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September 2012 - Ketel One Vodka Major Championship Challenge Trip to Pebble Beach
If you missed it, please listen to the full interview, ondemand.
Here's part 1:
Here's part 2 of the interview:
MITCH: Our opportunity to chat with a man who is trying to bring the NBA back to Seattle, not to mention the NHL and he thinks I want to talk about the NBA and its return to Seattle. What he doesn't realize is all I want to talk about the 1986 "Metro Wrestling Champion" of Roosevelt High School. Forget the NBA, let's talk about the real stuff, Chris Hansen. 1986, do I have the right year?
CHRIS: You do.
MITCH: How many matches for Roosevelt did young Chris Hansen have that year?
CHRIS: You're really testing my memory now. I'm not sure I can answer that question. But, I would guess somewhere around 30.
MITCH: Did you win 'em all?
CHRIS: I lost one match in the regular season. I coasted through Metro. Then it goes to Regionals and State and unfortunately I lost a very tough match in Regionals and I didn't make it on to State. So, it wasnt' quite as successful as I would have liked it to have been. Still haunts me to this day. A very close overtime loss.
MITCH: Do you remember the match?
CHRIS: I do, Of course.
MITCH: Is it safe to say that maybe you're getting your revenge by trying to bring an NBA team to Seattle. Like, if you had won that match, might everything be different right now?
CHRIS: No, I wouldn't necessarily say that.
MITCH: Well thanks for joining us on the morning show. It's great to hear your voice. It's great to be able to put a voice with a name. I think I'm able to speak on the behalf of all of our listeners, Thank you so much for the effort thus far. I know that we haven't done anything yet. We haven't acheived our ultimate goal. But, I think that all of our listeners would want me to thank you for everything that you've done so far, trying to bring the NBA back to Seattle.
CHRIS: Well, that's great. I really do appreciate the support. I think it's been very motivating. We kept our deal under wraps for as long as we could, given the necessities to aquire the real estate and get the frame work of the deal worked out with the city. Frankly, surprising, although it shouldn't have been, how supportive all the die hard Sonics fans coming out of the woodwork have been. So, that's great!
MITCH: So far, so good. So, What word would you use to describe the last year of trying to accomplish this, aquiring the land and negotiating with the city and so forth. Has it been fun, has it been frustrating, has it been exciting? What set of words would you use?
CHRIS: I think it's been alot of different things. A little bit of some of those. It's been motivating to try and do something positive to bring the Sonics back. It's certainly had its frustrating moments in negotiating individual transactions. Or trying to getting the deal done with the city has a lot of different things that needed to be waived by both sides. It's been a long process. But, it's definately been worth it and in hindsight, assuming that we're successful, then it will be fun and worth it.
MITCH: What about the 15 minutes of fame. What's it like to be in the newspapers all of a sudden, after leading a, I would imagine, a quite life. What's it like for you for your 10 year old to see your picture in the newspaper.
CHRIS: They're surprised that their dad is actually not just someone bossing them around and telling them to get ready for school and rush off in the morning. I must be somebody important in life. We've done pretty well insulating them from my business life and they just think of me as dad. It's definately been a little bit of a unique experience. And in my job profession, i work very hard to keep my privacy. It's valuable to what I do for a living and it's just really different to open up your life and your personality to a lot of different people.
MITCH: Did I hear this right, that your son is a life long Giants fan now?
CHRIS: Well he's only 10. So, to say life long, we'll see ... they were at the precise age that I was when the Sonics won the championship in 1979.
MITCH: What happens if the Mariners and Giants some day play in the World Series. What kind of strife in the Hansen household would there be?
CHRIS: The Giants are the only team that they've been allowed to root for in my household and that's because they're in the National League. Their first memorable sporting experience was donning their Hasselbeck and Shaun Alexander jerseys during the Seahawks Super Bowl run. They're committed to Seahawks, Sounders and hopefully Sonics soon.
MITCH: So, you'll be in town tomorrow for a few days to meet with the Arena Review panel. When do we expect a final report, recommendation or conclusion? And when would you like to something concrete one way or the other from the city and from the county.
