SEATTLE – Microsoft CEO Steve Ballmer and Peter and Erik Nordstrom have joined the investment group to build a new arena in Seattle’s SODO neighborhood and to acquire an NBA franchise.
Hedge fund manager and lead investor Chris Hansen made the announcement in a letter to Seattle Mayor Mike McGinn and King County Executive Dow Constantine. He cited "intense community interest" and requests from the Seattle City and King County councils as reasons for making the announcement now.
"They appreciate the role the Sonics played in this community for more than 40 years and see this project as an opportunity to bring that civic asset back to our community," said Hansen. "Their participation in the ownership group brings added assurances the business will always be backed by strong local hands and reinforces my commitment that the team will never again leave Seattle.
"The local roots of this group run deep and each individual is invested in creating a lasting positive impact on the community," he added.
Hansen said he would be the majority owner of any NBA franchise that comes to Seattle and his investment group would include about 10 people.
Ballmer's addition should be no surprise. In 2008, Ballmer led a group that offered to pay $150 million toward a $300 million KeyArena renovation back when the Sonics owners were threatening to move to Oklahoma City.
Erik and Peter Nordstrom are the great-grandsons of John Nordstrom, the company's founder. The Nordstrom family owned the NFL's Seattle Seahawks from 1976-1988.
"I think getting an NBA team back in Seattle is a terrific opportunity to add another asset to our city and contribute to why this is such a wonderful place to live,” said Erik Nordstrom.
"There are many details to work through and lots of work yet to be done, but I believe Chris’s plan represents a unique opportunity for the community,” said Peter Nordstrom.
"The names of Steve Ballmer and Peter and Erik Nordstrom add additional strength and credibility to this proposal, and even greater assurance of the financial stability of the investment team that is working to bring the Sonics back to Seattle," said Constantine in a press release.
The proposed $490 million arena would be built just south of Safeco Field.
Critics have raised concerns about the traffic impact in the neighborhood, including the Longshoremen’s union and the Seattle Mariners. But Hansen, who funded a study on the traffic impact, says most fans would be arriving well after the port closes for most events.
A memorandum of understanding on the arena was reached between Hansen, Constantine and McGinn last month. That agreement is being debated and reviewed by the Seattle City Council and King County Council, with the expectation of a vote coming later this summer. Both entities would need to approve the agreement for the project to move forward. No construction would begin until after a franchise has been acquired.
Pete Nordstrom is a former minority owner of the Sonics, and the Nordstrom family once owned the Seahawks. Ballmer led an unsuccessful attempt to renovate Key Arena before the Sonics departure, and is a well known basketball fan.
“Their inclusion brings a lot of credibility,” says King County Councilmember Pete Von Reichbauer. “Now we know some of the heavyweights in the boat with him.”
But Von Reichbauer says Ballmer’s involvement raises questions about the request to use up to $200 million in public bonds. Forbes says the Microsoft CEO has a net worth of $15.7 Billion Dollars.
“It’s a double edged sword,” he says, “It cuts both ways. If you have that capacity, why do you need public money?”
“Mr. Ballmer has about as much money as anyone could,” says Seattle City Councilmember Jean Godden. “Certainly we’ll want to know if they could possibly do it without the city, without taxpayers.”
“It’s a good deal. We come away with a great piece of property and the facility,” says Hall Walker, Seattle’s Deputy Budget Director. “We bring to the table basically the ability to finance at a low rate, which brings the total cost down to everyone.”
Walker also discounts concerns, about details in the Memorandum of Understanding, which calls for the City to purchase Hansen’s land at fair market value at the time of groundbreaking. Council members had expressed concern that the land, south of Safeco Field, which sources say could be worth up to $50 million right now, would be sold to the city at a higher price.
“It’s not accurate to compare what he pays for it,” says Walker, who points out the MOU calls for a cap in the City and County’s bonding contribution at $120 million if Hansen could only acquire an NBA team. The cap rises to $200 million if Hansen lands an NBA and NHL team.
Walker acknowledges, that once the City would own the land, it stands to lose about $800,000 a year in property tax revenue. But he says the loss would be offset, somewhat, by electricity bills that would come from a multi-use arena.
The project calls for about $290 million in private investment from Hansen's group, along with $200 million from the city and county through 30-year bonds. Any franchise that comes to Seattle and uses the arena would be required to sign a non-relocation agreement that would span the life of those bonds.
All construction costs, including overruns, would be paid for by Hansen's group, along with all environmental studies and permitting. Once that process is completed, most of the public investment is placed on the city. The public investment is capped at $200 million and would come from taxes and revenues generated through the new facility.
Earlier this week, McGinn delivered a personal message to NBA Commissioner David Stern, saying the city is interested in having the league come back. On Tuesday night before Game 1 of the NBA Finals, Stern said he was encouraged by Seattle's interest.
Hansen will be joined by Sonics legends at a rally in Seattle's Occidental Park Thursday at 4 p.m.
The Associated Press contributed to this report