The Oxford Dictionary of Economics defines an opportunity cost as “the cost of something in terms of an opportunity foregone. Opportunity cost is given by the benefits that could have been obtained by choosing the best alternative opportunity.”
If Seattle chooses not to build the SoDo arena, one big opportunity cost will be the loss of Chris Hansen’s offer of $290 million in private money to build the $490 million facility. I’ve lived in several cities that built and rebuilt stadiums and arenas, and this is the best deal I’ve seen. The $420 million American Airlines Center in Dallas, which hosts the NBA and NHL, was entirely paid for by taxpayers — it opened in 2001 to replace an arena finished in 1980 (so much for wishing the mid-century cheap Key Arena should have the shelf-life of the Sistine Chapel).
Such a move risks sending a message that Seattle is hostile to major private investment and public-private partnerships. Then there are the opportunity costs that would accrue to SoDo and Pioneer Square restaurants, bars and hotels from lost business. Put an arena in Bellevue, and many thousands of patrons and their money will be lost to downtown, a huge cost for the entire city and its tax base. The Port of Seattle will lose a chance to keep the public’s attention on building infrastructure, such as a Holgate overpass, that should have been completed when Safeco Field opened — another opportunity cost.
To be sure, there are significant consequences to the potential shriveling of the port and the industrial and logistics businesses in SoDo. But these are tipping points threatening for a variety of reasons that have nothing to do with the arena, and failing to build the arena won’t address them. Make no mistake: These risks need to be fixed and soon. Something tells me that if the arena is killed, the strange new protectiveness of the blue-collar city will quickly vaporize.
So the calculus is not as simple as saying no. Even that will carry a price tag, and a big one. Remember MARTA: That’s our rail-transit system, for which the feds offered to pay 80-percent, only it’s in Atlanta because Seattle said “no.” Talk about an opportunity cost.
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Today’s Econ Haiku:
How ’bout those flash trades
Small investors lose again
Drowning in big pond