Center of Attention: Task Force Recommends Larger City Subsidy for KeyArena
[The Stranger is posting this news story about a report on Seattle Center finances that will be released tomorrow. We got an early look at the report. More details to follow tomorrow afternoon.]
The Mayor’s Task Force for Seattle Center Sustainability, a nine-member commission charged with coming up with a path to financial sustainability for the struggling, debt-saddled city department, will recommend Tuesday that the City Council move Seattle Center’s long-term debt, which is currently paid for out of the Center’s operating budget, to the city’s general fund. The move would free Seattle Center from the crippling annual debt that has forced it to sell off properties to make up the shortfall, but would saddle the city with an additional annual debt between $2 and $3 million.
The shortfall can be traced back to the economic downturn of 2000, when revenues from sales of luxury suites and club seats at Key Arena, which had funded annual payments from a 1995 renovation of the Sonics’ stadium, plummeted. In 1995, the arena, which the Sonics rent from Seattle Center, underwent a $73 million renovation. The Center’s annual debt for the renovation was supposed to be paid off with private revenues from Sonics games. But when the economy began its steep decline, luxury seat sales at Sonics games followed, forcing the Center to run deficits and pay for a growing annual shortfall by dipping into its operations budget. “Seattle Center needs to be growing right now, and not only is it not growing, it’s shrinking,” says David Heurtel, Seattle Center’s director of marketing. “The Kingdome, Qwest and Safeco each have a dedicated revenue source [i.e., a tax]” to pay for capital improvements “We’ve got to remove the Key Arena debt from the Seattle Center bottom line.” Already, the report says, the Center has had to cut 50 positions to pay for the shortfall, of which the report recommends 20 should be restored immediately.
The Safeco-got-city-funding-so-we-should-too argument may not win Seattle Center much sympathy on the City Council (the council’s biggest Sonics skeptics, Nick Licata and Peter Steinbrueck, were in Australia Monday, and the council member whose committee will take up the issue, David Della, had not returned a call by Monday evening) but the task force’s other argument might prove more compelling: Seattle Center, Heurtel points out, is a city department. As such, it relies on (and, Heurtel argues, deserves) ongoing city funding. Currently, the report notes, about 25% of Seattle Center’s budgetbetween $8 and $9 million a yearhas come out of the city’s general fund. But that amount, the report argues, shouldn’t be seen as a prescriptive cap on spending. “Just as the City budget funds parks, human services, and educational support, it should continue to fund a portion of Seattle Center’s budget,” the report says. “To consider this `subsidizing,’ as is asserted by some, ignores the fact that Seattle Center is a public institution that generates public benefits for which the public should rightly pay.”
The ongoing public subsidy is only the first (and largest) of the task force’s proposals. The report also recommends that the Center restore the cuts to its operating budget, including safety and maintenance staff; that the city make a significant investment in the Seattle Center monorail; that the city pay for capital improvements to the Center, including the Center House; and that the city invest between $20 and $200 million in KeyArena: The higher number if the Seattle SuperSonics stay in the city, the lower number if, as appears increasingly likely, they don’t.
While shifting the debt of Key Arena to the city's general fund might help the Seattle Center, it is really just the epitome of shifting deck chairs on the Titanic. This is all a proverbial Trojan Horse to sneak in the Sonic's deal.
You write that it was the decline of the economy that saw luxury boxes leasing declines. How about it was simply that most people didn't - and don't - care about the Sonics anymore? Or if they do, not enough to pay the ticket prices (as individuals) or lease luxury boxes (as corporations).
This shell game is Mayor Nickel's first step towards a full court press - obvious metaphor and poor pun intended - on the weak-knee and gutless City Council to get them to pony up the $200 million for his pal Howard Schultz. Perhaps "the Shark" will go forth with another hand written note of "quid pro quo" to someone on the council (as he did in 2003 bartering fire stations for whatever it was, memory fails).
We need to let the Sonics go, and yes, along with them, the Storm. (The loss of the Storm is much more sad than the Sonics.) Shift the debt, if it will help the Seattle Center survive and reorient itself, with the proper management. But no more money to corporate welfare. The Sonics' management knows that legal precedents were established with Qwest Field and SAFECO Field.
Those were mistakes, even if the buildings now up are incredible.Consider this: if the Mariners were playing the same kind of ball in 1995, that they are now, maybe there'd be no policy discussion over Key Arena now.