As scheduled, the Final Environmental Impact Statement on the Seattle Arena was released Thursday morning and as expected, the results were favorable.
This news is being picked up everywhere but the most thorough article came locally from Chris Daniels and Geoff Baker.
Chris Daniel’s Article here.
Geoff Baker’s article is here.
The Puget Sound Business Journal also had a good summary piece on the economics.
Here are some highlighted tweets of the coverage:
JUST IN: #SeattleArena “is adequate and complies with the requirements of the State Environmental Policy Act” per city. Coverage all day.
— Jon Humbert (@jonhumbert) May 7, 2015
— Geoff Baker (@GeoffBakerTIMES) May 7, 2015
Hansen group on NHL First: “completely open to the prospect of that occurring prior to the NBA”. #SeattleArena
— Chris Daniels (@ChrisDaniels5) May 7, 2015
Murray on NHL/Bettman: “He remains very very interested. He remains committed to this city. So we’re very interested in working with them.”
— Chris Daniels (@ChrisDaniels5) May 7, 2015
Mayor Ed Murray just clarified through spokesman he’s fine with current MOU if an NBA team shows up. But does not feel it will happen.
— Geoff Baker (@GeoffBakerTIMES) May 7, 2015
So, to summarize, Murray feels only way to get arena is via “NHLfirst” proposal and says private contribution must be “much, much better”
— Geoff Baker (@GeoffBakerTIMES) May 7, 2015
Sonics Arena Statement
Within a couple hours of the FEIS being released, the SonicsArena camp released a statement. There was an entire paragraph on an NHL first scenario.
We also wanted to take the opportunity to reiterate that we remain 100% supportive of the NHL returning to Seattle and playing in the Arena — and are completely open to the prospect of that occurring prior to the NBA. In light of recent speculation, we would just like to clarify that we have sought to be as accommodating as possible in our negotiations with potential NHL partners, with our only major requirements being that such a deal does not jeopardize the process or put the City, County, Taxpayers or us in a worse financial position.
This is consistent with the Hansen camp’s position from the very beginning. In an interview late 2012 with King 5, Hansen said that an NHL first scenario would be possible in the right scenario. At the time, NBA expansion or relocation looked like more of a possibility which made the scenario less likely. Comments from Victor Coleman last week have muddied the waters a bit so it is great to see the Hansen group affirm their position.
Port of Seattle Opposition
Consistent with the ports messaging throughout this entire process. They released this statement on their opposition to the Arena and the EIS findings. In my three plus years of following this project, the Port has never provided any data on the impacts of the Arena to their business and have never appeared to be collaborative in this project. We should expect more and more of this type of PR from the port.
What is next?
Now that the Final EIS hurdle has been cleared, a couple things will start to play out. For an NHL first scenario, a prospective NHL owner will need to strike a deal with the Hansen group. Once that happens, the Hansen group will need to take a proposal to the Mayor to change the current MOU to be an NHL first scenario. This will more than likely need to happen in August so that the Mayor can bring it to the city council for vote in September.
In the meantime, the NHL has two key Board of Governors meetings, one before the NHL Draft in June and another in September. As reported last week, it appears they will “vote” on expansion in September. Since the news did not come from the league, it is up to us to define “vote”. Most people interpret this “vote” as to start the application process and not necessarily, awarding the franchise.
Meanwhile, the Tukwila arena proposal moves forward and should be considered a major competitor to the SoDo Arena regardless if there is movement on the NHL first scenario in Sodo.
As I tell most people, this is a rollercoaster, try not to get too high or too low on any news. So let’s celebrate the victory but do not assume this thing is a done deal. Lots and lots of work still remain.
Quick post this morning. I thought it was important to share this statement from Seattle Mayor Ed Murray. Great to see such a commitment from the Mayor’s office. It is going to get really noisy over the next couple months as I expect to hear from Chris Hansen and/or Victor Coleman over the next couple weeks as the Final EIS (Environmental Impact Statement) is published on or before May 7th.
