Economics Behind Sonics Move Is Inconsistent
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Next Tuesday will be critical, not only for presidential candidates, but also for Seattle SuperSonics owner Clayton Bennett, as Oklahoma City voters will either say yes or no to a tax increase that will provide funding to upgrade the city’s 6-year-old arena and bring it to NBA “state of the art” standards. The Oklahoma City vote is the first time this year that the electorate has been asked to approve funding for a sports facility, and could become the fourth municipality to approve spending money on sports buildings this year, following the lead of mid-market-sized Miami, as that city put up money for a new Florida Marlins baseball park.
It is quite obvious that politicians in Miami were not following the dismal gamesmanship that exists between the city of Seattle and the Sonics’ ownership. Bennett and his partners are trying to break their Seattle lease before the June 2010 expiration of their agreement with the city. They were unable to get elected officials to come up with funding for a new arena development plan in Seattle, Renton, or Bellevue, and would like to take the team elsewhere, presumably Oklahoma City, for the 2008–09 season, while Seattle elected officials want Bennett to live up to the terms of the 15-year lease that was signed by former owner Barry Ackerley in the mid-1990s.
But are the multi-million dollar planned expenditures in Miami and elsewhere worth it?
For years, sports economists have pointed out that building sports stadiums and arenas should not be thought of as an economic engine that kick-starts local economies. But elected officials have ignored what sports economists have been stating for years; and sports owners are not going to publicly agree with the economists because it is not in their best interest to parrot the economists. That was until recently. Bennett, in his attempt to break his Seattle lease, has suddenly adopted the sports economists’ viewpoint that stadiums and arenas are just not good investments.
In January, Bennett’s lawyers filed papers in U.S. District Court in Seattle, using the economists’ view as the crux of their position, in a move that they hope will persuade a judge and allow the franchise to leave Seattle before the lease is up. Bennett’s lawyers were armed with a survey contending that 66% of Seattleites say the team’s exit would make “no difference” in their lives, while only 12% said they’d be “much worse off.”
One person working on the lawsuit said that Bennett’s position is “inconsistent.” Bennett is telling Seattle officials on one hand that his franchise is worth nothing to the city. But he has also positioned himself as the white knight of pro basketball in Oklahoma City, as he is poised to bring the Sonics to his native state as soon as the 2007–08 season is done.
Seattle has said not so fast, and the case will be heard before Judge Marsha Pechman starting on June 16. Bennett has already petitioned his fellow 29 NBA owners for permission to move the franchise, and asked for a March court date, while Seattle officials wanted the case heard in October. The reason for the early court date was that Bennett’s team, which includes lawyers, public relations specialists, and economists, as well as the basketball operations, felt that if they could win a judgment, they could go before the NBA’s relocation committee and tell them they were free to go to Oklahoma City. Bennett is not entirely pleased with the Oklahoma City possibilities, though. While saying Seattle won’t miss the NBA team if it moves to Oklahoma City, Bennett wants upgrades at the Oklahoma City facility that his team will call home. He isn’t so sure that the building’s naming rights agreement with local Ford car dealerships would apply if he moves his NBA team to Oklahoma City. He wants a new naming rights deal at the building, and a large slice — if not all — of the naming rights dollars that would normally go into the coffers of Oklahoma City.
Bennett already has stated that the Oklahoma City arena, which opened in 2002, does not meet NBA standards and probably should eventually be replaced. The building seats 19,675, which would make it one of the biggest buildings in the NBA, but needs more than just 3,380 club seats, seven party suites, and 49 private suites. The premium seats are where owners make money. Of course, in small-market Oklahoma City, it will be tough to generate revenue, as cable television monies will be smaller than what was available in Seattle. There are less opportunities for corporate money, as Oklahoma City doesn’t have as many big companies (although there is oil money in the city), and ticket prices will not be at New York or Los Angeles levels. George Shinn’s Hornets averaged nearly 18,000 per game in 35 openings in Oklahoma City in 2006–07 as a temporary home after Hurricane Katrina forced him to find a place to play. But Oklahoma City’s arena revenues were just $40 million for the team, and that doesn’t cut it for an NBA franchise.
Oklahoma City does have a remedy, though. Voters will go to the ballot box on Tuesday and will be asked to extend a penny sales tax that would raise about $121 million to fund upgrades at the city arena and build an NBA practice facility. Bennett also wants city officials to give him a “favorable lease,” which means that the city should give him the keys to the arena and the lion’s share of revenues generated in the building, and not have to pay for the building’s operational costs.
Bennett is looking for public support in Oklahoma City, but hasn’t yet told a Seattle court that his basketball franchise doesn’t contribute anything to the Seattle economy. There seems to be an inconsistency in his thinking.
Bennett’s lawyers may be correct in agreeing with sports economists, but that isn’t stopping public spending on sports facilities. Oklahoma City desperately wants an NBA team, and other cities want to be part of the major leagues so they can say they are in the same class as New York, Los Angeles, and Chicago. The question is at what cost: According to Bennett, his NBA team has no economic impact — which goes against every argument that’s ever been made to build sports facilities with public funding.
evanjweiner@yahoo.com