CHRIS: I can just say that I don't control the political process of the city and the county, so that's really up to them to put this through the normal paths of the county counsil and the city counsil having proper time to evaluate the panel's recommendation and if there are any suggestions or questions they have and get them from me. In all likely hood the panel will take about a month. Then after that, you'll have a another 6 to 10 weeks where the county and the city will do their work and then hopefully it will go to a vote in late spring or early summer.
MITCH: So, you don't have a date that you have in mind that you can take it to the league or take it to some meeting or the commissioner ... you don't feel like you you need to know by a certain time?
CHRIS: I would say that the date is not critical. But, the sooner the better. I think we've expressed that to them that the sooner we have the framework in place ... we would have like to have had that framework in place for the owners meeting so that they could take a hard look at our deal with the city.
MITCH: When's the owner's meeting
CHRIS: Mid April
MITCH: The concern seems to be, that now that there doesn't seem to be a franchise that's waiting on word from Seattle on what they're going to do ... I'm afraid this thing could linger for a while. Do you fear that it will just linger for a while?
CHRIS: No, I really don't. But, maybe I'm an optimist. But, i think we presented a very fair deal to the city and the county that will create a lot of jobs. We're not asking taxpayers to directly contribute to this. We're just asking for the taxes that the arena and the team would generate that wouldn't exist if the team didn't return. I honestly don't think the city and county would get a better deal than this. So, we're not going to just leave our transaction hanging out there for vote, indefinately. And, I think everybody understands that. I think the counsil members have been very receptive. I think they're looking at it the right way. They're just doing their homework, like they should and making sure they understand all the dynamics of the deal and that it is what we say it is. And that they're listening to all the other constituancies in the city and the county that would like to have some input on this. So, I really think they're approaching this the way that they should. I think they will make a decision. That doesn't trouble me so much.
MITCH: If this deal comes to fruision, Chris, we're talking about an arena that will have the 3rd highest private contribution of any arena ever built. In fact, only behind I believe the Staples Center and the remodel of Madison Square Garden. That's the kind of sweetheart deal that you've put forth and given the opportunity to King county and the City of Seattle. That's hard to beat. I don't see anybody topping that anytime soon.
CHRIS: I think there are a couple of other interesting components that I would like to make clear that even though we are asking the city and the county to contribute that we've gone very far in some of the questions that are going to be asked about just isolating the tax revenue that's directly attributable to us bringing the arena there. Then going out of our way to not only make those numbers conservative but to guarantee those numbers in the form of us paying additional rent and putting security deposit up against that amount that would cover any shortfalls in the city's projections that are much more conservative than ours. So, I think the structure of the deal is very fair and favorable.
MITCH: Yea, and you've gone out of your way in more ways that just you're pointing out ... there's also the Key Arena deal. I understand that you've taken money out of your own pocket to try to enable something good to come about of Key Arena, if indeed a new Arena is built.
CHRIS: Just as all Seattleites, I have very fond memories of all the different events, other than basketball, that have occured at Key. And I think it's important to the city to find a long term solution for that. And they've expressed that all along. I think it's important to the counsil members too. If we build an arena, we're obviously going to have the operating infastructure to operate an arena, like Key, much cheaper than the city would. So, that's really been the focus of trying to figure out, not only a solution for Key, in the event that we were to bring a team back there and have to play for a couple years. But, really also for repurposing it and keeping it alive in some successful format, post a new arena being built.
MITCH: You've been very quiet up until now, in part not to step on anyone's toes in the NBA and of course you don't want to be perceived as some sort of preditor, somebody going after other teams. To respect that, I am not going to ask you about any other NBA teams, but I think what people in our audience would love to know from you Chris, is if you would characterize your conversations with David Stern, up until now, and how optimistic are you that if the city and the counsil are to agree to this deal and we put the plans in motion to build a state of the art $500 million dollar arena, how optimistic are you that an NBA team will follow to the area.
