July 29, 2012 in Sports

Saturation point key to arena talk

Can Seattle successfully support six major sports and Huskies?
Bob Condotta Seattle Times
 
Associated Press photo

The Storm of the WNBA would face additional competition for fans at KeyArena if a new arena is built in Seattle.
(Full-size photo)(All photos)

Among the many questions surrounding the proposal to construct a new arena in Seattle to host NBA and NHL teams is this:

If they build it, will they come?

And not just to the $490 million arena Chris Hansen has proposed be built in the Sodo District, but to Safeco Field, CenturyLink Field, KeyArena, Husky Stadium and Alaska Airlines Arena.

If Seattle acquires pro basketball and hockey teams, as Hansen has said is optimal to make the new arena work financially, the city would be one of 13 to have franchises in what are traditionally considered the four major pro sports – NBA, NHL, NFL (Seahawks) and MLB (Mariners).

Seattle would also be one of just four cities to have those four as well as teams in MLS (Sounders FC) and the WNBA (Storm).

Throw in University of Washington football and men’s basketball, and some wonder if Seattle would be able to adequately support all of its sports franchises.

The question is a key one that swirls around the contentious debate over Hansen’s proposed arena at a critical time. The proposal will be considered and could be voted on Monday by the Metropolitan King County Council.

“The data is pretty compelling that we would be sort of flooded here with teams,” said William Byers, a UW professor who conducted an analysis on the topic for the Metropolitan King County Council arena advisory committee.

Still, those who study sports economics say that while Seattle would suddenly be as flush with teams as any city in the country, each could be supported given the city’s population and corporate base – especially if the teams win.

“Seattle is a very rich city compared to the actual population so there is enough money to support four teams,” said Rodney Fort, a sports economist and University of Michigan professor.

Saturation in Seattle?

The numbers illustrate well, though, just how saturated Seattle would be with the addition of two more teams. Local independent economist Dick Conway, who also prepared a market analysis for the arena advisory committee, calculates that each of the 3.5 million people in the Greater Seattle area would have to attend 2.12 events per year to fill every seat for new NBA and NHL teams, as well as the Seahawks, Mariners, Sounders and Storm.

That ratio is the third-highest among the 22 largest cities in the United States, he said. Only Denver (2.6) and Cleveland (2.32) are higher. Seattle now ranks eighth (1.67).

Mark Rosentraub, a professor of sport management at the University of Michigan, worries that Seattle is “already pretty saturated” with sports franchises and “would be at a stress level” by adding two more.

Hansen insists he isn’t worried about too much competition for the sports dollar in Seattle. “The bottom line is Seattle is a very large and vibrant market more than capable of supporting four (or five or six, depending on how you categorize MLS and the WNBA) teams,” Hansen spokesman Peter McCollum wrote in an email. “There are smaller, less affluent markets already thriving with that many teams.”

Every pro team and the UW athletic department say they are not concerned about an oversaturation of sports. “I think Seattle is an incredible sports town, and we obviously supported an NBA team here for a long time and coexisted,” Washington athletic director Scott Woodward said. “And I think it would be nothing but positive for our programs.”

Sports economists acknowledge there would be stiff competition for the Seattle sports dollar, but say each of the teams could still be financially successful.

“This doesn’t mean Seattle can’t handle two more teams,” said Conway, the independent economist. Neil deMause, who runs the website Field of Schemes devoted to tracking arena/stadium issues, agrees. “Minneapolis-St. Paul and Denver do it, and they’re smaller than Seattle,” he said. “I expect there’d be some competition for fans, and especially corporate support, but I don’t see why it wouldn’t be manageable.”

Suites and TV deals

One factor that might work in Seattle’s favor, some economists say, is the changing definition of support. Two decades or so ago, support was largely in-game attendance. Luxury suites and other premium seating became a key part of the equation the past 20 years, combining for 5 to 20 percent of a pro or major-college team’s revenue. Selling those suites in a new arena would be vital.

Hansen, though, has expressed confidence that won’t be an issue, writing on the SonicsArena.com website touting the project that the area’s “incredibly strong corporate base” will allow for enough sales of premium seats to go around. Indeed, Washington recently ranked 13th among states on per-capita personal income.

Big money being paid to pro teams via regional television packages also changes the equation, economists say. The Los Angeles Lakers just finished the first year of a 15-year regional TV contract that will pay them an estimated $3 billion. Hansen has said he expects that “well over half” of the revenue for a new Seattle NBA team would come from national and regional media-rights deals.

“With TV now the key revenue stream for professional teams, Seattle is really an ideal place to add two sports franchises,” McCollum said.

“If someone is tethering the team to a regional sports market, and it provides enough nights, a team can lose money on the traditional side because it is making enough on the (media) side,” Rosentraub said.

Seattle’s wide geographic reach could also help pull in fans from throughout the region as well as increasing the value of a TV deal.

Rosentraub also noted that support is in the eye of the owner. What one owner views as an appropriate level of revenue to run his team may be different from another.

“You can have an owner of one of them that really doesn’t care much about making money because (he or she) wants to do it for the region,” Rosentraub said.

Conway said he asked Hansen during the board meeting if he is in it to make money or have fun. Conway said Hansen told him “for fun.  I think that’s important. I’m not sure some of the owners we had in the past viewed it that way, or maybe they thought it was fun in the beginning and when they started losing money decided it wasn’t as much fun as they thought it would be.”

Analyzing audiences

Still, getting fans in the seats remains critical, and new teams would have to draw good crowds to succeed. Observers don’t question that another NBA team would draw well, especially if successful.

Gauging the potential support for an NHL team is somewhat trickier. Fort believes because the NHL’s potential fan base in Seattle is untested and, “They’ve got to win.”

“It can fly,” he said of hockey. “But it all rests on how committed the hockey group is to actually making hockey good in Seattle quickly because (fans) won’t wait for it to come around.”

“The fan spending pie is sort of fixed,” Byers said. “Does the addition of two more teams take away demand for existing teams? At this point, all I can do is raise that question.”

Economists warn that the market has gotten more crowded since the Sonics left. The MLS’ Sounders FC have set records for attendance since their first season in the league in 2008. Fort, though, said “there is not a lot of crossover” between fans of soccer and hockey and those of other sports.

Also hard to define exactly is the impact new teams would have on smaller sports activities, such as Emerald Downs in Auburn, though observers say there likely would be some.

Ultimately, Fort said, what will determine the financial success of any of the area teams is their success in the standings.

SeattleDenver
Professional teams in ‘big four’ sports24
Pro teams in top-tier leagues45
TV market rank1217
Metro population, in millions, (rank)3.5 (16)2.6 (21)
Median household income$66,548$61,891
Super Bowl titles02
NBA titles10
World Series titles00

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