Argument: Key Arena has the potential to be profitable with or without the Sonics and Storm.
Seattle Center will remain a vibrant part of the community regardless of whether they leave.
Rebuttal: Reports that Key Arena could eventually turn a profit without the Sonics are greatly exaggerated and based on overly optimistic projections. The study that Nick Licata cites in the Seattle Times on February 13th 2006 does not include the financial impact of the 600,000 people who visit the city to watch basketball every year. That number of visitors is much higher than will be realized from any combination of concerts, events or minor league sports and those visitors spend more than any other visitors to Seattle Center:
Ø None of the three options for Key Arena without the Sonics and Storm make money when debt service payments are factored in. Furthermore none consider other economic losses detailed in the KAS or other reports.
Ø All three options involve an increase in ice shows from 9 per year to 17 or more, tripling “other sports shows,” and an increase of concerts from 20 to 25-30, which would equate Key Arena with the top few indoor concert venues in the world. All these options fail to account for the potential that a world class arena may be built elsewhere in the region in direct competition for those very same events. Even with the substitute events, the facility would still fail to make money after debt service.
Ø Of the options cited only one assumes that Key Arena will also lose the Seattle Thunderbirds as a primary tenant. The Thunderbirds lease expires after the 2007 season and the team is not likely to return. Passage of Initiative 91 would prevent the city from making any competitive effort to retain the team. If the Thunderbirds also depart, even the most optimistic scenario for Key Arena would require a 72% increase in non-sporting events and result in a 59% decrease in operating profit. After debt payoffs, the building’s losses would increase by 278%.
In its study of alternative options, the Key Arena Subcommittee warns against projecting significant increases in non-sports events. If in fact an alternative arena opens or current market trends continue, assumptions of a large increase in events booking defy logic and are contradictory to historical precedent when our city is charged with operating an entertainment venue.
Patrons coming to Seattle Center for sports-related events were by far the group most likely to visit Seattle Center more than once or twice a year. The average response for these patrons was 11 to 15 visits per year, more than twice that of persons identifying themselves as arts patrons. Sports event attendee spending accounted for 31% of the total revenue of businesses located at Seattle Center in 2005, an estimated $97 million. It is highly unlikely that Key Arena or the Seattle Center would be able to survive in their present form without attendance related to sporting events.
Quotes: “Non-Sonics options pencil out, and that’s the finding of sports-industry experts.”
- Seattle City Council Chair Nick Licata, Seattle Times, February 13, 2006.
“An analysis of the finances of Key Arena indicates that it can operate at a profit with concerts and other sports events without the Sonics.”
- Seattle City Councilman Richard Conlin, via e-mail
“That citizens report can be viewed here. One thing it does say is that Key Arena is viable without the Sonics.”
- http://www.citizensformoreimportantthings.com/page2.html
“Licata envisions a remodeled Key Arena featuring multimedia exhibits, including video games and film, that would be open to children and families throughout the day. In addition, he estimates Key Arena can book eight to 15 concerts throughout the year to make up for the more than 50 game nights lost.”
- NW Asian Weekly, August 5, 2006
“I think the Seattle Center is kind of the icon of Seattle, and I fear without a good anchor tenant that we may not be successful at the Key Arena…I would hope the Sonics and the Storm stay.”
- Washington State Governor Christine Gregoire, Interview, KJR-AM, August 1, 2006.
“Key Arena is essential … to achieving the Center’s vision to bring together diverse audiences and build our collective sense of community. The City should make meaningful efforts to retain the Sonics/Storm as anchor tenants of Key Arena. We further recommend that public investment in Key Arena be at a level sufficient to make it a competitive facility for NBA Basketball”
- Key Arena Subcommittee Report, February 16, 2006
“We are not enough of a major market for many touring concerts and family shows to warrant the expense of a Northwest segment to their tour, and there are cycles in the entertainment industry where different markets are the “hotspots.” In recent years, there has been an overall decrease across all available northwest venues of touring family shows and the market in nationally touring concerts is incredibly variable. Ultimately, we don’t control what show opportunities will be available in the Northwest or which ones Key Arena will get.”
- Key Arena Subcommittee Report, February 16, 2006
“Our own economic study indicates that Key Arena could be self sufficient without the presence of the Sonics, assuming we spent maybe $20 million to update the facility, but only on the assumption that the team doesn’t build another arena in the county. Such a new facility would most likely draw most of the non-Sonics business we might otherwise get for Key Arena.”
- Seattle City Councilman Richard McIver
“The picture for former NBA arenas with a newer arena in the marketplace is dismal. Most have been demolished or converted to other uses and those operating as arenas usually do so at a deficit. The City should engage in meaningful efforts to retain the Sonics/Storm as anchor tenants of Key Arena, or risk absorbing greater losses and potential failure without them.”
- Key Arena Subcommittee Report, February 16, 2006
“There were a few concerts this year and last year, but (patrons) didn’t come here for dinner,” Chutney’s Gill said. “(The concert patrons) were youngsters. They don’t look for Indian food. They don’t care what they are eating. They just want cheap food.”
- Jaspreet Gill, owner, Chutney’s, NW Asian Weekly, August 5, 2006
“When Britney Spears plays at Key Arena, business sucks.”
- Jess Oh, owner, Sam’s Sushi, NW Asian Weekly, August 5, 2006
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