Why I am voting No.

[betts]

I'm posting a letter to the editor I found in the DOK today:

Letters to the Editor: Wednesday, February 13, 2008

Let's keep momentum going in city
When we made the decision to reopen the Skirvin Hotel, we did so feeling confident that Oklahoma City was definitely a city on the move, especially downtown. Little did we know how much movement there would be! On March 4, Oklahoma City voters have a rare opportunity to build on that momentum. Improving the Ford Center will show the nation that we're ready to become a top-tier, big league American city.

I worked in Milwaukee at the Pfister Hotel, owned by our parent company, Marcus Corp., and can tell you first hand the tremendous impact the NBA's Bucks had on that community during the six years that I lived and worked there. The NBA brings a wealth of economic activity at many levels. Restaurants and taxi cabs, night life and entertainment venues will all be supported by the teams and fans.

This may just be the catalyst that could spur downtown retail store growth. So much is happening here and we need to keep the momentum going! Only 28 cities in this country can call themselves an NBA town and enjoy the benefits and recognition that brings. Let's hope our city is able to join that elite list. Vote yes on March 4.

John D. Williams, Oklahoma City

Williams is general manager of the Skirvin.

[Kerry]

What does the Ford Center vote have to do with Bennett or the Sonics? If it was Bennett pushing for the vote then you might have a point. Also, the arena in Seattle was to cost $500 million. The Ford Center improvements will cost about 1/5 that. So by my calculation that means Bennett should only be libal for $20 million. The relocation fee is around $30 million so I think Bennett is covered.

The city stepped up and built the Ford Center for $90 million. Bennett and company stepped up even more and bought the Sonics for $350 million. Now people think the city should just lay down and let this opportunity pass instead of stepping up to the plate again? Go figure. You have to be at-bat to hit homeruns.

[Luke]

Well, if the reason to upgrade the Ford Center was so Bennett's Sonics could come to town, then why shouldn't he foot the bill for the upgrades? It would seem logical seeing as how he wants a return on his investment. No upgrades, no Sonics, no money for Bennett.

[Midtowner]

Luke -- because nowhere else in the world do major league franchises pay for their own facilities. It just isn't done.

Unless the city isn't serious about having the NBA here, we'll get this done.

[betts]

Well, if the reason to upgrade the Ford Center was so Bennett's Sonics could come to town, then why shouldn't he foot the bill for the upgrades? It would seem logical seeing as how he wants a return on his investment. No upgrades, no Sonics, no money for Bennett.

I don't believe Clay Bennett is being given an option to foot the bill. And there's no guarantee he'll ever get a return on his investment, which will total at least $400 million by the time he pays the $30 million relocation fee and his legal fees. No upgrades, no Sonics is correct, but the third may well not be. There is very little assurance that the Sonics owners will ever make money on the team, or at least as much of a return as most of us would expect on any investment we made.

[Luke]

Sports stadiums can be privately financed - The Buckeye Institute

Interesting read.

But, must these stadiums be financed solely be taxpayers? Many new sports stadiums are being built with substantial private funding.

Joe Robbie Stadium, home of the Miami Dolphins, is renown for being almost completely privately. Joe Robbie put up almost $12 million of his own money and borrowed as additional $90 million from three banks.

Robbie, however, had some public sector help: Two landowners donated several hundred acres to Dade County for a sports stadium, and the local government built a highway interchange to ease traffic problems in the area. Nevertheless, the bult of the cost -- construction, maintenance and operation of the facility -- was financed privately.

Joe Robbie's project is not unique. Consider the following more recent examples:

The Fleet Center, home to the NBA's Boston Celtics, was privately financed except for road improvements, a mass transit station and service costs.
Minneapolis's Target Center, home to the NBA Timberwolves, was originally financed with $25 million from owners, and $59 million from private banks. The city provided $20 million for land and infrastructure improvements.
The NHL's St. Louis Blues built their facility with a $30 million investment from the owners and a bank loan for the rest of the facility costs. The city provided the land and paid $10 million for land clearance.
Private philanthropists in Milwaukee built the Bradley Center which is home to the NBA Bucks, IHL Admirals, and Marquette University's basketball team. They built the arena for $84 million and then donated it to the state as a gift. The city used $25.5 million in bonds to demolish some vacant buildings, acquire some land, and provide planning and infrastructure.
What lessons can be learned from these examples?

First, private ownership and financing of sports stadiums is not a thing of the past. Ohio policymakers need to fully explore private alternatives before putting taxpayers' wealth at risk or increase taxes further.

