Want A "Plan B" For The Arena? Why Not Tax Breaks?


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First of all, let me use this forum to apologize for my Debbie Downer attitude about the arena proposal and the NBA's possible return to Seattle lately.

Do I hope Chris Hansen succeeds in getting his SODO arena built one day and that he can secure an expansion team or at least a firm date by which we'll have a team soon?

Of course I do.

But color me skeptical.

Because as much as Chris Hansen and Steve Ballmer have demonstrated that our city and region have the infrastructure and money to support the NBA successfully and as much as the 12th Man has shown (over and over again) that Seattle fans understand how to rally behind their sports teams, the reality is the NBA hasn't shown they want to throw Sonics fans a bone.

What's the saying again?

You can lead a horse to water, but you can't make the horse drink the water?

There's unfortunately a good reason why local NBA fans are as pessimistic as ever about our chances to get a team in the next 3 years before the MOU between Chris Hansen, the City of Seattle and King County expires. It's because the same league that's jilted us twice in the last six years is delivering a product to their fans that's kept getting bigger and more compelling over the past several years without our help. And thus, the 30 franchises (none of which are located in Seattle) are about to get rewarded with a new monster TV contract.

Because of that, Seattle has become to the NBA what Los Angeles is to the NFL and it seemingly feels like we're nothing more than a second class citizen and a leverage tool to extort public subsidy money from other cities (we're waiting for you, Milwaukee...).

And just like in the NFL and it's lack of presence in Los Angeles, there seemingly becomes less of a need in the NBA's eyes to expand to Seattle and dilute the talent pool as the on-court product becomes better and the TV pie grows bigger without the help of the green and gold's 41 year tradition and diehard fans.

Sure, the NFL could've returned to Los Angeles in 1999 as the league's 32nd franchise if they had come up with a new stadium deal. But if that had happened, then Houston would've become "Leverage City" in the NFL. And last time I checked, Houston isn't exactly "Cow Town". In fact, they're far from it as the #5 biggest metropolitan area in the country, the #10 TV market in the United States and just a bigger overall pond than Seattle is now.

Thus, it's perfectly plausible to think that history could've been different and the NFL could be looking at Houston in a nonchalant fashion right now while Los Angeles reaped all of the benefits of having an NFL team play in a modern stadium and old Oilers fans saw their "Luv Ya Blue" paraphernalia gather dust and obtain an odd, stale odor to boot.

This is why I just feel like if we want a better chance to build an arena at this point, we shouldn't depend on the NBA to do Seattle a solid.

The Kings and Hornets/Pelicans are out of play after Hansen gambled and bought land likely thinking he could lure at least one of those teams to Seattle, the Bucks have until Fall 2017 (after our MOU expires) to get a shovel in the ground for their own arena and Adam Silver's public comments at least suggest the league is lukewarm towards expansion. Plus, Chris Hansen is now a transparent public figure, which will make relocation super tough for him. Because even if there was some "off the radar" vulnerable team that existed right now (like the Sonics in 2006), he wouldn't be able to buy the team and enter the NBA's country club due to the inevitable "save the team" efforts that'd take place in X city and the NBA's general reluctance to move teams other than when incumbent owners (who don't want to sell their team/property) ask.

Thus, we need a "Plan B" and potentially even a "Plan C" right now to get a shovel in the ground somewhere (SODO, Memorial Stadium, Key or Bellevue).

That's why I'd like to suggest to Dow Constantine and other politicos who are arena champions to put tax breaks on the table as a means to help lessen the risk for the private sector to build an arena in any of the 3 potential "shovel in the ground" scenarios (NBA-first, NHL-first, "build it and they will come").

Obviously we know how Seattle City Council (somewhat understandably) feels about how risky an "NHL-first" scenario would be under the current MOU they struck with Chris Hansen because of the potential difficulty a bankrupt NHLSeattle franchise would bring as it relates to recouping their bond money and we know that raising John and Jane Doe's taxes in any level of government in this state is a non-starter for funding sports arenas now.

Thus, I'd like to see tax breaks be brought to the table in an attempt to get the arena built faster as long as somebody has the land, financial means and passion to put a shovel in the ground (i.e. Chris Hansen/ArenaCo).

