The reader should know that I hated the Sonics. Growing up a Phoenix Suns fan, I dreaded the playoffs, when my team would have to get past Seattle in its glory days.
Economics is not a hard science, so don’t expect it to provide clear-cut answers on the arena. Studies have shown that stadiums and arenas usually fail to live up to their claims as economic-development engines. Suburban Glendale, Ariz., saddled itself with Greece-like debt to lure the NHL Coyotes from downtown Phoenix. Like much else in Arizona, the deal was part of a real-estate hustle that went wrong.
On the other hand, Coors Field in Denver was a great success in the redevelopment of Lower Downtown (LoDo). Cincinnati seemed a poster child of stadium-building gone wrong, raising its sales tax in 1996 to build new homes for the Bengals and Reds and then facing massing shortfalls during the Great Recession. Now, however, those stadiums are anchoring an impressive renaissance on the once-ramshackle riverfront.
Seattle doesn’t need a stadium or an arena to boost its economy. An NBA team can be one more asset, one more amenity, and a big one, that helps draw and retain talent and tourism. On the other hand, the deal proposed by Chris Hansen is the best I’ve ever seen and the most favorable the city will likely ever get — and this from a hedge-fund guy, no less. It’s perfectly doable financially and has a local ownership group that won’t pull a Howard Schultz on a reborn Supersonics.
The location is ideal, where it can take advantage of existing infrastructure, not least the most abundant rail and transit access in the state. It would be nice to use Key Arena, but access is not the best, among other problems. A suburban site would be car-dependent, disrupt neighborhoods, lack infrastructure and possibly destroy precious rural land or open space.
The major economic issue is the effect of the arena on the Port of Seattle. While the port is not outright opposed to the deal, it doesn’t want its concerns about freight mobility and port access to be swept aside, as many were when Safeco Field was built. For example, an overpass on Lander Street was never built. Traffic is already difficult in the area and the concern is that the arena will make things far worse. Since 1997, the port, state and local governments and the railroads have invested $1 billion in the seaport and rail yards. More congestion means lower competitiveness for a port, an essential part of our economy, that is already facing many global challenges.
Still, the issue risks being overstated. It doesn’t have to be an either-or proposition. As trucking executive Steve Gordon told me, “Does no one in leadership in Seattle see the new arena as a potential to fix the port/SoDo traffic issues instead of an obstacle? One would think that as a part of the development, a portion of the up-front fees and ongoing taxes could by dedicated to improving the infrastructure.
“Assuming the creation of some significant new revenue base in the area, someone has to be able to think creatively about to build a reasonable and fair funding mechanism to create winners all around instead of a win/loss situation between the arena backers vs. the local businesses.”
A second economic question is whether Seattle can support both NBA and NHL teams. It’s certainly a rich metro. But it’s relatively small compared with the others that have NBA, NHL, NFL and Major League Baseball. The danger of cannibalization of entertainment dollars is real.
One thing is clear: Many people here love their Sonics and want them back. It would be a shame to once again shoot ourselves in the foot, a la, Seattle Commons and the late 1960s rail plan, by finding all the reasons why a project shouldn’t happen, instead of the ways it can happen and produce winners all around. I’ll even change my allegiance.
And Don’t Miss: The American energy boom — think again || Foreign Policy
Today’s Econ Haiku:
Greece went to the polls
Greasy polls settle nothing
But we all slide down