually steer clear of making lawsuit predictions. That said, I think it’s fair to say that the I-91 suit faces an uphill battle, at least, because the way I-91 was written doesn’t fit very well with Chris Hansen’s arena financing plan. So even if Seattle wouldn’t see a net positive return on its arena investment — and I think it’s more likely to break even or take a small loss — it’s going to be tough to challenge on those grounds.
NVR: Speaking of Chris Hansen’s financing plan for construction of the arena; what is your opinion of the finances surrounding this arena deal? How do you think this compares to the financing of the 1995 Seattle Center Coliseum renovation?
NdM: I think “better than a poke in the eye with a sharp stick” about sums it up. Compared to most arena deals, Hansen’s plan requires far less in public subsidies — but then, most arena deals are massive ripoffs. Hansen’s arena funding scheme, as I’ve written about on fieldofschemes.com, most of the costs would land on Hansen: $290 million in cash, $50 million in land costs, an untold amount of rent payments, and some other taxes that end up coming out of his pocket. By contrast, the city and county would have most of their $200 million repaid by either rent payments or newly generated taxes — not all, because a lot of the arena taxes will just end up being cannibalized from elsewhere in town. And there’s still the risk of being left with a costly white elephant in KeyArena.
I’ve crunched the numbers several different ways to try to figure out what the total public cost would be, and there’s really no way of knowing for sure. I’d say it’s extremely likely that Seattle will come somewhere between breaking even on the deal and losing $50 million or so — which, again, is way cheaper than most cities have gotten off, but still not exactly the “generates a positive rate of return” that I-91 required.
So, better than a poke in the eye. I know everybody wants me to give a thumbs-up or thumbs-down to this, but the fact is, it depends on what you think is a reasonable price to pay to have a shot at an NBA team, and the price point set by Hansen is arguable, but not a slam dunk. If I’d been on the Seattle city council, I honestly don’t know how I would have voted.
Stay tune for part two, coming up shortly.
Categories: Seattle Arena