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Lisa Waite

KeyArena: More luxury seating needed.

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Postscript
Update: Schultz Starts the Shot Clock
The Sonics owner gives the Legislature an ultimatum, and two senators are not impressed.

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Who Owns the Sonics?
They aren't saying.

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• Terry McLaughlin
• Seattle SuperSonics
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• Local Politics

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In their drive for a new arena, the Seattle SuperSonics are trying to dribble around the Seattle City Council. Rather than first obtaining city approval for a new arena proposal to the Legislature, as the council insists is proper, the Sonics have gone straight to Olympia for a funding plan. They want state lawmakers to approve a tax-extension package that could finance a $271.5 million arena proposal. It would retire debt on KeyArena, which would be torn down and replaced with a new facility that the team would effectively own and operate. (This amounts to tearing down a landmark from the 1962 World's Fair — the Washington State Pavilion, later known as the Seattle Center Coliseum and now KeyArena.) It's a political maneuver that would evade early City Council scrutiny—City Hall will have to sign off at some point. But says Sonics Executive Vice President Terry McLaughlin: "It's just a way to keep the momentum going." As he sees it, the council can take its sweet time deciding if a new arena is warranted, but the team will have gotten a funding plan approved in Olympia this session. Two bills are ready and awaiting action, and, says McLaughlin, "Time is of the essence."

It's not clear how this will go over at City Hall, where a review is set to begin Feb. 1. But the Sonics arena economic model no longer works, and something has to give. McLaughlin says the team has been in talks with unnamed other big cities—teamless Kansas City, where a new arena is in the works, is perhaps the most likely—and with Bellevue, where a new facility would have to be built from the ground up, costing perhaps $400 million. An arena in Bellevue, too, could be financed by the legislation the team is pressing in Olympia. The King County Council would have to approve financing of any facility built within the county, and the City of Seattle, as owner of KeyArena, would have final say over a Seattle plan, sooner or later.

Sonics lead owner Howard Schultz argues that the city's oldest (1967) big-league team, with an NBA title (1979) under its waistband, should get the same deal given to the Seahawks and the Mariners. The time is ripe, as well: The Sonics are, in part, making their move now to take advantage of the city's excitement over the Super Bowl–bound Seahawks. "Yes, we're cheering them long and loud," says McLaughlin. "It shows how a sport can galvanize a community."

The Sonics have also now gotten around to discussing some of the true costs of the proposal. For the first time, McLaughlin allows that the Sonics' arena dream is not just a $200 million proposal to finance a steroidal expansion of KeyArena, as previously reported. "Really, it's closer to $220 million now," he told reporters Thursday, Jan. 26, during a news conference. But the full package sought by the Sonics/Storm franchise actually comes to at least $271.5 million. With interest, it tops $400 million. The breakdown, outlined in documents floating between the team and City Hall, is $221.5 million for a new Seattle Center arena and $50 million to retire debt. The debt is what's left to be paid on the $73.4 million arena remodel done in 1994–95; annual bond payments of around $6.8 million are scheduled to run for seven more years.

Seattle Center spokesperson Perry Cooper says debt settlement "has to be part of the package." The Sonics have already decided they'd like taxpayers to pick up all costs including debt. That would be similar to the Seahawks stadium deal, in which taxpayers paid $205 million in remaining debt on the imploded Kingdome. The Sonics proposal conflicts with vows made a dozen years ago when city officials and then-Sonics-owner Barry Ackerley agreed the expansion would be financed by revenue and not involve taxpayer funds. (See "The Keys to KeyArena," March 23, 2005.) But, says McLaughlin, there's little alternative. The team lost $16 million last year and can't climb out of the red here without a new deal. If the Legislature approves an extension of current taxes used to finance the football and baseball stadiums, "that would provide sufficient revenue to do the job at KeyArena," he says. "That would also retire that debt, and there'd still be a significant surplus left over."

Draft planning documents, updated in December, show the $271.5 million cost is projected in 2008 dollars, the most likely year that construction and a financial plan would be in full swing. "These things usually take from five to seven years to plan and build," says McLaughlin, noting the Sonics lease expires in 2010, "so we're already behind the eight ball." If the project got under way this year—most unlikely—the cost would be $254.8 million, debt payoff included. If construction didn't start until 2009, total cost could be $280.4 million. Interest could almost double taxpayer costs. The current $73.4 million arena finance plan, for example, will ultimately have cost $125 million with interest and would have cost taxpayers $150 million had not the bonds been refinanced a few years back.

There are other, cheaper arena expansion proposals on the table—priced as little as $20 million—but the Sonics and many city officials favor the high-end plan, a modest one in the team's view. "We don't need lavish," says team President Wally Walker, as quoted in minutes from a meeting with city representatives. "We need something that works." Adds McLaughlin in an interview: "Two years ago, the Sonics and Storm went through a very deliberate and pretty intensive process, working with the Center and city to design a building with an economic life for 20 years. It was $200 million, and that cost has already risen 10 percent. To build anything less will be to whittle away at the future. We don't want to be revisiting this in another five, 10 years. In the early '90s, when the arena renovation was being designed, the first proposals were around $120 million. Designers were told to go back to the drawing board, that's too expensive. Most of that design included the things we are seeking now."