If you have the time, I would recommend listening to yesterday’s Sin Bin with guest Chris Daniels and Brian Robinson.
(Sorry for the screen shot vs. embedded tweet. I was having issues with the picture of the actual statement being displayed correctly).
In case you missed it, Gary Bettman mentioned Tukwila and Bellevue as potential sites for an NHL arena in the Seattle Area on a radio interview in Vancouver. Stick tap goes to Paul Rogers, from SonicsRising.com, for covering the news ahead of our more traditional media outlets. Geoff Baker from the Seattle Times then published this article with a lot more detail on the specific locations. As much as I love the SoDo location, it is great to see that Seattle’s dreams of landing an NHL team are not tied to any one plan. I breakdown the 3 locations by population, income, and driving distance.
Seattle has ~ 6 times the population base of Bellevue. It is worth pointing out that Seattle’s area (142 Sq Miles) is much larger than Bellevue’s (36 Sq Miles). For this reason, to get a fair comparison you could include Kirkland, Redmond, and Sammamish. If you combine those populations, the Bellevue area has ~325K compared to Seattle’s ~650K. The closest comparable NHL market could be Minneapolis-St. Paul. The city of Tukwila is much, much smaller, but based on the location of the reported site, it is literally on the southern border of the Seattle city limits.
Side note: I received over 15 times more responses from people living in Seattle vs people living in Bellevue when I launched my original survey.
We have already established that the NHL fans have the highest income levels of the big 4 Professional Sports Leagues. For income comparisons, I used IRS adjustable income reporting data from 2012 by zip code that I then consolidated into city. I filtered on how many IRS tax returns had an adjustable income of over 75K by city. This is not to say that the only people going to NHL games will be individuals/households that make over 75K a year but a large amount of Season Ticket holders will come from this income bracket.
Similar to the population levels, Seattle has a significant amount of households with tax return Adjustable Income over $75K when comparing to Bellevue. However, when you add Bellevue, Kirkland, Redmond, Sammamish, Issaquah and Newcastle, the number is much closer than the population number: Seattle has ~117,000 households to Eastside collective around ~100,000 households.
From a distance perspective, Bellevue and SoDo are somewhat of a wash. Yes, traffic won’t be great regardless of the route, but 10 Miles seems like a reasonable distance to travel to a game for either side of the lake. Certainly, there are more people working in downtown Seattle during the week, but there are obviously quite a few companies located on the Eastside, as well (Microsoft, T-Mobile, Costco, etc…). From downtown Seattle, Tukwila seems like a reasonable distance, even closer than Bellevue.
In a perfect world, a potential owner could obtain some data from a few NHL teams that show the distance traveled from season ticket holders & single game ticket purchases to analyze the viability of the three locations. If I had my pick, I would analyze San Jose, Colorado & Minnesota ticket sales by zip code.
Side note: 35% of respondents to one of my surveys over the summer, sited “Inconvenient Location” as the reason why they did not watch more WHL hockey game.
Here are a few distances for other NBA/NHL arenas:
Canadian Tire Center, home of the Ottawa Senators:
- 16.6 Miles from downtown Ottawa
St. Paul MN, home of the Minnesota Wild:
- 12.4 Miles from Minneapolis
The Palace at Auburn Hills, home of the Detroit Pistons:
- 33 Miles from Detroit
Glendale AZ, home of the Arizona Coyotes:
- 10 Miles from Phoenix
- 21 Miles from Scottsdale
- 27 Miles from Mesa
Sunrise FL, home of the Florida Panthers
- Sunrise, FL is 31.2 Miles from Miami
On an unrelated note and a shameless plug, I am trying to get 100 people to donate $10 to the RMHC of Seattle just so I can donate $1500. Please consider donating
Let me first say that I’ve always felt analyzing Arena Revenues on the success of a franchise is just part of the financial picture & can be shortsighted. Arena Revs are important and it is largely reported that NHL relies on their Arena Gate revenue much more than other professional sports leagues. My point about the Gate Revenues is that it takes time and generations to develop a fan base that creates excess demand to allow for owners to increase prices. So when you hear of crazy cheap prices and promotions in other cities, this should be considered a good thing and part of the process in developing a fan base. Besides, isn’t cheap tickets a good thing to make hockey more accessible to people of all income levels?
