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Jon Talton

Analysis and commentary on economic news, trends and issues, with an emphasis on Seattle and the Northwest.

Category: Sports business
May 7, 2013 at 10:21 AM

Monopoly ball

James J. Hill was in the wrong game and lived in the wrong era. Hill, the “empire builder” who directed construction of the Great Northern Railway to Seattle as well as the newly renovated King Street Station, joined a cabal involving some of the richest men of the Gilded Age — John D. Rockefeller, E.H. Harriman and J.P. Morgan — to create a giant rail network including the Great Northern, Northern Pacific and Chicago, Burlington & Quincy. They pooled their holdings in a trust called the Northern Securities Co.

The 1901 deal was especially good for Hill and Harriman, the latter controlling the Union Pacific. The UP received favorable treatment from the Hill lines. The competing Burlington Route was taken out as a rival. Hill kept control of railroads to the Puget Sound. These rich men were saved from the cost of “ruinous competition.” Shippers were forced to pay high rates and had no alternatives. (The Milwaukee Road’s extension to Seattle and Tacoma would not arrive until later in that decade).

What none of them counted on was Theodore Roosevelt, the new president. Unlike his predecessors in the 1880s and 1890s, he responded to the popular outcry against the monopoly and sued Northern Securities under the Sherman Antitrust Act. The case went to the Supreme Court and the rich men lost. Northern Securities was broken up, the biggest coup of the Trust Buster. I wonder what TR, who enjoyed sports as much as he loved “fair play,” would make of David Stern and the National Basketball Association?

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August 1, 2012 at 9:55 AM

The arena and opportunity costs

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.

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Comments | More in Ports of Seattle and Tacoma, Sports business

July 12, 2012 at 9:30 AM

The arena and the port

Amid the legitimate scrutiny, honest differences of opinion, deliberate misinformation, hidden agendas and outright hysteria over the proposed Seattle arena, one thing puzzles me the most: Why would the Port of Seattle choose to take an aggressive stance that will make it come away as the “arena killer” if successful? Why risk alienating a huge base of arena supporters who are also needed to back the port?

I’m not convinced traffic is going to be that big a deal. Seattle already needs to make infrastructure improvements, arena or no, to help access to the port, especially a Lander overpass. And where was the port outcry when the high-rises were being approved for the area around King Street Station? They will produce — cue gasps — traffic. If one chooses to drive.

I can only guess. Hedge-fund boss Chris Hansen made a tactical error in not approaching port commissioners and officials before rolling out the plan. But the arena is really a proxy for deeper anxieties trending to panic for the seaport. With the loss of the Grand Alliance and Hamburg Sud shipping lines to the Port of Tacoma, Seattle will see a decline of about 20 percent in its container business.

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June 18, 2012 at 10:30 AM

The arena, economics and not shooting ourselves in the foot

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.

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Comments | More in Ports of Seattle and Tacoma, Railroads, SODO arena, Sonics, Sports business

April 4, 2012 at 9:40 AM

Economics of SODO arena make most sense

The Seattle Mariners objections to a new arena in SODO don’t add up when you consider that in downtown Phoenix the NBA Suns and MLB Diamondbacks play right across the street from each other, to use only one example from around the country. This sounds more like an attempt by a team run on the cheap to avoid competition from other professional sports.

Concerns from the Port of Seattle must be taken more seriously. The port is a backbone of the region’s well-paid blue-collar jobs. But I hope city and county officials use this as a starting point to address the port’s concerns than allow another Seattle Commons-like loss to happen.

The economics of the proposed arena are strong. It would be centrally located, able to use existing infrastructure, further boost the region’s downtown and benefit from connections to Link light rail and Sounder trains. A greenfield arena in the suburbs would only add traffic congestion to residential areas, potentially destroy needed open space and lack transit options for fans. The externalities — the largely unmeasured hidden costs — of a totally car-dependent new arena are huge.

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Comments | More in Downtown and urban issues, Ports of Seattle and Tacoma, Seattle Mariners, Sports business

February 24, 2012 at 10:15 AM

Vote: Are pro sports good for the economy?

There are really good stadium and arena deals, as when the Carolina Panthers pretty much paid for their stadium in downtown Charlotte. And really bad ones, as when the Arizona Cardinals took a taxpayer-funded stadium and put it in the middle of nowhere to help their land speculation plans. Seattle’s proposed arena looks somewhere in-between, more on the good side, but the details will still emerge. Having an arena near the other stadiums is also good, leveraging transit and other infrastructure, as opposed to disrupting neighborhoods or sticking it in the exurbs with all the environmental costs associated. Then there’s finding teams. I’m not sure the economics can support both the NBA and NHL, but this is a basketball-crazy town (let the anti-Howie comments begin) that misses its Sonics.

Are pro sports good for a local economy? Of themselves, they generate a few huge salaries and many low-wage jobs. But the teams provide assets that help attract talent, capital and energy to the economy. Corporations get to entertain clients and use the teams as a recruiting tool. The games also add to the tourism economy. At least that’s what I think.

So, today’s poll:

Do pro sports help the local economy

Read on for the week’s links and the haiku:

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