Second, public investments can be limited to things that cannot be done easily through the private sector such as land assembly, some planning, and some road improvements.

Third, sports teams should have a significant financial stake in the stadium. This gives the teams an incentive to fill seats and factor the success of the stadium into their bottom line.

Fourth, privately owned and operated facilities are taxable. This means that public expenditures that result from the project can be offset by revenues from new taxes.

Ohio citizens and policymakers should be wary of proposals to fund sports facilities solely with public dollars. Public funding of sports stadiums in Ohio is way out of line with trends in other cities and states. Private financial markets will provide funding for the most economically profitable projects. If significant private financing is not available, taxpayers and policymakers should take that as a sign that the sports facility is not a good investment.

[andy157]

I don't believe Clay Bennett is being given an option to foot the bill. And there's no guarantee he'll ever get a return on his investment, which will total at least $400 million by the time he pays the $30 million relocation fee and his legal fees. No upgrades, no Sonics is correct, but the third may well not be. There is very little assurance that the Sonics owners will ever make money on the team, or at least as much of a return as most of us would expect on any investment we made.

You state that, you don't believe Mr. Bennett is being given an option to foot the bill. I will take you at your word. But, would you, or could you believe that, he has an option to foot the bill? That is of course if he desired to do so?

He offered to foot the bill to the tune of 100 Mil of a 530 Mil plan for a new arena, that he proposed, to the state of Washington to be located in the City of Renton.

The best part of his offer was that he got to keep ALL of the revenues, everything, the whole pie. The naming rights alone where worth 150/200 Mil. Terrible return on his investment hey.

The rest of the money was to raised by the State/City. Sales Tax: 227 Mil, Resturant Tax: 75 Mil, Car Rental Tax: 40 Mil, Hotel/Motel Tax: 81 Mil.. The article was in the 11/5/07 Sports Business News. It went on to say that on 4/16/07 The Washington State Legislature was faced with two choices. Give in to Bennett's Blackmail demands, or reject his offer. Action taken. There will be no arena in Renton

[betts]

The Fleet Center, home to the NBA's Boston Celtics, was privately financed except for road improvements, a mass transit station and service costs.
Minneapolis's Target Center, home to the NBA Timberwolves, was originally financed with $25 million from owners, and $59 million from private banks. The city provided $20 million for land and infrastructure improvements.
The NHL's St. Louis Blues built their facility with a $30 million investment from the owners and a bank loan for the rest of the facility costs. The city provided the land and paid $10 million for land clearance.
Private philanthropists in Milwaukee built the Bradley Center which is home to the NBA Bucks, IHL Admirals, and Marquette University's basketball team. They built the arena for $84 million and then donated it to the state as a gift. The city used $25.5 million in bonds to demolish some vacant buildings, acquire some land, and provide planning and infrastructure.
What lessons can be learned from these examples?

The lessons that can be learned are that some cities have people in them wealthy enough to pay for sports facilities themselves. Boston is the seventh largest television market in the US, and Oklahoma City is 45th. Massachusetts has 20 Fortune 500 companies and Oklahoma has 6. There might be a disparity in wealth between the two. You notice that it took private philanthropists in Milwaukee to build the arena. Know any that would be willing to pay for the Ford Center? Because I think bringing a $350 million team here without any guarantee of a return is philanthropy enough for the Sonics owners. The Minnesota Timberwolves franchise cost $32.5 million, so it would be a lot easier to come up with the cash for a new arena if you'd spent one tenth of what the Sonics' owners spent. I'm not going to discuss the Blues because I know nothing about hockey. There are several problems with the above reasoning: First of all, as discussed, the are huge disparities in what people have paid for sports teams, and there are huge disparities in wealth of different cities. Second of all, this isn't Clay Bennett coming to the city asking for a handout. No one knows what team, if any, will end up in Oklahoma City. The NBA is telling Oklahoma City what it needs to do for them to consider putting a team here. Remember, before we hosted the Hornets, we didn't even make the cut for an NHL expansion franchise, and David Stern laughed at Mick Cornett and Clay Bennett when they asked for an NBA franchise. We're a marginal size for a team, we have a marginal at best television market and we've got a less than acceptable median income. We're not doing the NBA a favor by "allowing them to put a team here", they're doing us a favor by considering us an acceptable market, despite some of their reasonable concerns. If we're not willing to upgrade an $89 million arena when other cities are building half billion dollar arenas, I think there are reasons for concern, and I cannot disagree with the NBA not wanting to put a team here if that's the case.

