There are three conditions for the NHL to bring a team to a new market.
The first is that it’s a market in which they feel a hockey team could thrive. The second is a viable owner or ownership group that’s willing to pay the exorbitant expansion fee or relocation freight. The third is a viable, modern arena where the team can maximize revenue.
In the most recent round of expansion that yielded a team in Las Vegas starting next season, Seattle met the first condition. It failed miserably to meet the second condition, which was symptomatic of not meeting the third condition: Finding owners for a team without knowing the fate of billionaire Chris Hansen’s downtown arena project was impossible.
Well, that fate just gained some clarity.
In a stunning move on Tuesday, Hansen said his group is no longer seeking public funds to build the arena in SoDo. It would be privately funded, as will an overpass over Lander Street, which local opponents of the arena have fought for to ease congestion in around the Port of Seattle.
“Our goal has always been to return the NBA to Seattle and to build a new arena to make that possible. Our partnership with the City and County started five years ago was based on a recognition that private financing of a new arena in the prevailing economic conditions was not economically feasible. The goal of this partnership was to build the arena and bring an NBA team to Seattle. Public financing was simply a mechanism that made that possible at the time.
“We have concluded that a changed economic climate makes possible the private financing of the arena. For that reason, and to address concerns expressed by City Council members, we would consider revising the street vacation petition to eliminate public financing of the arena. In such a case the MOU would be terminated and the rights and obligations of the parties under the MOU would end. The City and the County would recoup the $200 million in debt capacity and tax revenue streams generated by the arena would cease to be encumbered for arena debt service.”
Now, here’s the rub: The private financing is only going to happen if the last hurdle towards construction is cleared. That hurdle is the city agreeing to vacate a one-block stretch of Occidental Avenue and the addition of several tax credits to the deal.
The MOU Hansen and his group signed with the city and county in 2012 is set to expire next year. The project has gone through thorough review, includes environmental and design approval, and a unanimous recommendation to vacate Occidental by the Seattle Design Commission and SDOT. The group also signed a scheduling agreement with the Mariners, Sounders and Seahawks last April.
The last major hurdle remains to vacate a stretch of Occidental Avenue, which would give Hansen’s group the physical footprint it needs to build the arena. In a 5-4 vote on May 2, the council rejected the vacation proposal.
Hansen’s group had agreed to pay $18-20 million for the street vacation and contribute money to the Lander overpass. Councilmembers who voted against the proposal expressed concerns over the MOU’s public financing portion of $200 million in bonding capacity, freight, and traffic concerns. The Port of Seattle, the Longshoremen’s Union and the Mariners have been the most vocal in their opposition.
So what does this all mean for the NHL and Seattle?
Well, first off, please note that neither the NHL nor hockey are mentioned in the letter from the Hansen group. Like, at all. Their focus has always been on building an arena to attract an NBA team there, either through expansion or most likely relocation. The hockey aspect of the deal was ancillary; that the Memorandum of Understanding included an “NBA first” funding provision seriously harmed the NHL’s interest in the market, and the market’s interest in the NHL.
The fact is that none of the three groups angling to bring hockey to Seattle stepped up with a formal bid for expansion earlier this year: Victor Coleman, who wanted to “finalize an arena site” before doing so; a group that wanted the team in Bellevue; and Ray Bartoszek, an investor who also wanted to build an arena just outside of the city.
But with a privately funded arena, there’s no more mystery about whether the city would fund an “NHL first” facility. It would be built without public money, with the hopes that the NBA arrives eventually and with doors open to an NHL tenant.
This brings us back to Coleman, who reportedly had some rough patches with Hansen in the past because of that focus on the NBA. He’s a real estate maven whose interest in the NHL is genuine, and who was enthusiastic about Seattle’s prospects for a hockey team: “I think the demographic base (in Seattle) and the desire of the NHL in that marketplace is the perfect match right now. The expansion of the NHL into the Pacific Northwest, with Vancouver and the presiding area, makes it a perfect fit,” he said in 2014.
Coleman didn’t submit a bid because his ownership group “wanted to finalize the arena site before submitting an application.”
With the private funding option a reality, that finalization could be coming soon.
So again, what does this mean for the NHL in Seattle?
There was speculation that the League was dragging its feet on expansion in the hopes that Seattle entered the mix again, although Gary Bettman denied that. It’s no secret the NHL loves the market – the demographics, it’s proximity to Vancouver and California. It’s no secret that an odd number of teams in the NHL isn’t something the League wants, nor does it want one division of seven teams vs. three divisions of eight.
To that end, Seattle would seem to be very much in the mix for an second expansion team. (Keeping in mind the good people of Quebec City are probably waiting for a relocation rather than expansion.)
As we said off the top, there are three conditions that have to be met. The NHL loves the market. The market appears on track to get an arena. And when it does, one of the biggest hurdles for someone like Coleman to committee money and rally other owners to the cause will be cleared.
We’re a loooooooong way away from the NHL potentially going to Seattle. But Hansen’s decision to privately fund his arena just blew open the conversation after months of silence.
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