Argument: Key Arena was recently renovated to industry standards and is a perfectly adequate NBA facility.
Team owners are making empty threats to line their pocketbook. Nothing has changed since the last remodel and no remodel is necessary.
Rebuttal: In terms of amenities Key Arena ranks last in the league in terms of seating capacity, ability to generate revenue, and lease terms. Basketball is not the only problem. Limits in internal infrastructure and loading facilities make it a difficult place for concerts and other events. At this time it is not a premier building suitable for a world class city.
Key Arena was remodeled 12 years ago at a cost of approximately $75 million dollars. At the time many teams were getting new arenas at costs of well over $200 million and committing to 20- or 25-year tenancies in those buildings. It is a simple matter of getting what you pay for. In lieu of building a new arena, the team and city agreed on a short-term fix at a significantly lower cost. Both parties agreed a 15-year commitment was appropriate given the work done. Negotiations have always been conducted with that 15-year commitment in mind. If 15 years was the appropriate and agreed-upon useful life of the building then why are city leaders no longer agreeable to those terms?
At this time the City of Seattle is faced with a problem not unlike that faced by building owners everywhere. Their three largest tenants, the Sonics, Storm, and Thunderbirds all have expiring leases and are negotiating tenant improvements. If the City of Seattle is in the rental business, then city leaders should be seriously concerned that all three of their largest Key Arena customers are in unanimous agreement that the facility is inadequate. Should they lose the Sonics and Storm any new tenant will certainly require improvements in addition to rental incentives, commissions, etc. Most real estate professionals would advise that it is always better to work reasonably with an existing tenant than to search for a new one.
Quotes: “The Key Arena is a great facility for watching professional basketball … it’s a great venue.”
- Seattle City Council Chair Nick Licata, Interview, KJR-AM
“The current lease with the team expires in 2010, long before we will have paid off the debt incurred when we spent $75 million refurbishing Key Arena about ten years ago, at the request of the team's previous owners. At that time, the City Council was assured the lease arrangement would be sufficient to repay the debt. Now we see otherwise especially with an expected debt of $25 million left when the current lease expires. At the very least, we don't want a repeat of such a faulty lease.”
- Seattle City Councilman Richard McIver, http://www.seattle.gov/council/mciver/issues.htm
“By funding the other two stadiums, we were in fact digging the grave for the Sonics.”
- Seattle City Council Chair Nick Licata, Seattle Times, April 18, 2005
“There was a huge risk. The deal was based on a best-case scenario rather than an average scenario. It was a steamroller, and nobody wanted to think about a bad case, much less the worse case."
- Former Seattle City Councilwoman Jane Noland, Seattle Times,
April 18, 2005
“Successful arenas hosting NBA basketball are significantly larger than Key Arena – roughly double the square footage. For the last six new NBA-only arenas 80% of the funding was public.”
- Key Arena Subcommittee Report, February 16, 2006
“It’s not a very good lease, to say the least it’s the worst in the league.”
- NBA Commissioner David Stern, http://sports.espn.go.com/nba/news/story?id=2407965 |