If significant private financing is not available, taxpayers and policymakers should take that as a sign that the sports facility is not a good investment.

I don't think anyone is trying to say sports facilities are a good investment for a private investor. What we've said, and it is opinion, is that we think having an NBA team is a quality of life issue, that it may help keep college graduates in Oklahoma City and attract interest from businesses looking to relocate, that having a team is great advertising for the city, and provides an artificial form of entertainment in a city without a lot of geologic and geographcial reasons for natural outdoor entertainment. I believe having a team helps us continue to develop our downtown and helps decrease urban sprawl. Not to mention, it's a lot of fun to have a team, is something that can pull OU and OSU fans together, and gives a city a national identity apart from the dustbowl and the Murrah bombing. For those reasons, to me, it's worth a few pennies a day for 18 months to bring a team to Oklahoma City.

[Luke]

It would only make sense that if I wanted my NBA team to play in OKC because I thought OKC would be profitable, then I would have to make sure the facility was up to NBA standards and I should foot the bill for that.

Here's what we have: several businessmen worth billions buy a team. The citizens of OKC pay a tax to ensure the team moves here. The businessmen worth billions charge the citizens to enter the arena they originally paid for and upgraded. The businessmen make even more money.

How about the businessmen invest in the arena themselves?

[betts]

I'm going to repost this, as it answers some questions posted just above, and you now have to be a subscriber to view it online. I apologize to those who have read it already. This is from the Journal Record last week:

Streuli: Time to play ball
by Ted Streuli
The Journal Record February 11, 2008

I tend to be a skeptical kind of guy, but that’s generally regarded as a good trait in a journalist. And like most journalists, I tend to be especially skeptical when there’s a lot of tax money being tossed about, and a politician is telling me why it’s a good thing.

That’s why I got a little itchy when Oklahoma City Mayor Mick Cornett started touting the March 4 sales tax election as a great idea. If it passes, the $120 million raised by the 1-cent sales tax will pay to dress up the eight-year-old Ford Center and build an NBA-quality practice arena. Proponents, including Cornett and the Chamber of Commerce, say it’s a must-win election if the SuperSonics are to move from Seattle to Oklahoma City. And they’re pushing hard; even Cornett’s assistant, David Holt, is handing out buttons and giving PowerPoint presentations to any group willing to listen.

In case you’ve been living in an igloo the past couple of years, you need to know that when George Shinn declined to sell the NBA’s Hornets to a group of local businessmen headed by Clay Bennett, they turned to Seattle and bought the Sonics. They would like to move the team to Oklahoma City.

Anytime folks want to spend $120 million of other people’s money – including mine – I have questions. And this deal was no exception. Cornett and Chamber President Roy Williams answered those questions for me the other day, and now I’ve decided how to vote. I wondered why we should pony up the cash to help a group of millionaires (some of them billionaires) remodel a relatively new arena.
It seemed to me that would be like building a new garage as a gift to my rich neighbor who just bought a Bentley, which he would then charge me to ride in. I would wonder why he couldn’t just build his own damn garage. The answer is that the Bentley people won’t let him. Or, if you’ve become confused by the car metaphor, it means the NBA, not the team’s owners, decide where a team will play. And the NBA says the city, not the owners, should invest in the facility because they want to make sure their franchisees have a reasonable chance to turn a profit. If we don’t build the garage, they’ll park the Bentley in Kansas City. Bennett and friends don’t want to own a Kansas City team, they want to own a team in their hometown – but they don’t get to make the decision. If the Bentley gets parked in KC, they’d likely look to transfer title.

Spending the $120 million all but guarantees the Sonics will soon be playing here. But we’ll get more for that money than the NBA. We’ll get more play from the Big 12 and others. Tulsa, with a beautiful new arena, will attract more big-time events, too.

I don’t know about you, but I’m un-jerking my knee on this one.
My March 4 vote will be “yes,” even if I have to rub a little anti-itch cream on when I do it. This is one of those times when they’ve got it right

[betts]

It would only make sense that if I wanted my NBA team to play in OKC because I thought OKC would be profitable, then I would have to make sure the facility was up to NBA standards and I should foot the bill for that.

Here's what we have: several businessmen worth billions buy a team. The citizens of OKC pay a tax to ensure the team moves here. The businessmen worth billions charge the citizens to enter the arena they originally paid for and upgraded. The businessmen make even more money.

How about the businessmen invest in the arena themselves?

