Billionaires Set to Return NBA to Seattle - Without the Big Tax Bill
It's been four years the Seattle SuperSonics bolted for Oklahoma City after Seattle refused to pay for $220 million in renovations to KeyArena in 2006, and again refused to use tax money on a new $500 million stadium in 2007.
The team's buyers took it to their Great Plains hometown after agreeing to pay $45 million to get out of the KeyArena lease, leaving Seattle residents to watch from afar as Kevin Durant blossomed into one of the best players in the NBA.
By then, a stadium plan was already taking shape and Microsoft (MSFT) CEO Steve Ballmer was rumored to be ready to put his billions to work in returning a team to the city. But it was too late.
Now it looks like billionaires are coming to the rescue yet again.
Crowning New Kings in Seattle
Ballmer and hedge fund manager Chris Hansen are reportedly teaming up to buy the hapless Sacramento Kings for $500 million, with plans to move the team into a new $490 million arena in Seattle that Hansen already has approval to build.
This is a scenario we've seen before, with Seattle being a case study in the ups and downs of basketball in middle markets.
The Cleveland Browns asked for $175 million to refurbish Cleveland Stadium before the team moved to Baltimore in 1996. Voters approved the funds but the team moved anyway, and it cost $200 million in public funding to build a stadium for the next incarnation of the Browns in 1999.
The city of Houston didn't even offer the Oilers help building a stadium before they bolted in 1996 to Nashville, which laid out $144 million in new stadium subsidies and $70 million in ticket sales to lure the franchise. A few years later, Houston pumped $289 million into a new stadium for the newly formed Houston Texans. Had the city chosen to help the old Oilers, the might have been able to keep the team for around half as much.
Perhaps Seattle has learned its lesson. This time around, the city seems to have bucked the trend with the help of Chris Hansen and his group of investors.
According to ESPN, he has agreed to pitch $290 million into building a new stadium near Safeco Field and CenturyLink Field on the south side of town, with the remaining $200 million coming from the city. But in this deal, rent and ticket taxes are earmarked to pay the $200 million back, and Hansen would be on the hook if those two income sources fall short. Not a bad deal for the city.
Not a Done Deal Yet
The sale of the Kings and a move to Seattle (and the new stadium) aren't done deals yet. But when there's this much smoke, there's bound to be fire.
The Maloof family, which currently owns the Sacramento Kings, are having financial trouble at their Las Vegas casino, The Palms, and their basketball franchise doesn't look much better. Ballmer and Hansen both have the funds to make a deal happen and build the kind of stadium Seattle needs.
It may have been a tough few years for basketball fans in Seattle, but if they can get a team back and put up little to no public money to do it, everyone should be happy. Maybe the tides are turning and the public won't keep having to shell out hundreds of millions in public funding for private sports teams anymore.
Motley Fool contributor Travis Hoium owns shares of Microsoft. The Motley Fool owns shares of Microsoft.