It’s a Lie: Seattle Taxpayers Will Pay for a Staduim

The Seattle Times carries a press release: “Arena plan as solid as it looks?

The intricate plan offered for an NBA and NHL arena in Sodo hinges on the untested strategy of building a city-owned, self-supporting arena, without the aid of new taxes, and with team owners — not taxpayers — obligated to absorb any losses.

This not only a lie, it is a blatant lie, contradicted by statements later in the article:

…Seattle and King County would finance $200 million — likely in bonds — to cover construction costs. The city would recoup its money through lease payments and the taxes on everything from tickets to concessions from the arena.

Let me translate that into plain English. The taxpayers of Seattle and King County would sign a bond. We’d be obligated to pay it back if or when the Supersonics new team leaves town. Also, let me comment that the use of “would” is inaccurate. The word that the writers sought and were unable to come up with is “might”, as in: “the city might recoup its money…”

One more quote:

It’s hard to argue against the idea of an arena that pays for itself.

It’s even harder to guarantee it, though.

Actually, it’s easy to guarantee that the arena pays for itself, or at least that the taxpayers don’t pay for it. The builders finance the arena. See how easy that is? They issue the bonds, they reap the profits. Then the people of Seattle and King county are guaranteed to not be on the hook.

Pretty simple, if the Seattle Times would stop relaying lies about who’s on the hook for bonds issued by Seattle or King County.

Look, while I’m opposed to having to sit in traffic for yet more sporting events, I shouldn’t have a say in how these folks spend their money. The arena backers should feel free to spend their money, plus as much as anyone will loan them, to build a stadium, buy a team, or hold a parade. That’s what freedom is about. But the people of Seattle should not carry any of the risk. The money should be entirely private.

Maybe the plan can’t work without Seattle bearing some of the risk. If that’s the case, that’s because this isn’t the sure thing that its backers want us to think. It means that the bankers see this as a risky thing, and want to transfer that risk to some sucker. I don’t want to be the sucker who’s paying for a failed deal. Do you?

3 thoughts on “It’s a Lie: Seattle Taxpayers Will Pay for a Staduim

  1. Those first two quotes don’t seem to be at odds with each other. The first statement says “without the aid of new taxes”, and the second statement says that the bonds would be paid back through lease payments and (presumably sales) taxes on the ticket and concession sales, which presumably won’t happen unless the stadium is built. If the existing tax applied to the expected increase in sales activity makes up the difference between the lease payments and the bond repayments then no new taxes will be needed.

    As for your suggestion that the backers see this as a risky proposition, let me offer an alternative explanation. If there are multiple cities that they might invest in, and those cities are all keen to have the extra economic activity that the investment is expected to bring, then they are going to ask those cities to compete to offer the best deal to get the project into their city. If I think my investment is a sure thing then it’s an even better investment with $200M of someone else’s money and given a choice between a city with cheap loans and a city without, it would be an easy decisions for any investor.

    I have no idea if the stadium is a good idea or not; I don’t know anything about the sports concerned or your local teams. That said, I think your analysis is a little disingenuous. There have been many, many cases where local governments have underwritten private projects to build infrastructure that was expected to increase local economic activity and had great success; this seems to be exactly that sort of situation.

    • The contradicted claim is that taxpayers won’t be obligated to absorb losses. If the taxpayers (or our agents) issue bonds, then the taxpayers are liable for them.

      As to the investor’s logic, you’re correct. However, Seattle voters have repeatedly voted against spending money on stadiums. We even have a delightfully named lobbying group: Citizens for More Important Things. (http://www.citizensformoreimportantthings.org/)

  2. @nicko – You probably have a lot in common with most King County taxpayers in the sense you “don’t know anything about the sports concerned” and “have no idea if the stadium is a good idea or not.”

    And that is why simply maintaining a level playing field where free enterprise is allowed and everyone can play by the same set of rules is the best strategy. If we don’t start gambling public funds on sports teams we won’t risk losing them.

    What you described in other cities is a playing field in which corrupted elected officials allow politically connected individuals and corporations to masquerade as free market capitalists. In reality the politicians and the cronies have created a second set of rules for themselves, called “heads I win, tails you lose.” Invest public money, and if the investment succeeds, they take the profits. If the investment fails, the taxpayer absorbs the loss.

    In the long run, are huge corporate welfare packages and bailouts that disproportionately benefit the politically connected the mark of a free country? No. Definitely not. There’s no reason we have to compete to be the city who is most willing to abuse our own taxing authority, eminent domain, etc. to attract a sports team. That’s not progress. That’s not liberty. That’s stupidity.

    I don’t want to be the sucker who’s paying for a failed deal either.

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