And again, please provide me with proof that the businessmen will make any money at all by putting a team in Oklahoma City. What would you consider a reasonable return on an investment if you were investing money? 5%? 7%? 10%? The average NBA team makes $10 million a year. Last year, 30% of all NBA teams operated in the red, one team losing $39 million. If the Sonics' owners were to make the NBA average of $10 million, they would be getting a 2.5% return on their money. Most of the teams that lose money are smaller market teams, especially if they don't make the playoffs. Oklahoma City would be the second smallest market, with the second smallest television market. When someone proves to me that the Sonics' owners are going to make even a reasonable return on their investment, I might start thinking they should help pay for the arena.

[metro]

#215 Tom L Ward - Forbes.com

#215 Aubrey K McClendon - Forbes.com

Luke,

Actually only two of the Sonics owners are billionaires (McClendon and Ward). Each are estimated by Forbes at $1.6 billion net worth. While I can totally agree with you in principle, that we shouldn't be subsidizing the rich, unfortunately that is the way business is done in America as others have pointed out. Furthermore, we aren't Boston, Miami, or St. Louis as you pointed out below. We are OKC, a city barely known outside the region. These other cities you mentioned are much larger in population, wealth, and media market (3 key factors to major league sports). These other cities also have several other major-league franchises, so the loss of one is not as significant as trying to obtain your first one as is OKC (or having none). Furthermore, we're competiting with larger cities such as San Diego, Anaheim, Vegas, Kansas City and others that are salavating at the possibility of a team, and probably willing to throw a better incentive package at the NBA than we are. Do you think these cities know and see the value in major league sports? Of course they do, most of them have already experienced it and know the value. While I'm as big of an OKC supporter and visionary as anybody, I know good and well chances like this don't just come around often, at best once a decade. I know most of what I've said has been beat around the bush many times, but if you think NBA or NHL is coming without this arena upgrade, or at an owner's expense, you're fooling yourself.

[andy157]

This may be somewhat off topic, if so I'm sorry. But here are my questions. We are all aware by now that Bennett:Etal paid 350 Million for the NBA Sonics. But also included in the deal was the WNBA Storm. Granted the mens team accounted for 280 of the 350 but what is going to happen with the womens team? Anyone know? Is he going to sell them? Keep them? If he keeps them will they come here or stay there? If he brings them here does the relocation fee cover both the teams?

[fsusurfer]

He has since sold the storm.

[andy157]

If they promise to bring the WNBA Storm to OKC, and promise to hire Sherri Coale as the head coach, and sign her to a long term contract, I may forget all about little ole practice facility. And vote YES!!!

[andy157]

If they promise to bring the WNBA Storm to OKC, and promise to hire Sherri Coale as the head coach, and sign her to a long term contract, I may forget all about little ole practice facility. And vote YES!!!

Well crap. Then screw them. I'm back to NO!!!

[andy157]

He has since sold the storm.

Any idea on how much of the 350 they got back?

[fsusurfer]

10 mil

[Luke]

And again, please provide me with proof that the businessmen will make any money at all by putting a team in Oklahoma City.

Are you implying they wouldn't make any money? I guess I'm confused as to why businessmen would spend time and lots of money to try to get a basketball team here if they're not going to make any money?

[Luke]

#215 Tom L Ward - Forbes.com

#215 Aubrey K McClendon - Forbes.com

Luke,

Actually only two of the Sonics owners are billionaires (McClendon and Ward). Each are estimated by Forbes at $1.6 billion net worth.

Then those two alone could finance the WHOLE upgrade project!

While I can totally agree with you in principle, that we shouldn't be subsidizing the rich, unfortunately that is the way business is done in America as others have pointed out.

A little creativity and this could be financed privately. If not, then perhaps the demand is superficial.

Do you think these cities know and see the value in major league sports?

If Chesapeake, Devon, OGE, MidFirst, BoA...on and on... see the value in Major League Sports for their employees, then why don't THEY foot the bill? If Bricktown restaurants and downtown hotels think that it would help their bottom line, then how about THEY subsidize it. Between the owners and the beneficiaries of an NBA team, it can be funded.

Look, I know what you're saying. All I'm saying is there has got to be a more creative way to get the financing necessary than by taxing everybody when only a fraction of the population will actually go to a game.

[Kerry]

Luke,

First off, the Sonics have nothing to do with this. They did not ask the City to upgrade the Ford Center. Second, you are probably correct, the owners do have enough money to privately fund the arena. However, that is not the option we are presented with. You have to play the cards you dealt, not the cards you wish you had. There is not a secret option 3 on the ballot.

[Luke]

I don't know how you can say the Sonics have nothing to do with this. If it wasn't for the Sonics, there would be no purpose to upgrading the arena.

