Wednesday, January 14, 2009

Storm Lease Vote

I sent off my own email to the Seattle City Council last week encouraging support of the Storm and the proposed ten year lease.

One of the council members (so far) has taken the time to respond. Here is my response from Councilman Richard McIver. You may remember him as the council member arrested for spousal abuse a little over a year ago. Or perhaps you recall the $1000.00 in fines levied against him for handing out no-bid contracts last July. Or maybe you remember hearing how he then tried to use City funds to pay those same fines.

McIver was vocally supportive of keeping the Sonics in Seattle, he was one of the few allies Save Our Sonics had on the city council.

As far as the Storm, however, he has had little to say until recently. He was quoted in the Puget Sound Business Journal back in August saying,


“I think we would work as hard as we can to make it financially feasible
for them to stay there,” City Councilmember Richard McIver said recently. “But
that doesn’t mean we ought to pay them to play.”


This is the number one sticking point for him with the current proposal.

Here is the full text of his reply to me.

Mr. Sheehy,

You are among five or six dozen fans of the
Seattle Storm who have emailed my Seattle City Council colleagues and me over
the past week to express support for ratification of a ten year lease between
the team and the City for the lease of KeyArena. Many of the emails I
received offered compelling testimony about the value of Storm to individual
families and to the broader community. I certainly agree that the team is
a valuable community asset we want to keep in Seattle, and they serve a critical
role as our anchor tenant for KeyArena now that the Sonics are
history.

While the Council will likely vote on the proposed lease
very soon, it has only recently reached us for consideration and I am not yet
prepared to offer my support until I have had an opportunity to examine the
lease more closely.

Under the proposed lease, the City would
retain control and responsibility for concession operations, as well as sale of
KeyArena naming rights, suites, premium seats, and advertising. (This will
ensure the availability of these revenue streams for a potential future NBA team
at KeyArena.) In that the Storm’s presence in KeyArena helps the City sell
naming rights, suites, and advertising, and thus, enhances the revenues the City
will receive from these sources, the lease agreement requires the City to pay
the Storm $300,000 annually. I am not sure I’m comfortable with this
figure in light of the fact that this is a fixed amount independent of any
actual revenues Seattle Center may receive from these sources. (As it is,
the team would receive 30% of the gross concession revenues generated on home
game days, which it is estimated will give them $206,000 per
year.)

The other big issue is damages the City would be required to
pay in the event KeyArena undergoes a major renovation during the term of the
ten year lease. The City would be required to make up any subsequent
revenue loss to the team as a result of any dislocation.

According
to an analysis done by the City Council’s professional staff, the lease appears
to provide a close to break even financial deal for the City. That is,
while it is unlikely the City would generate significant excess revenues from
this contract, the City should not experience a significant loss in revenues
either, at least for those years in which the Storm are able to play at
KeyArena.

I suspect the lease will be approved by the
Council, and very likely with my vote, but I cannot provide any guarantee of my
vote until I have more closely analyzed the proposal. Members of the
Council have a fiduciary responsibility to protect the interests of the citizens
of Seattle. This is particularly important during the current recession
that is placing some very real challenges on our budget.

Be assured
I will keep your comments in mind.

Richard J. McIver
Seattle
City Council


In my (clearly biased)opinion, a near break even state is perfect for the relationship between Force 10 and the City of Seattle. The owners have committed to the city in a number of ways and the city has offered words of committment to them in return. The city can't ask to make a large profit off of a business that does not make a large profit itself. $300,000 should be a reasonable fixed figure to account for the city's gains from naming rights, advertising, suites and premium seating. The storm do well with their courtside ticket sales, though they make little from the suites from what I have seen. If the team does well and goes deep in the post season more often than not, the city will make out well.

3 comments:

pt said...

Nothing to add to that, but "I agree". I would look at it as paying on the upkeep for a public park - having KeyArena (and the Sonics) provides a public service to the people of Seattle, and the fact that the lease helps the city break even makes passage even more attractive.

pt said...

That should have been "the Storm" instead of "the Sonics". There is always going to be that Seattle Sonics association.

Patrick said...

I don't expect it to fail...I just find the obsession with the fixed $300K annual payment and the use of the term "fidicuary responsibility" somewhat hollow coming from a man who tried to use city funds to pay for the ethics fine assessed against him for handing out no-bid contracts.