CHRIS: I would say that if we're successful in getting the framework for a deal in place, that I'm very optimistic about the return of basketball and hopefully the NHL as well to the Seattle market. I think the real question that probably everybody has is really more one of timing. It's very hard to forcast the timing of when this may happen. But, if you'd just look at the dynamics of this, is what I would encourage everybody to do ... Seattle is the 12th largest television market. It's a very affluent market. It's a market that leagues like the NHL and NBA would love to be in. It's a market that the owners of the other franchises, even for their own econmic self interest would like to be in. So, if we do our job and we can get a new state of the art arena built, I'm very optimistic that at some point in the next few years we'll have the opportunity to bring a basketball team to the area.
MITCH: And you don't feel that David Stern harbors any ill feelings toward this town based on what happend or didn't happen the last time around.
CHRIS: That's my general belief. But, I'd rather not comment, specifically, on anything David or anybody else has said at the NBA. I would just more a message for people in Seattle is just that, we did a lot of wrong things in allowing the Sonics to leave on a lot of different levels. Blaming other people for the past is not a part of the solution in getting a team back to Seattle. I think it's really important for our community, if we want to be successful, to rally around getting a new team and highlighting all of the positive aspects of our basketball heritage and what a great NBA town Seattle was and how great our fans were and not focus on any ill will toward Clay Bennett, politicians here in Seattle or the NBA. I just don't think that's productive part of the solution.
MITCH: You're already far down the line on this particulare site. You've aquired all the land that it takes to build the arena. If it doesn't work out for this particular venue, would you be open to other ideas or is it pretty much, since you've spent the last year aquiring the land, it it going to be there or you probably wont't be a part of it?
CHRIS: I would just say this ... I've spent alot of time looking at all the different sites that were available. I lived a long time in Seattle. I lived there all the way through High School and then again after college, before graduate school. This just seems like the ideal site. You already have the infastructure in place to get people there. It's in an area that is already zoned for the stadium. It's in Seattle. Which my own belief is that it's the Seattle Supersonics and that's where the team should be. I personally also believe that if you look at the history of successful venues, urban venues tend to do well when the teams necessarily aren't doing that well ... and the more difficult that that venue is to get to from a traffic and timing perspective, puts more of a burdon on the team and the arena owner from a profitablity stand point and so I think that people in the community would love a solution that is in Seattle and right in the heart of the city. Coincidentally, near where we have two other stadiums that they're used to going.
THE SECOND HALF OF THE INTERVIEW ...
MITCH: Let’s continue on our interview with Chris Hansen, as he comes to town tomorrow to meet with the arena review panel. He joins us on 950 KJR AM and 102.9 FM. This idea, Chris, of funneling taxes generated by a new building back into the building costs seems just like a no brainier plan to all of us who are not smart enough to understand anything different and it just strikes me why haven’t we heard that idea with other arenas or has that been the case with other arenas? It just seems like we always hearing about owners in different cities wanting to build facilities, yet I don’t ever remember hearing one of them say, “Hey, here’s what we’ll do. We’ll just take the taxes that are going to be generated by a new building so that there’s no extra public money to build that that arena or stadium.” Has it been done before?
CHRIS: It has been done before. It’s frankly easier to get people to understand that concept when you’re bringing a team into the city rather than a team is already in the city so those tax revenues already exist. And then I think the other question is where people have gone wrong in the past is, whether it’s civic leaders or owners just get overly optimistic on their assumptions and that’s created a lot of problems for bond issue instances, publicly financed arenas that have used something like this. So I think we’ve gone out of our way from a creative standpoint to really find a solution that protects the tax payers and gave us enough support that we could build a 500 million dollar arena. I think a combination of creativity, patience, the mayor’s staff did a great job working with us and so did the county staff. A lot of input came from them too. I can’t take credit for all this. They had a lot of people on their team … we had a lot of people on our team and just thought a lot about what was fair and I also do respect, I mean Seattle is a great city that likes to debate things openly and thoroughly and I respect that and so my job here is to explain the transaction and answer questions people may have but I really want the city to make their own decision. I mean I want people on both sides to lob in on anything people have concerns about to voice those concerns and most importantly for people that are supportive for what we’re trying to do also need to stand up and express their opinion as well.
