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Seattle sports-arena talks well under way, documents show
February 4, 2012
By Steve Miletich and Lynn Thompson
Seattle Times staff reporters
A wealthy San Francisco hedge-fund manager and officials in the Seattle mayor's office have been working behind the scenes for eight months to bring an NBA team back to the city as early as next fall and build a new arena, according to emails and documents that reveal a far more concerted effort than previously known.
A Dec. 13 agenda for a meeting between the parties shows they were talking about details such as a "Review of Basic Deal Structure," "Financing Issues," including "City Debt Capacity," and "Security for Public Financing."
The documents, released Friday to The Seattle Times under a public-disclosure request, also provide the first glimpse of how the largely unknown hedge-fund manager, 44-year-old Seattle native Christopher Hansen, approached the city about his desire to buy an NBA team and build an arena south of Safeco Field.
In an initial email laying out his vision, Hansen told city officials an arena could be built with minimal impact on taxpayers.
"Thanks for spending the time today guys," Hansen wrote in a June 16 email to Julie McCoy, chief of staff to Seattle Mayor Mike McGinn, and Ethan Raup, the mayor's director of policy and operations.
"I really appreciate it and look forward to making this happen in Seattle," wrote Hansen, a multimillionaire who built a fortune in the private investment world. "I genuinely mean that and am confident that with a little effort and creativity we can find a solution that meets our needs and the City's /State's desire to get a team back to Seattle without a large public outlay."
Hansen offered to provide information on "recent municipal arena deals that have been put together and some of the direct and indirect contributions that the city can make that don't require incremental taxes or direct public funding."
Those issues were on the table at the key Dec. 13 meeting, which was attended by McCoy and Raup and set up by Carl Hirsh, a New Jersey arena consultant hired by the city in July.
It was held at the law offices of Foster Pepper, one of Seattle's prominent law firms. An attorney with the firm, Hugh Spitzer, had been hired by the city in September to provide advice on selling construction bonds.
The agenda also included discussion of KeyArena, where the Seattle Sonics played before owner Clay Bennett moved the team to Oklahoma City in 2008 after failing to secure a new arena. Bennett said KeyArena lacked amenities to support an NBA franchise.
No details were listed on the agenda, but KeyArena could be used as a temporary home for a new team with the permission of the NBA, which considered it an unsuitable permanent venue even before the Sonics departed.
Kings up for grabs?
Although the documents don't mention how Seattle would obtain a team, they show the city has been following developments in Sacramento, which is under a March 1 deadline to come up with a viable proposal to build an arena for the Sacramento Kings. In September, Hirsh emailed a copy of an Associated Press story to Raup that outlined the Sacramento situation.
If Sacramento fails, the Kings could be playing in Seattle next fall if the city and Hansen reach an agreement, according to a Seattle City Hall source who has been briefed on the matter.
In addition, National Hockey League Commissioner Gary Bettman has expressed a strong interest in placing a team in Seattle, leading to widespread speculation that the financially struggling Phoenix Coyotes could be moved here.
Bettman, speaking after a board of governors meeting in Ottawa last week, said the league hopes to find a buyer before the end of the season to keep the Coyotes in the Phoenix area, according to news reports. "I don't see any reason to discuss a Plan B at this point," he said.
But, according to ESPN.com, Bettman said, "There are a lot of people who think Seattle would be a great place to have a team. The Pacific Northwest, the natural rivalry with Vancouver, another team in the Pacific time zone ... but there's no building."
Seattle has been mentioned as an NHL destination along with Kansas City and Quebec City.
While many observers consider an NHL team, as well as concerts and entertainment events, to be a crucial component for the financial success of a new arena, the documents obtained by The Times focus on basketball.
The last item listed on the Dec. 13 agenda was, "Terms for Consideration from Development Team."
No final offer from Hansen's group has been presented to the city. Hansen heads Valiant Capital Management LLC, but his effort is said to be a personal endeavor.
McGinn said Saturday he is taking the proposal "very seriously," but doesn't want the city to be left "holding the bag."
He said he couldn't predict the timing for the next step.
"It's a pretty substantial commitment that would have to be made by the investors," McGinn said, emphasizing that the city budget can't be tapped to fund an arena.
Voters have spoken
McGinn said the offer also must honor the will of Seattle's voters, who in 2006 overwhelmingly approved an initiative that says the city must make a profit on any investment it makes in a sports arena. McGinn noted that he voted for the initiative.
Hansen, a 1986 graduate of Roosevelt High School with deep roots in the city, has not publicly spoken about his plans.