Because if these numbers in The Seattle Times from 2 summers ago are correct, a new arena in Seattle would generate a whopping $220-225 million (approximate) over 30 years in City admissions taxes, City B&O taxes and County property taxes. If you exempted those taxes and then added a $100 million or so naming rights deal to the mix (Microsoft? Amazon? Costco? Boeing?), you'd then be looking at only a $175 million (perhaps less than that if you wanted to build a slightly scaled down version of Hansen's arena) "risk" in the private sector from a $500 million construction project if you're truly bullish on the prospects of the NBA and NHL in Seattle or at least a new building going up in the region as a successor to KeyArena. And if anything, part of or all of that leftover $175 million risk could be assigned to an NHL/NBA owner through a lease with the private owners of the arena (i.e. Chris Hansen/ArenaCo) or upfront cash.

Sure, there'd be a few political hurdles that you'd need to overcome if you penned this kind of deal, but I believe all of them could be overcome fairly easily (or at least it'd be easier than you think).

For instance, you'd likely need to exempt the project from I-91 if you struck a deal involving tax breaks with the City of Seattle. But I'd personally be surprised if that became a massive sticking point politically since tax breaks don't constitute any risk to the general public.

In this hypothetical, tax breaks would just be an avenue to soften private risk without putting the public directly on the hook for the arena tab like they were in the Mariners and Seahawks stadium deals. If anything, you could argue this type of deal would obey the spirit of I-91 anyways.

From there, there'd also be some controversy in this scenario about the future of KeyArena (if we assume the new arena would be on private land such as dirt Chris Hansen has bought in SODO) if the City is contributing to tax breaks for a private arena on private land; but again, I'm sure there's a compromise that could be struck in here as well.

For instance, a private investor could pour X amount of money to repurpose Key into something akin to a smaller, more intimate theater-like venue as has been suggested by Chris Hansen and his arena team in the past.

Finally, there would obviously be some controversy involving NIMBYs no matter where you put the new arena. In the case of Chris Hansen's land in SODO, the maritime industries would raise a big stink and wonder out loud what's in this deal for them (especially without an extra $45 million in traffic mitigation bonding money they'd receive as a part of Hansen's MOU). But once again, I'd like to think there are common sense solutions that could be proposed for this problem.

In this case, the private sector (ArenaCo) could work closely with other sports teams on resolving scheduling conflicts, completing EIS processes and then paying for necessary mitigation and then having local government use the arena project as leverage to get more meaningful money from the State to help with whatever transportation problems exist in SODO (which are things Hansen is probably intent on doing anyways).

Now again, this is just one person's opinion (mine). But I just feel like if the NBA is going to be hesitant to come to Seattle in the next 3 years and we need a "Plan B" to get a shovel in the ground, this is going to be the way to go. Because by ensuring there will be $200 million+ in tax breaks for the arena over 30 years no matter where the building is located, you then make an "NHL-first" and/or "build it and they will come" solution that much more feasible for the private sector and you make it easier for any potential NBA, NHL and arena investor to "bring their own money to the table".

Plus, common sense would at least say if tax breaks now can work in Miami as a solution for the Dolphins' stadium renovations after the public felt jilted by the Marlins stadium deal, you'd think that such an arrangement could work in Seattle as an "out of the box" way to fix the small problems that exist with the current MOU.

Look, at some point we're going to need a new arena built in Seattle to replace the aging KeyArena, that much is a given. But it's hard to know at this point how eager the NBA will be to help us with that cause over the next few years and how much time we truly have left to make an arena arrangement work with Chris Hansen and his team. That's why I feel like we need a "Plan B" to get something built and tax breaks for the private sector may just be the "out of the box, Plan B" solution for Hansen (or anyone else that wants to invest in a Seattle or Bellevue arena along with the NBA and NHL) we're looking for.

UPDATE: Looks like the Dolphins will get privately financed renovations to their stadium without tax breaks at this point, but the point still stands. Tax breaks could enable the private sector to build a new Seattle Arena without upfront public risk.

FanPosts are written by members of the Sonics Rising community and do not represent the opinion of site management.

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