Additionally, the NHL should be doing things to diversify their dependence on Gate Revenues. My analysis of the Forbes NHL Valuations from last year showed that 50% of Canadian Team revenues comes from Gate Revenue where most of the other teams are somewhere closer to 33%. With roughly 50% of NHL franchises selling out every game this year, higher prices and therefore higher gate revenues are surely coming. The unfortunate thing here is that teams don’t have much of a choice but to raise the prices because they will be sold on the secondary market for higher prices should they try to keep prices low.
Ok…thank you for letting me get that out of my system
Seattle revenues at KeyArena
I’ve seen a lot of banter over the last few days on the limited capacity in the KeyArena and the impacts to Arena Gate Revenue. There is a lot of concern that because of the small arena, it isn’t suitable for the NHL, even temporarily.
Key Arena seats only 11,000 for hockey? Uh, hockey-related revenues anyone? http://t.co/v8XNaHK3MG
— adater (@adater) June 18, 2013
Seatless in Seattle #keyarena
— Nick Cotsonika (@cotsonika) June 16, 2013
So I decided to look at the price points of the various I apologize for stating the obvious here but there are two elements to Arena Revenue: attendance and ticket prices. Again with the obvious, in order to make up for lost capacity, one can raise the price of tickets. With the added scarcity of tickets this shouldn’t be too hard to do.
I looked at the average attendance per game in 2013 and the average ticket price per team to get at a “projected gate revenue per game” for each team. For the most part, you can assume that the lower the ticket price, the lower the attendance. The loan exception is Tampa Bay who has the 2nd lowest average ticket price but the 8th highest average attendance per game. Ottawa is another anomaly with the 6th lowest ticket price per game but the 6th highest average attendance per game. Even with that high attendance, they rank the 6th and 7th lowest in gate revenue per game. Here is a graph of what the Seattle NHL Team would need to charge to raise the equivalent in Gate Revenues for each team.
Note there are two figures that are being compared against the team averages. One price point at 11,000 people and one at 13,000. The 11K figure is popularly reported but Chris Daniels for Channel 5 in Seattle had done some investigating and noted that the figure is around 13K. Important to note that this assumes that all games sell out in KeyArena, regardless of capacity. I don’t recall how some other markets did when playing in a temp facility but it might be a little naïve to think that they could sell out every game.
Here are my findings:
- Assuming a sellout of 13K, the Seattle NHL Franchise would need to charge an average of $43.18 to bring in the same gate revenues that Phoenix is brining in at $40 per ticket. 43.18 would be the 6th cheapest ticket in the league.
- Conversely they would need to charge $186.33/seat to bring in what the Toronto MapleLeafs bring in at the gate per night. (I know not realistic but kind of fun to look at.)
- If the Seattle team charged the league average of $61 per seat they would make more than 6 teams do today at the gate.
- At $50 a seat, they would be charging the 12th lowest ticket price in the league and still generate more than 4 other teams.
Those are just some fun stats and thoughts to look when it relates to gate revenue. There are things like variable pricing per game where the team could charge a premium: Vancouver, Pittsburgh, Boston, Detroit, & Chicago draw extremely well on the road.
Let me know if you have other scenarios and I will run them against my model.
As most of you know, yesterday was the big showdown pitch meetings between Seattle and Sacramento for the Kings. As expected, we didn’t get much as meetings were behind closed doors and Stern did show his cards. I watched most of the three press conferences and here are the major things that I took away that could impact the situation.
- Stern shot down any talk of expansion citing it was not prudent to split their auxiliary revenues by adding a couple more teams.
- The decision could go past the original said deadline of the NBA BOG meeting April 18th. If the Coyotes are an option for Seattle, this starts to impact that timeline where Seattle might not be a reasonable option.