But in his June 16 email, Hansen referred Seattle officials to an aide who would be willing to talk about arena deals in other cities, identifying the representative as Dave Perez.
On June 18, Perez wrote to McCoy and Raup that he was "eager to spend some time with you guys discussing recent PPP solutions that have been used to deliver sports facilities," an apparent reference to public-private partnerships.
The documents don't provide a breakdown of how the partnership would work, but the public end could include admission taxes and increased tax collections tied to a boost in Sodo property values. Some fiscal-analysis materials were withheld from The Times by the city as confidential. McGinn said no new tax source would be used to fund an arena, while acknowledging the city already collects admissions and property taxes.
Hansen has acquired property south of Safeco Field's parking garage, between South Massachusetts and South Holgate streets east of First Avenue South, records show.
While sources have previously said at least one business owner has declined to sell, the issue of the city using its power of eminent domain to acquire the land is no longer a concern of Hansen's group, Seattle City Attorney Pete Holmes said during a recent interview with The Times editorial board.
Holmes did not elaborate, but his comments suggest Hansen's representatives have reached some sort of agreements.
Hirsh, managing partner of Stafford Sports LLC, who has extensive experience with arena deals, has estimated the cost of building a state-of-the art facility at about $400 million.
City Councilmember Richard Conlin said intense public scrutiny would be given to any arena proposal and that the investment group must be willing to vet its plans with the public.
"They're going to have to expect a lot of publicity in the final stages," Conlin said.
Councilmember Nick Licata, a vocal critic of previous stadium deals that involved public financing, said he'd support a plan to build a new arena that provided the city with a return on its investment as required by the 2006 initiative.
McGinn has said that once the city receives a firm proposal, it will open discussions with the City Council.
Eyes on Sacramento
What happens in Sacramento could drive the process.
Sacramento is attempting to secure the financing to build a new downtown arena for the Kings, who have played since 1988 in what is now known as Power Balance Pavilion, formerly Arco Arena. At 17,317 capacity, it is the smallest arena in the NBA and is also one of the oldest, and lacks many of the revenue-generating amenities of new arenas.
The Kings are owned by Joe and Gavin Maloof, who have run into some well-documented financial issues in recent years, specifically concerning their investment in the Palms Casino in Las Vegas, and they are pressing for a new arena to be built immediately or to relocate the team somewhere it will make more money.
The Kings almost moved to Anaheim last season before NBA Commissioner David Stern stepped in and said the city should be allowed more time to try to keep the team. Given that the Los Angeles Lakers and Los Angeles Clippers already play in the Southern California market, the owners of those teams might balk at a competitor.
The Kings are an original member of the NBA, which dates to 1949, and are one of the most well-traveled, having played in Rochester, N.Y.; Cincinnati; and Kansas City-Omaha before Sacramento.
Under the NBA's March 1 deadline for Sacramento to present a viable financing plan, a new arena would be located at the downtown rail yards at a cost of roughly $400 million. The city has proposed to raise about $200 million by leasing the rights to the city's parking spaces for 50 years.
On Friday, the city announced the names of 13 companies that have submitted proposals to win those rights. The city is expected on Feb. 14 to present to the City Council the proposals it considers the most viable. It also has been expected that a proposed arena builder would donate roughly $50 million to the project.
The Kings are struggling on the court, with a losing record, and attendance has suffered, with its average of 14,267 per game through Feb. 3 ranking 26th among 30 teams.
Seattle Times reporters Bob Condotta and Emily Heffter contributed to this story, which also includes material from Times archives. Steve Miletich: 206-464-3302 or firstname.lastname@example.org. Lynn Thompson: 206-464-8305 or email@example.com
Wealthy ex-Seattle man behind NBA arena proposal
February 4, 2012
By Steve Miletich and Eric Pryne
Seattle Times staff reporters
A wealthy San Francisco hedge-fund manager is the lead investor seeking to build a sports arena south of Safeco Field to lure an NBA basketball team back to Seattle, according to two sources briefed on the effort.
Christopher Hansen, 43, who has roots in Seattle and now heads Valiant Capital Management LLC, in San Francisco, is working with an investor group whose proposal has yet to be publicly unveiled.
Hansen, described by one source as a multimillionaire, could not be reached for comment Friday. He previously lived in Seattle's Leschi neighborhood, public records show.
Hansen is working with a Bellevue man who would like to bring an NHL professional hockey team to Seattle to play in the arena, according to the source, who did not know the name of the Eastside participant.
Both men understand they need each other to make the proposal work, the source said.
