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Chris Hansen, right, talks with former Seattle SuperSonics star Gary Payton backstage during a rally for a new NBA arena in Seattle, June 14, 2012. (AP Photo/Elaine Thompson)

Chris Hansen, right, talks with former Seattle SuperSonics star Gary Payton backstage during a rally for a new NBA arena in Seattle, June 14, 2012. (AP Photo/Elaine Thompson)

KUOW News

Chris Hansen Says City Will Make More Money On Arena Investment Than He Will

Deborah Wang
07/05/2012

The Seattle City Council continues deliberations today on a proposed basketball and hockey arena in the city's Sodo neighborhood. Arena investor Chris Hansen is asking for the city and King County to invest up to $200 million into the deal. Hansen claims the city will make a higher rate of return on its money than investors will.

TRANSCRIPT

Chris Hansen says for him, the deal is a labor of love. He says he wants to bring basketball back to Seattle to give something back to the community. But, Hansen says, it is also an investment and it has to pencil out.

Hansen told KUOW's Steve Scher that he and his partners would put up more than $600 million to do the deal — about $300 million into an arena and more than $300 million to buy a team. But he says they are not expecting to make much money on that investment. He says their projected rate of return would be in the mid–single digits per year.

Scher: "Do you need the city's investment?"

Hansen: "Yeah, we could use some help here. This is a very hard pull from a risk–reward standpoint; you have to appreciate this is not a good investment, you know, good rate of return on investment compared to our other alternatives. And there is a lot of equity that needs to be contributed up front."

Hansen wants the city and county to float up to $200 million in bonds to help pay for construction of the arena.

The bonds would be paid back from taxes the arena generates, including property tax and a 5 percent admissions tax on tickets.

Hansen says there are numerous safeguards built into the agreement that would protect taxpayers. And he says the city's expected rate of return on its money would be about 7 percent per year. He says that would be a higher rate of return than what the investors are expecting to make.

If the deal is rejected, he says, there is no "Plan B." But he doesn't rule out that there could be a revised proposal down the road.

Hansen: "So, if the councils say no and they would like to get, you know, try to negotiate a better deal or they want to rework it in some major way, they effectively are saying no to us doing this project for probably, ah, you know, the intermediate term. I mean, could we re–craft the deal maybe somewhere down the road and try to rework it, but it would be, you know, it would be awhile before, you know, we would be able to come up with Plan B."

And in the meantime, Hansen says, there may be lost opportunities to purchase a NBA team.

The city and county councils are expected to vote on the deal sometime next month. City Councilmember Tim Burgess has asked Hansen to reveal the names of his other investors before then.

Right now, Hansen says he, Microsoft billionaire Steve Ballmer, and Peter and Erik Nordstrom of the department store chain make up the core of the ownership group.

I'm Deborah Wang, KUOW News.

© Copyright 2012, KUOW

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