MITCH: Chris, talk to me about the NHL … the importance of an NHL team in this plan … I’ve heard both answers to the following question. Do we have to have an NHL hockey commitment before the shovel hits the dirt or can we start the building process with just an NBA team on its way?
CHRIS: That’s probably a question that’s not fully ready to answer at this point. I think the framework of our deal is that it will include both an NHL and NBA team. I think anybody with some common sense would conclude with actually having two teams ready to relocate to the market on the exact same day and you owners having their ownerships groups ready to go on the lead signing off on it. For those two things to happen perfect simultaneously are a pretty low probability. So, I think the thing safer to say is that basketball is probably more important to this transaction than hockey but both are important. And, I think we would like to find a way to work around the likely hood that those two franchises might become available at different times.
MITCH: How long with it take for the Arena to generate that $200 Million and how do you forecast that?
CHRIS: This is a pretty complex question, but I’ll try and answer it as simply as I can … There are a few major components of the incremental taxes that are generated. It’s the admissions tax on our tickets. It’s the incremental property tax, that is the city and county’s portion on the construction of the new arena and it’s the city and county’s portion of the sales and B&O tax. And then there is some question about whether some of that is actually substituted from other entertainment dollars that would be spent in this market. We’ve tried our best to take that into account. That’s offset by the fact that a lot of people that are coming to games are coming from outside the city and bringing new dollars from other areas outside of the Seattle city limits.
MITCH: So, roughly how long will it take to generate that money?
CHRIS: We’re not talking about paying back the $200 million dollars in year one. We’re talking about, as if you were to think about a loan on your house, we would be asking the city to finance the $200 million dollars over 30 years and then this on an annualized bases, just like you’d make a mortgage payment that amortizes the debt that you’d own your house outright in 30 years. We think that the incremental taxes and the rent that we’ll be paying the city and the guarantees that we’ll be providing on top of that, will easily cover that annual payment.
MITCH: And if it doesn’t, you’ve already stuck your neck out there.
CHRIS: If it doesn’t, there will be a reserve fund on top of that. There will be incremental rent that will be paid. Most importantly, which I don’t think that people understand, is that we have a tremendous amount of personal equity that we have in the arena and in the NBA franchise. And the NHL owner will have in the NHL franchise. And to think that we would “Welch” on a million dollars on incremental rent, when we have hundreds of millions of dollars in equity, I would say is pretty ridiculous.
MITCH: Chris, I think people would love to know, how do you make money on this deal? It’s been described as it’s not a great financial deal for you. You’ve said that in the few times that you’ve been quoted. You’re doing this to bring the NBA back to Seattle. But, does Chris Hansen and his investors make money on the arena deal without ownership of the team. Is it based on a vision to develop the land around the arena. Tell me how this becomes a good deal for you.
CHRIS: I don’t want to get into too many specifics. But, I would say that we wouldn’t be doing this, if we didn’t think we didn’t think we would make a decent return. What I’ve said all along, is that I’m in the investing business. Both public and private equity and that’s how I’ve generated my financial success so far. If it was just about money, I would just do types of investment opportunities that I see on a day to day basis. Probably, pale in comparison to an NBA franchise and an arena company. But, the ways we would make money, I think if we took a long term approach … a few things have changed in operating an NBA franchise for the better … The CBA is out and we all know what the new player’s component of the CBA is and that’s obviously going to reduce costs a bit. Then at the same time, if you look at a market like Seattle, the contracted revenue streams like television, naming rights, sponsorships those types of things have gone up. So, it’s a good market to be operating a team and I think with a little patience, we’ll do fine and then on the arena we have the added benefit of a lot of concert promoters have been avoiding Seattle market because Key Arena is not adequate … there’s not good load in load out, traffic is bad, it’s not big enough, so we think the arena would do a lot better than Key in the number of acts it would attract. The combination of those things, will allow us to earn a reasonable return … Then, lastly, interest rates are low, which is very important to infrastructure finance as well, so it’s an ideal time to put together a large expensive project like this.