Little has been written about Hansen or his company, according to a search of public records and the Internet. Valiant reported that its holdings of U.S. stocks were worth $779 million as of Sept. 30. Hedge funds can make a wide range of other investments whose value the funds aren't required to disclose.
Mayor Mike McGinn's office confirmed Dec. 9 that it was examining an "opportunity" to bring an NBA franchise to Seattle, but declined to provide specific information. Ethan Raup, McGinn's director of policy and operations, declined to comment Friday.
The Sodo proposal represents the most serious effort to resurrect NBA basketball in Seattle since the Sonics left in 2008 for Oklahoma City.
Hansen apparently is focusing on land in the Sodo District, just south of Safeco Field's parking garage, between South Massachusetts and South Holgate streets east of First Avenue South, as a possible arena site.
A limited liability corporation (LLC) he heads recently purchased one large property in the area, and a broker associated in public records with that corporation reportedly has reached out to nearby owners.
For an arena to be built there, the city most likely would have to vacate a stretch of Occidental Avenue South, which bisects the potential site.
WSA LLC, an entity affiliated with Hansen and Valiant, paid $21.6 million for a warehouse on three acres on the east side of Occidental between Massachusetts and Holgate in early December, according to public records.
The seller, Thomas Herche, did not return a call.
One public record concerning the transaction gives an Issaquah address for WSA that is the office of Vipond Group, described on its website as a company specializing in marketing, selling and auctioning commercial real estate.
William Vipond, the firm's founder and president, reportedly has contacted property owners on the other side of Occidental offering to buy.
Vipond did not return several calls.
There are four owners on the west side of Occidental between Holgate and Massachusetts. An entity affiliated with Henry Liebman's American Life, Sodo's largest property owner, owns slightly more than an acre with several buildings at the south end of the block.
Liebman couldn't be reached Friday.
Lyle Snyder of Mercer Island, who owns a half-acre at the north end of the block that now is the site of the Showbox SoDo, declined to comment.
David Efron of Scottsdale, Ariz., whose family owns a warehouse on about 0.6 acres south of Snyder's property, would not say whether he has been contacted by Vipond, WSA, Valiant or anyone wanting to build a sports arena.
But he said in an email that, when approached by other prospective buyers over the years, "our family partnership has not been particularly desirous of selling the legacy entrusted to us by our grandparents."
The owners of the fourth property, about 0.2 acres, could not be reached for comment.
At least one business owner has declined to sell, according to sources, who didn't identify the owner.
The mayor's role
McGinn, an avid basketball fan, has been working with the Sodo investor group for several months to explore how the city can assist, including help with financing, according to sources. As part of the effort, McGinn hired an arena consultant, sources said.
In 2006, Seattle voters overwhelmingly approved an initiative that says the city must make a profit on any investment it makes in a sports arena.
A new arena has been considered essential to acquiring an NBA team. If an arena site was found and financing for the project obtained, investors would have to work with the NBA to attract a new franchise or buy an existing team, such as financially struggling teams in Sacramento or New Orleans.
The group behind the Sodo effort is separate from a recently publicized campaign being led by longtime Sonics fan Brian Robinson and his organization, Arena Solution, supporting all reasonable efforts to secure a new arena and an NBA team.
Among those involved in the Sodo plan is Wally Walker, the former Seattle Sonics player and team executive, sources said. Walker was a minority owner of the Sonics, serving as the team's president and general manager from 1994 until the team was sold to Clay Bennett in 2006.
Bennett moved the team to Oklahoma City after failing to secure a new arena in Seattle and reaching a financial settlement with the city of Seattle. Bennett said KeyArena, where the Sonics played, lacked the amenities required to support an NBA franchise.
The hockey factor
If built, the arena would add a third professional sports facility in the Sodo area, joining Safeco, home of the Seattle Mariners, and CenturyLink Field, home of the Seattle Seahawks and Seattle Sounders FC.
Many think a new arena would have to offer both professional basketball and hockey to be a viable business proposition.
Seattle has never had an NHL team, though in 1990 a group led by then-Sonics owner Barry Ackerley, who died this year, sought to acquire an expansion franchise, but withdrew its bid.
KeyArena was not designed to meet NHL specifications when it was renovated in the mid-1990s.
Seattle Times news researchers Miyoko Wolf and David Turim, and staff reporter Lynn Thompson contributed to this story, which includes information from The Seattle Times archives.
Steve Miletich: 206-464-3302 or firstname.lastname@example.org
Eric Pryne: 206-464-2231 or email@example.com