The Arena Dream - Now the Reality: Where Can Investors Buy NBA Team for Just $200 Million?

If there's anyone rising to the level of beating Mike McGinn for mayor in 2013, it's the man who is suddenly making a second McGinn term seem feasible. Mayor? Hell, if Chris Hansen can pull off building a new Seattle arena and buying an NBA franchise with just a $500 million investment through a financial arrangement never before tried, he can run for God.

Hansen, the San Francisco hedge fund manager, says in a little-noticed term sheet presented to the city that he and his ArenaCo investment group are willing to lay down roughly $300 million for a new 18,000-seat SoDo arena and another $200 million or so for a basketball team. Altogether, with another $200 million from taxpayers, the $700 million outlay would put Seattle back in the NBA.

A pro hockey franchise should also be included, although McGinn and King County Executive Dow Constantine yesterday didn't clearly explain whether an NHL team is necessary to make the deal with the city and county pencil out. The taxpayer investment is to be paid back through "arena-generated revenue" - essentially team lease payments and assorted existing taxes paid by sports fans and other arena users over 30 years.

It appears from the term sheet, however, that commitment by both an NBA and NHL team is necessary to make the numbers add up - "a pre-nup" as one official calls it - something that must happen before the first shovel is turned for arena construction:

This is a truly innovative [financing] approach made possible by the size of the private investment, the revenue created by the arena and the guarantees made by the teams. The public's investment will be leveraged against a significant private investment to develop the arena, and against the value of two NBA and NHL franchises.

Emphasis added - and clearly they meant to say one, not two franchises from each league.

So the starting point for the city, county and Hansen is the procurement of two sports franchises - one at $200 million - who agree to stay 30 years (or leave early and pay off what is owed to the city and county in unearned tax revenue). Taxpayers don't play until Hansen puts his money in the pot. And he doesn't ante up until he has an NBA franchise and an agreement with an NHL team.

First thing first is: that $200 million hoop team. Is there such an animal? Howard Schultz, you just may recall, sold the Seattle Sonics and Storm to Oklahoman Clay Bennett for $350 million in 2006. Bennett then sold the Storm to the Force 10 ownership here for $10 million in 2008 before moving the Supes to OKC.

The most talked-about franchise likely to move to Seattle, the Sacramento Kings, is valued at close to $300 million, although the owners say they're not interested in selling. That's about the same as the struggling Charlotte Bobcats, who are losing $7 million a year, and the New Orleans Hornets, rumored to be for sale.

But value doesn't necessarily mean sale price - the Chicago Bulls were valued at $850 million in Michael Jordan's days. When he left, the franchise devalued to $250 million.

It's possible Hansen et al, in bringing the NBA back to Seattle, could end up laying out as much as Bennett did in taking it away. ArenaCo's tab could reach upwards of $700 million, inching the complete deal towards the $900 million mark.

Since Hansen isn't saying much about his own investment group's value, we'll assume he truly expects to spend more than $200 million for a team. As he puts it in a letter to the mayor, "we plan to raise over $500 million in private investment for the facility and an NBA franchise."

But how far over? Emphasis emphatically added to perhaps the most important word in the proposal.

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