The owners financing the arena is not an option we are presented with...yet. If the "Nos" have it, then maybe our local home town businessmen will do everything possible to make sure the opportunity doesn't slip through their hands. Or, they'll look to another city where they don't have to spend money. We'll see.

[metro]

Way to sum it up Kerry!!!

Quote andy157: This may be somewhat off topic, if so I'm sorry. But here are my questions. We are all aware by now that Bennett:Etal paid 350 Million for the NBA Sonics. But also included in the deal was the WNBA Storm. Granted the mens team accounted for 280 of the 350 but what is going to happen with the womens team? Anyone know? Is he going to sell them? Keep them? If he keeps them will they come here or stay there? If he brings them here does the relocation fee cover both the teams?

andy157, As others have pointed out, he sold the Storm for $10 million a month or two back. A good move in my opinion. Bennet's Group's losses plus legal fees this year are probably around $20 million or so. WNBA doesn't really make any money, the selling price just reflected that. This is a good way the group can help subsidize losses/costs to hold out until 2010 if need be AND it provides goodwill and a bargaining tool in dealing with the City of Seattle. Keep the WNBA and Sonics naming rights in Seattle, Seattle might agree to a buyout (or have no choice if the judge grants they can move early). Seattle is more happy with the NBA than they would have been otherwise. Bennet and Co. end up just cutting waste/losses and focus on the cream of the crop to bring to OKC. Again, NBA games ARE NOT AND WILL NOT BE the only events at the Ford Center. There are dozens of other types of events that take place their on a regular basis, and those events as well as the community as a whole will benefit, regardless of usage.

Luke, in theory, YES, McClendon and Ward could finance the arena alone. But are you suggesting or saying if you were in their shoes that you would? Meaning if you're net worth is $1.6billion, you just bought a team for $150-200million (each), plus you expect them to pay $50-75million (each) for an arena upgrade, plus all their other investments, AND still pay some of Oklahoma's highest paying jobs (thousands of them)? To do things on this scale, they have to either finance (meaning take on substantial debt on a venture they will probably lose money on) or liquidate assets (sell stocks). I don't know about you, but selling half a billion dollars worth of stocks (thus potentially losing majority stake in their own companies, Chesapeake and Riata), doesn't seem like good business sense. If these folks (which again, employ thousands of high paying jobs in local economy), lost majority control of their local companies (in a vulnerable market), we could end up losing another major energy player to Houston. Do you suggest this is a good idea to gamble on?

[betts]

Are you implying they wouldn't make any money? I guess I'm confused as to why businessmen would spend time and lots of money to try to get a basketball team here if they're not going to make any money?

Any possibility this is their philanthropic gesture, but they're only willing to make one.....or only allowed to make one? If people built an arena in Milwaukee and donated it to the city, why is it so farfetched that the Sonics' owners would buy the Sonics and bring it to Oklahoma City without any financial guarantees at all? That is precisely what I believe they are hoping to do and planned to do.....that this is their gift to the city. But, David Stern is drawing the line at them also paying for arena upgrades, as well he should. If Oklahoma City really wants an NBA team, why shouldn't the city pay for an ugrade that's one third to a fifth of what other cites are spending?

[betts]

I don't know how you can say the Sonics have nothing to do with this. If it wasn't for the Sonics, there would be no purpose to upgrading the arena.

The owners financing the arena is not an option we are presented with...yet. If the "Nos" have it, then maybe our local home town businessmen will do everything possible to make sure the opportunity doesn't slip through their hands. Or, they'll look to another city where they don't have to spend money. We'll see.

Hello?? I don't want to be rude, but have you read all the posts in this thread and the NBA megathread? No one even knows whether we'll get the Sonics, the Hornets or no team at all. We use the word "Sonics" just because it's simpler than talking about "the Hornets or Sonics, whichever". Since it's not even known which team will end up in Oklahoma City, it's pretty difficult for Clay Bennett to make demands. He may end up staying in Seattle or Kansas City, Las Vegas or Louisville. If the "nos' have it, the Board of Governors will turn down Clay Bennett's relocation request in April. There won't be time to throw together a financing package from some surprise philanthropists or secret hidden city funds. The owners will not be given a chance to "make sure the opportunity doesn't slip through their fingers". Yes, they will be forced by the NBA to "look to another city where they don't have to spend money." And why would they want to bring a team here that they've already spent $400 million on if their own city is too ungrateful to make it happen for a few pennies a day per person. I'd go to Kansas City too, and thumb my nose at Oklahoma City. We will see.