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Points of View: Retaining the Sonics is Good for Business |
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Written On: May/June 2006 |
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Written By: by Wally Walker |
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Admittedly, the business model for professional sports can be difficult to grasp, but the economic benefits of an NBA and WNBA franchise to a host city, county and state are indisputable.
During public hearings before the 2006 Legislature, the Sonics and Storm released our audited income statements for the past five years. The media focus was on $58 million in operating losses sustained by the current ownership group, but the more significant story for the community should be the direct impact the teams have on the economy. Our financials reflect an incremental, new-money impact of more than $100 million a year — including a total annual payroll in excess of $60 million. In addition, the Sonics and Storm paid approximately $3.2 million in state and local taxes last year.
Economists may argue about the exact multiplier effect, but using the same models employed for the Mariners and Seahawks, the total economic impact for professional basketball in Seattle tops $230 million annually. Those numbers are very close to the economic impact studies generated for pro baseball and football in Seattle. And locally, those economic benefits have been substantiated by a new, independent economic assessment of Key Arena.
In a report prepared for the Seattle Center and Mayor Greg Nickels' Key Arena Subcommittee, Dr. William B. Beyers, University of Washington, and GMA Research Corp. of Bellevue, concludes:
• In 2005, Key Arena businesses and visitors created $353 million in business activity, 3,252 jobs and $102 million in labor income in King County.
• "New money" economic impacts, that would not occur without Key Arena, yielded $165 million in business activity, 1,572 jobs, $47.3 million in labor income and $6.5 million in tax revenues.
• State and local governments receive $13.3 million in tax revenues as a result of the business activity at Key Arena.
• Key Arena is an important tourist destination. Of 1.1 million visitors in 2005, about 43 percent came from outside King County — primarily to attend sporting events or concerts.
The Sonics and Storm cannot take credit for all that economic activity. Our games account for only 45 percent of the events held at Key Arena, but we are the city's primary tenant and account for about 65 percent of the building's revenues. Unfortunately, those revenue streams are at risk. Key Arena is no longer competitive as an NBA or WNBA venue, and is increasingly less competitive as a venue for other events.
Whether it is a $220 million renovation to Key Arena or a new facility elsewhere in King County, the Puget Sound region needs a first-class, multi-purpose arena — not just to provide a competitive facility for professional basketball but also as a venue for concerts, family shows, exhibitions and other community events. These events are part of the fabric of a community, part of our identity as a community. They are among the elements that make Seattle a world-class city.
The Sonics were Seattle's first major professional sports franchise and have nearly 40 years of history representing the Emerald City — including an NBA Championship in 1979, a feat the Seattle Storm matched when they won a WNBA title two years ago. As a former Sonics player, it's hard to imagine Seattle without professional basketball. As a businessman, it's hard to imagine how it could be allowed to happen.
The economic benefits more than justify a substantial public investment in a competitive multi-purpose facility, and the Sonics and Storm are willing to share in both the costs and risks associated with construction and operations. It's time to guarantee professional basketball, and the economic benefits it brings, will be part of our future. It's time to make a good business decision.
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