I spent the evening reading and re-reading the information that was handed out at the City Hall press conference Thursday. Here are a few observations, what the proposed building process appears to be (as best as I could understand it) and the remaining questions.

Observations

• If a memorandum of understanding can be reached between Chris Hansen, the city and the county, the proposal could be considered by the two councils "this spring."

• There is no need for public vote. That was handled by the I-91 vote. The state is uninvolved. Great news!

• Hansen plans to raise over $500 million in private investment for the facility and purchase of an NBA team.

• I like the "study" of KeyArena. Seems like something that satisfies government officials but accomplishes nothing.

• Hansen writes in his letter that he will "reach out to local partners first and to those that share my commitment to operating the arena and sports franchises in a way reflective of Seattle and King County values." Sounds like a plea to Steve Ballmer, etc.

• I think this presentation was very well thought out. It seems like they thought of every conceivable objection that could be raised by either a councilmember or a member of the public and answered those concerns in their presentation. This leads me to believe that their plan will be approved in the spring.

• What challenges are left? There are three:

1. He needs to secure at least $500 million and maybe significantly more than that (see below);
2. He needs to find an NBA team to buy;
3. He needs to find a partner to buy an NHL team. This one is even trickier because he needs to find a team (likely Phoenix) and then an ownership group willing to buy it, move it, and not make any money on the building.

Building process

Step 1: Hansen must acquire the property and the permits and secure an NBA team and partner with an NHL team.

Step 2: Hansen sells the land to the city and leases the land for 30 years.

Step 3: Hansen agrees to build an arena up to current standards – he can't cut corners. He pays for the whole thing.

Step 4: The teams move to Seattle and must use KeyArena until new arena is ready. Hansen manages it in meantime.

Step 5: When built, the city will "lease the Facility from ArenaCo (with an option to purchase)." Then the city puts in its $200 million. Then the city leases the building to the ArenaCo. This is where it gets tricky. How can the city lease the building to Hansen when the city doesn't necessarily own it? Why does the city's $200 million come after it's built? Do they have to purchase it, not rent it? My guess is that the city actually has to activate that option to purchase.

Step 6: The city leases the arena to Hansen and makes money (according to I-91) on rent and the ticket taxes.

Step 7: Hansen makes revenue generated from the facility. I wonder what that includes? Concerts, etc? Hockey rent?

The process is brilliant and caused one local developer to say, "it's what I would have done if I could have thought of it." Essentially, Hansen has twice used the city (and its ability to secure money at a cheaper interest rate from Wall Street through bonds) to borrow much of the money he needs to build the arena. Everyone wins.

Remaining questions

• How does Hansen (and his investors) make money? The inevitable TV deal? Concessions? The lease to a hockey team seems to be included to make rent. Parking is already there. There is some in-site advertising – does the hockey team get any of that? Obviously, the values of franchises tend to increase significantly over time. It seems as if the hockey team would have a very hard time making money.

• How does the money add up? Building = $480 million. Team = ~$320 million. Total = $800 million. The city puts in $200 million. If he raises $500 million, there is a shortfall of about $100 million (same as Sacramento, by the way). No way he gets the team for $200 million, right? Or is the $100 million his investment to go with the $500 million he raises?

• The city makes its money back on the rent and the ticket taxes. That means customers pay extra, right? We the sports fan will pay the $200 million, not the layperson. Is that fair? Are we willing to foot the bill for the region because we like sports? It sounds fair, but imagine if all education was paid for only by parents of students?

• The city has promised that it will only spend $200 million, likely paid for in bonds to be recouped by rent and taxes on the new revenue. But what about the city purchasing the land and the building? Both of those purchases are required by the document, at market value. I would think that is an investment of at least $100 million, perhaps more. Where does that money come from?

From what I understand, the city would likely structure the bonds using a specialized procedure that allows Wall Street to make the investment risk that the government bodies are adverse to making. It's brilliant.

• What kind of relationships does Hansen have ready to go with the NBA and NHL? How quickly can he secure those teams?

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