- Sac ownership group did not match the Seattle offer price of the Kings. It should be noted that Stern was asked about this outside of his press conference (by Chris Daniels) and Stern implied that it would not be a deciding factor. I don’t know if this is really the case as Stern might eliminate that issue in the press to make sure he doesn’t tip the way he is leaning.
There is so much public and political posturing in these things it is really hard to gauge what is really going on so take everything you read and watch with a grain of salt. As usual, I love Neil deMause’s write up at Field of Schemes. It is definitely slanted but it isn’t the typical over positive Sports Coverage that you will read everywhere else. Hard for me to predict what will happen over the next 3 weeks other than I expect a lot of lawsuits in Sacramento and expedited resolution to any lawsuits or studies we have here in Seattle. Hold on tight…stay positive and try to be level headed to things that are reported.
Everyone should know by now that a prerequisite to Seattle getting an NHL team is getting an NBA team. Hence the focus on the Sacramento Kings situation. As you may or may not know, Kevin Johnson announced that he had come to terms on a new arena deal with prospective owners of the Sacramento Kings. The prospective owners are a backup option, should the NBA reject the Hansen/Ballmer deal.
The term sheet will need to be approved by the Sacramento City Council tomorrow, March 26th so that KJ can give notice to the NBA Board of Governors who will be meeting on April 3rd in New York City in what will be a plea to reject the Hansen bid in favor of keeping the team in Sacramento. If the NBA BOG rejects the Hansen/Ballmer deal, the desire will be for the Maloofs to sell the Kings to this backup ownership group of Ron Burkle, Mark Mastrov, and Vivek Ranadive.
I expect nothing less than a rubber stamp on this thing tomorrow as the Sacramento City Council seems to be going with whatever the mayor puts together, with only a few skeptics. This is a Non-binding agreement so if there are any city council members that really oppose the public money being offered up in this term sheet, they can object to it later. Objecting now would be bad PR for the representative considering there is still a good chance the Seattle Deal goes through. How Sacramento decides to fund this proposal is entirely up to them. I am not a tax payer or a voter in the Sacramento area so how the people decide view this proposal is entirely up to them. If you want one perspective, try checking out the Field of Schemes assessment. Usually the comments section provides some good incite but the visibility of this thing has brought out the best the internet has to offer (sarcasm).
People in Seattle still see to think the odds are in their favor and all of this was expected. People in Sac are feeling very confident right now so hard for me to get an accurate read one way or another.
Seems like Michael McCann is giving the nod to Seattle
@marilynkenyon No bias for either, but I still see SEA as having advantage in part because BOG only voting on SEA offer & its strong offer.
— Michael McCann (@McCannSportsLaw) March 26, 2013
but acknowledges that it isn’t as clear as it looked several weeks ago:
— Michael McCann (@McCannSportsLaw) March 26, 2013
On a more local note, regardless what happens here, I am thankful for the Seattle City Council and King County Council’s due diligence to the SoDo Proposal. Our process took 9 months and they gathered public opinion and had several reviews of the proposal. I saw several financial reviews scrutinizing a lot of the assumptions in the Hansen plan. It was frustrating at times but in the end very enlightening to the process. Given the magnitude of the proposal it makes sense to be careful and thorough when evaluating the proposal.
Couple more comments and some questions I don’t have the answers to:
- There is still a threat of a potential lawsuit by political watchdog group in Sacramento that the term sheet violates gifting policy.
- Will the NBA view this non-binding deal as good enough to cover the arena plan for Sacramento?
- Does the BMR deal for the actual team need to match the Hansen deal? I believe the answer is yes but I don’t know if it will.
- What kind of leverage will the NBA/Sacramento have on forcing the Maloofs to sell to the Burkle, Mastrov and Ranadive should the BOG reject the pending sale of the Kings to Hansen/Ballmer?
- Could the Hansen/Ballmer offer go higher and what are the impacts?