SonicHawk":x0irvzp5 said:
drdiags":x0irvzp5 said:
The fact that the NBA got Sacramento to offer (tentatively) as much public funding for an arena adds to why they want to keep the team local. It helps other owners in the future when they need to extort money for their new arena deals. Would be a bad precedent.
Steve Rudman (cannot believe I am giving him kudos) laid out the reasoning nicely in his article.
http://sportspressnw.com/2150643/2013/march-9-the-key-date-in-the-sonics-soap
I just don't agree it has that much effect. If the owner isn't willing to put in what Hansen does, they can easily threaten to move the team. Cities can't assume that if they wait long enough the NBA will somehow make a sweet deal for them because they won't.
Would you rather have someone
loan you $10, or would you rather have someone
give you $5? That's the heart of the issue here, and the NBA has made it clear which they'd rather have. They know once they've tapped the public $$ vein, they can keep feeding as long as they want - and it's free $$$. And
most importantly it shifts the liability for shortfalls on to the taxpayers,
not the Owner or the League.
All Stern's talk about "valuing the community" of Sacramento? It's a BS smokescreen. He gets to paint himself as a good guy to Sacto while he's robbing them blind. Same story in New Orleans - why did Stern fight so hard to keep the Hornets there? It's because both the City & State have a major stake in paying for & operating that arena. You can bet your ass that if neither one of those places were offering free public money, Stern would treat the situation
exactly like he did here in Seattle and he would've fast-tracked the exit of both.
Easiest way to understand it is to look back at the original Key Arena situation. The remodel was financed with bonds, backed by future revenues generated by the arena (mainly the sale of luxury suites). Every year the Sonics were responsible for making a payment, the $$$ for which came out of the team's operating budget. After the '98 Lockout, the business model changed and the Sonics struggled to meet the payments (or so says Schultz) The real issue was that the Sonics were in a situation where they had to pay back the bonds
using the same revenue streams that also determined how much $$ they paid to the League under the existing revenue sharing plan -
it meant less money that Seattle could contribute to the to the League's other owners. What Schultz/Stern wanted was access to additional revenue streams (Since Seattle Center is owned/operated by the City, the Sonics didn't have complete access to parking, all concessions, income from other events, stuff like that). They wanted to use
that revenue (which was separate from income calculated in the revenue sharing plan) to cover the arena payments. In other words, use a free public subsidy so that the League could keep the max amount of team generated $$$ for themselves. We all know what happened - Seattle wouldn't play ball so Stern went on the warpath and made us an example for every other city - give us public funding, or suffer the wrath.
Now with Hansen's new arena plan, the details are completely different (he owns the building, land, can lease to an NHL team and will have access to all types of revenue generating opportunities that Key Arena never provided) but the overall concept is still the same: the construction bonds are backed by arena generated revenue. Which means that if some disaster happens, Hansen possibly has to dip into the team operating budget (reducing the amount of $$$ that goes back to the NBA) to make his bond payments before he pays the owners.
One thing with Stern & the Owners: they are never in danger of "losing" money, they're only faced with
not being paid as much as they possibly could. So for them, the whole thing comes down to "which plan gives us
access to the most money?"
Now, here's the big advantage (for the NBA) with Sacramento's plan: The investors put up a set amount of money, $250M. After that, their liability is capped. Sacramento is responsible for coming up with the rest, through a variety of methods, but mostly through parking. So what happens when Sacto's plan doesn't raise the projected amount? Well, as far as the NBA's concerned - that's Sacramento's problem, not theirs. It's not coming out of the Kings' operating budget. So Sacramento will be running around trying to generate more money - raising the price of parking, passing additional taxes, dipping into the City's general fund. And while all this is going on, the League will still be able to extract the max amount in revenue sharing from the Kings. They'll be getting free money from the taxpayers of Sacto to cover the rest.
Cut through all the politiking and PR bullshit and this is why all of Stern's actions make sense, and why Seattle gets screwed twice. Seattle is losing it's bid for the Kings for the
exact same reason we lost the Sonics - we are not granting the NBA access to the public subsidy trough. This is why OKC, New Orleans and Sacramento are (and Milwaukee could be) better long term choices in their eyes - because those cities are willing to pony up.
The fact that we're a "big market" matters, but not nearly as much as we like to think. When it comes to TV, the NBA cares more about its
National TV deal, which is always driven by the powerhouse franchises (Lakers, Bulls, East Coast). And as the past couple of seasons have shown, if the small market teams are competitive and have some stars, they'll bring in decent National ratings as well.
The additional revenue the Seattle market would draw or the cache of having Ballmer/Hansen as owners pales into comparison and affects their bottom line much less than the millions of free $$$ cities can/will give them in subsidy.
