the zombie nick licata's form letter

i'm really, really, really sad about the sonics. check out my real blog for more info. anyway, here's what nick licata, president of the seattle city council, thought about my sadness:


Thank you for writing me about the sale of the Seattle Sonics to a group
of investors from Oklahoma City. I have been saying for months that I
would like to see the Sonics stay in Seattle, but not at a cost of over
$200 million.

As I stated several months ago, there is no doubt about it, my glib,
foolish remark on the relative unimportance of professional basketball
in Seattle was smug and wrong. In my clumsy way I was trying to point
out that Seattle is a world-class city for a variety of reasons, not
just because of the Sonics.

Public leaders need to ask the right questions, and then listen to the
answers instead of providing good press copy. As an elected official, it
is my job to weigh competing interests and decide what is the best use
of taxpayer dollars. Let me give you some background on this issue.

In 1995, after a City Council vote, the former Coliseum was rebuilt into
KeyArena at the request of the Sonics. That same year, the voters of
King County narrowly voted down a baseball stadium. The State
Legislature and the King County Council overturned that decision. In
1997, state voters narrowly passed a measure for a football stadium.

Partly as a result of voter anger at the baseball stadium vote being
overturned, state voters then passed a series of anti-tax initiatives
that constrained the ability of local governments to pay for basic
services. This forced cuts in services, and has had a lasting impact.
Some governments, such as King County, have had to eliminate entire
lines of business, such as providing swimming pools and park
construction.

Right now the Seattle City Council is considering a tax levy proposal
from Mayor Greg Nickels to provide funding for road and bridge
maintenance. This is needed because a principal funding source for this
basic, core service was removed by an anti-tax measure. One goal of
anti-tax measures was to force local governments to put measures on the
ballot for voters to decide what they want government to do, so this is
in line with the intent expressed by the voters. That is why I believe
it is fair for the City Council to insist on a public vote for any tax
proposal for a new basketball arena.

These initiatives have forced elected officials to carefully choose what
items to fund. For this reason, the Council crafted a set of reasonable
conditions for negotiations, and the Mayor's office began discussions
with the Sonics former ownership.

The economic model for professional basketball includes a reliance on
public subsidies, The level of subsidy required for a NBA franchise has
increased considerably in recent years. The Sonics consider the 1995
version of KeyArena obsolete, only 11 years after its construction. This
is not an isolated case: Memphis built a new arena in 1991, and then
again in 2004. The economic lifespan of NBA arenas is decreasing and the
amount of public subsidy-formerly a small portion-is now expected to be
the overwhelming majority. This is the economic model of the NBA
nowadays.

Keep in mind, the bonds used to finance construction of KeyArena will
not be paid off until 2014, four years after the Sonics lease expires.

The current business model of the NBA depends not only on public
subsidies, but on generating revenues from arenas that are much large
than KeyArena, in order to generate revenue from restaurants and shops.
They want all the revenue the arena can generate, including from
concerts, which are more profitable than Sonics games. NBA arenas are
becoming as much malls as sports arenas. That is why KeyArena is
considered obsolete, not because of any structural defects, or lack of
good sightlines, for example. As the KeyArena business plan notes, it
was rated "Best Venue in the NBA" in 2004, and has won Facilities and
Event Management's "Prime Site" award three times since opening.

The question is, how much is enough? The proposal for a $220 million
KeyArena remodel, when including the remaining debt, and financed at 6%
interest, would cost an annual $40 million tax subsidy for 15 years.

I developed a proposal that would have provided $8-10 million in new
annual revenues for the Sonics. The Mayor of Seattle proposed three
options to the Sonics. One of the options would have provided a $20
million annual increase in revenues for the Sonics. The Sonics former
owners did not respond to any of the offers, and instead sold for $350
million the business they purchased 5 years ago for $200 million. This
was their business choice; they chose to take their profits by selling
the team, rather than accepting one of our offers and submitting it to
the public for a vote.

Sincerely,

Nick Licata