MITCH: What happens if the deal goes through and we’re ready to build a beautiful state of the art arena and some team decides to relocate here, but doesn’t want to sell any portion of the team to you? Are you OK with that? I read recently that owning an NBA team has been a dream of yours since college.
CHRIS: I would think that would be pretty unlikely, honestly. I think the question you’re asking is not rather they would want to sell a portion of the team, but whether they would want to give up the operational control of that team … I would just say that that answer really depends. I think that I have a pretty good idea of what the people from Seattle would expect out of a franchise and their opinion about the way things went down, when the Sonics left. My first and foremost desire to get involved with this was, if we’re successful, is to insure that the team never leaves the city again.
MITCH: I haven’t heard this question asked … What’s the arena gonna look like?
CHRIS: I think we’re keeping our options open at this time. We’ve obviously have had some people do quite a bit of work on the site for us. We wouldn’t have acquired the land, if we weren’t positive the arena of this type would fit there.
MITCH: How many seats?
CHRIS: Between high 17’s to 20,000 seat range is what we’re talking about
MITCH: K. How ‘bout length of construction. Permitting process. You gave us the analogy in comparison to building a house, well this isn’t building any house that I know of. I’m assuming it’s going take a long time to build. I’m assuming the permitting process is going take a long time. And I assume that David Stern and the NBA is going to have to be OK with the ball club playing in Key Arena for up to three years.
CHRIS: I think that it depends on the time of the relocation of a franchise here. Your time frame is pretty right, we have about a year in permitting and environmental approval and all those types of things, before we can put a shovel in the ground then about two years of construction, give or take a few months. So, that question depends if we start this soft cost work in advance, over the next year, it could just two years from the time we acquire a franchise. The NBA has been on record as saying that they’re OK with us playing in Key Arena for a couple years. I think they understand the reality of the situation. I don’t think there are too many people in the world that will build a $500 million dollar arena purely on “spec”.
MITCH: Can a hockey team play in Key Arena?
CHRIS: Well the Seattle Thunderbirds played there for along time. So, yes, a hockey team could definitely play there. The issue is the seating capacity is not optimal. Where the seating capacity for basketball is somewhere around 17,000 range. For Hockey it’s more like 10 or 11,000. So, that’s much more impactful for an NHL team to play in Key Arena before playing in a new arena.
MITCH: I’ll conclude by giving you the floor, if you don’t mind. An interview on KJR, the former home of the Sonics, you’re speaking to the choir. You’re speaking to a guy in me, who wants this to happen desperately. I’m not the largest NBA fan in the town, but I want this extremely bad. I know our listeners want this extremely bad. What can our listeners do to help out in the process?
CHRIS: I think there are a couple things. I think in a town like Seattle, the people on the left tend to be much louder. And sometimes the people that go about who are just going about their day to day lives tend to be a little more quiet. This is just an important time, if you believe in what we’re trying to do, and this is important to you to try and get a basketball and NHL team, just let your city council people know. Express your opinion on why you think this is good and I’m sure they would love to hear from you. That’s really important over the next couple months. People take time out to voice it to their councilmen, voice it to their other people, wear their Sonics jerseys. Just express their support.
MITCH: Don’t take it for granted and just assume the next guy’s going do it. You’re gonna have to do it yourself.
CHRIS: Then, I think the other important thing is that Seattle had great fans. I’ve been to tons of games at Key. I’m a lifelong Sonics fan, through all the playoff runs in the ‘90’s … I was at the finals in ’96. I was at game 5, when we lost to Denver in heartbreaking fashion. I was at all the games when the seasons before that when we beat Golden State in the first round, then lost to Utah. The run, when we made it to the Western Conference finals and lost in game 7 to Phoenix. We had some of the most rowdy, crazy fans of any NBA arena. I think that with a little time, it’s easy for people to forget that. The next step, after we get this transaction approved, would be to have fans let the NBA know that we’re serious about getting a team and what a great market we are. I’ll leave that up to everybody’s creativity of how to do that. Just get out there in your GREEN and GOLD.