Pitch for fan-based Seattle arena platform falling flat
What if fans could own stakes in a new Seattle arena? And get paid for it. Sounds too good to be true, right?
Well, you’re not alone if you think so, which is why the founders of MyArenaFund have had little luck convincing Seattle-area officials of their idea for a crowd-funded arena platform. Though co-founder Chris Favour believes the idea will revolutionize the nationwide headache of tax-dollar funded arenas, he often finds people who presume he is pitching a scam.
“It’s been a challenge for us because this is such a new space and everyone is very skeptical right on the outset, and I understand that,” Favour said. “Skepticism is natural and expected. But it is real.”
Nationwide arena solution?
Favour, a Seattle real-estate investor, has been contacting members of the media and city officials for months, pitching a fan-based arena business idea. Originally called RealtyCzar, Favour said the company was recently changed to a C-Corp and, in part based on negative feedback, renamed to Navona Partners, with specific arena information at myarenafund.com.
In December, Favour said he was considering making a pitch for the Mayor’s April 12 Request For Proposal deadline to redevelop KeyArena in a way that would make it a viable option for the NBA/NHL, but the group lacked money and time to ultimately follow through with that possibility.
Favour and co-founder David Bard say their platform can solve America’s stadium-funding woes by creating an option that needs no tax or government assistance. The concept is that fans and/or community members can invest directly into stadiums, with 90 percent of the net revenues paid to investors as quarterly dividends. Why has this never been done before? Favour says a change in Securities and Exchange Commission rules last July made it possible to create a real-estate investment trust built through an internet portal that would allow invested money be sent directly through a transfer agent for an escrow account.
“We strongly believe this is a real and viable solution,” Favour said.
Favour told MyNorthwest that “we are the first and we intend to be the first” to create this platform for stadium funding. However, he also points to Rich Uncles in California, as an example of the SEC rule change being used currently for general real estate investment.
Favour says he often explains that the idea is not like the stakes offered for the Green Bay Packers, which have been publicly owned since 1923. Packers shareholders do not get equity interest, and stocks cannot pay dividends or be traded. Favour said the SEC has set up tiered funds that allow a company to raise $50 million buckets of investment every 12-month period.
“We are proposing to give fans and Seattle-King County residents a way be directly invested into the stadium and own it – and make money from it,” Favour said in December. “Where are we going to raise $700 million? We expect our average investor about $25,000. A lot will do less. A lot who will do much more. Some will probably invest $1 million.”
Favour says the group can’t legally raise money until approved by the SEC. However, the RealtyCzar pitch summary sheet provided to potential seed investors noted that “We are requesting a $500,000 lead investor” and the current MyArenaFund website states: “We’re currently raising capital from accredited investors” for “critical necessities” that include registering with the SEC, building a startup team, developing a web portal, marketing and funding a bigger office.
No interest from Seattle Arena group
As Favour has come to realize, this idea is not a realistic option in Seattle. Favour’s group originally hoped to be involved in KeyArena bidding but acknowledged in December his pitch wouldn’t be “in the same realm” as the two major players: AEG or OakView Group. Favour’s explanation as to why: “We don’t have a million dollars to pay architects or designers.” MyArenaFund’s hope was also to partner with the SoDo Arena group — headed by Chris Hansen, Wally Walker, Erik Nordstrom, Pete Nordstrom, Russell Wilson — which has been working for more than five years to build a new stadium that could accommodate the NBA and NHL, and is willing to pay for the project without public funding.
MyArenaFund sandwich boards with links to the website and Sonics colors were placed in SoDo near Hansen’s property, which led to some confusion. In the months prior to Monday’s interview, Favour said Hansen was receptive to the platform idea. However, that confidence changed as time went on. In early February, Favour acknowledged that convincing the Hansen group or City to join in was a “hail mary” at best. Later in the month, he said he “does not think” the Hansen group was interested in doing anything with them at this time. That would all appear to be an understatement, as Walker said there has never been any interest from the Sonics Arena group.
“We don’t have any affiliation with this person or group and have told him that,” Walker said Monday.
Favour told MyNorthwest that Hansen’s comments about bringing the Sonics back being a “civic obligation” would seem to lend itself to the MyArenaFund idea but that Hansen’s lack of interest in the platform is “informative that what he’s saying in words isn’t actually the true story.” However, he also insisted that he wants to be “friends with everyone” and simply wants his funding concept out to the public.
“Our interests are we would rather be friends with everyone in this debate and not enemies,” he said.
Favour said he has also met with Tim Leiweke, who heads the Oak View Group, and that he has spoken with NBA Hall of Famer Charles Barkley, Sacramento Kings owner Vivek Ranadivé and is scheduled to meet with Oakland A’s team president Dave Kaval. Requests for comment to representatives of each party have not yet been returned.
Favour also said he plans to meet with the Seattle City Council and that he spoke with councilmember Debora Juarez after hearing that she wanted “the people to own the stadium and didn’t just want a group of individuals to get rich.” Juarez’s office said no meeting ever took place but declined to comment on arena issues. Still, Favour said he believes: “Our solution is what she is proposing — she doesn’t fully understand it yet.” King County Executive Dow Constantine’s office confirmed a scheduled meeting for this week.
In speaking with KIRO Radio’s “Jason and Burns” on Feb. 27, Bard all but acknowledged that their idea will not be used to bring back the Sonics. Thus, the founders have focused their sights on places around the country – including to the legislature in Arizona, where the Coyotes hockey team face their own arena issue. The Coyotes, in full ironic circle, would be a potential fit in Seattle if the city opens a suitable NHL stadium.
No matter which city bites first, Favour says the goal is to change the debate nationwide. He pointed to a bill introduced to Congress on Feb. 1 called the “No tax subsidies for stadiums act,” which would limit the common trend of publicly financed stadiums.
Favour called the continued marketing in Seattle a “test-the-waters campaign.”
“We’re not here to push anything on anyone,” Favour said. “We are strictly here to say, ‘Look, there’s a new option, there’s a new choice for fans and citizens of the community to look at.”
Jason Rantz and Zak Burns were interested in sizing up the arena-funding concept in the Feb. 27 interview. The KIRO hosts heard the pitch and ultimately came away concerned that the founders were misleading Seattle fans who desperately want the Sonics to return.
“It seems predatory toward the Sonics fans,” Rantz said. “That’s what’s holding me up. The money is never going to go into the SoDo arena but it seems like you’re hoping that people think that so that they will give. … You’re not bringing the Sonics back and it’s not going to build a SoDo arena. So it seems separate to the concept, which I like and can appreciate, but the way you’re going about proving the concept seems like you’re preying on the fans.”
Bard responded that it is simply coincidental that he and Favour live in Seattle but that platform can be applied anywhere.
“We’re late stage here in Seattle. I think what happens is people equate, ‘Well, how are you in this conversation? We’re not,” Bard said.
“Chris Hansen and group, they’re on the one-yard line,” he added. “We want them to go and get a touchdown.”