Features
Sonics Win On Court, Lose At Bank
The Seattle SuperSonics may have just concluded a highly successful NBA season but, off the court, the team’s fortunes aren’t so rosy. The Sonics recently announced it lost $17 million last season, largely because of an unfavorable lease agreement with the
“I don’t think there can be any dispute that the Sonics have the least favorable building arrangement in the league,” commissioner David Stern said during a visit to Seattle last month.
Unlike most NBA teams, the Sonics derive no income from luxury suites, parking or concessions at home games and, instead, wound up paying $8 million to the city government that owns the Seattle Center complex of which the KeyArena is part.
“The agreement was structured with the best intentions when it was signed in the mid-’90s,” Sonics president Wally Walker said. “It was innovative. It was right for the times, and it worked for a couple of years.”
Not long after the KeyArena opened, public money helped the Seattle Mariners and Seattle Seahawks flee the crumbling Kingdome for two new stadiums. Suddenly, the market for pro sports luxury suites in Seattle tripled.
“After the other venues were completed, it really put a dent into the suite income, which the city collects,” Walker explained. “It changed the economics for them and for us.”
Another unforseen market force: skyrocketing NBA salaries in the late 1990s. Unlike many NBA teams, the Sonics had no luxury suite money to help pay for top talent. Other factors included the 1998 NBA lockout, faltering economy and sale of the team by the Ackerley family to a 58-investor ownership group led by Starbucks chairman Howard Schultz.
State lawmakers have largely ignored a plan proposed by Seattle, the Sonics and WNBA’s Seattle Storm to extend the taxes that paid for Safeco and Qwest fields. The money would be used to retire about $60 million in bond debt from the 1995 expansion that built KeyArena, and help finance renovations.
Lawmakers briefly considered the $260 million plan last winter but bottled it up in committee, saying the state had more important issues than a stadium.
As he did during the last legislative session, Walker plans to return with city leaders to the statehouse in Olympia next winter to push the proposed relief plan.
He expects to cut at least some losses by building on the Sonics’ unexpected success and raising ticket prices by 6.6 percent next season, which should combine nicely with the prospect of higher sales.
“We don’t project a chance to break even,” Walker acknowledged. “We’ll be better this year than we were last year, we hope, but that’s from increased revenue.”