Rising costs, difficulty in obtaining financing and potential legal delays have combined to kill Barry Ackerley's dream of a new arena for his Seattle SuperSonics basketball team.
The disappointed Sonics owner announced today that the 17,500-seat arena he has been planning south of the Kingdome won't be built.
"We did our best. I'm sorry it didn't work out," said Barry Ackerley, who then referred all further questions to his son Bill, the project manager for the proposed arena.
"This is one of the hardest decisions our family has ever made," said Bill Ackerley. "After much soul searching, we have determined it to be impossible to continue with the new Seattle arena project."
Even with Ackerley out of the game, a new arena may still be built, according to John Thompson of the Seattle-King County Sports Council.
The council, formed two years ago to promote major-league sports in the area, started a committee working on the arena problem a few weeks ago. Thompson, former Seattle Seahawks general manager, said the group will contact companies specializing in arena operation and development planning.
But for the Ackerleys, the proposed arena presented too many problems.
"The decision to end this project was made after weighing several complex issues. We looked at the hard facts - the feasibility of the (arena) revenue paying back the $80 million construction loan, the number of (legal) challenges against the project, the legal fees we would encounter before knowing if we would ever be granted a building permit - and determined these were not small setbacks, but major obstacles," Bill Ackerley said.
Cost estimates for the Ackerley arena, which would also have been used for concerts and other events, have reached $110 million, up from $100 million earlier this year, sources said.
The property bought for the proposed arena south of the Kingdome is for sale in an effort to recoup the $10 million purchase price and $3-$5 million in development cost, Bill Ackerly said.
Asked about the future of the Sonics in Seattle, Bill Ackerley said, "I don't say the "M" (move) word. No way."
He said every effort had been made to find equity partners for the proposed new arena. But he didn't rule out the possibility that others might come forward with a workable package for a new arena.
The arena's financial viability received a blow when no buyers for a National Hockey League franchise in Seattle stepped forward. Hockey would have improved the new arena's potential income and made the project more attractive to lenders.
And Ackerley and his son Bill were unable to land a big-name corporate sponsor to put up cash in order to get the company name on the arena, sources said.
Ackerley's own company, Ackerley Communications Inc., which owns billboards and radio and television stations, also has experienced decreasing profits. In today's conservative lending market, banks would look closely at Ackerley's own financial strength, lenders say.
In short, he'd have to put up more cash himself, according to one banker.
Financing also hinged on the sale of 70 corporate viewing suites costing $120,000 per year with a five-year commitment required. Barely 30 of the suites were sold.
The money collected for the luxury suites will be refunded, Bill Ackerley said.
Also, Ackerley is reportedly concerned that potential lawsuits by some Kingdome tenants would delay construction and drive the cost even higher. Some tenants are concerned that increased parking demand and traffic congestion caused by the arena would hurt their business.
The arena was to open in October 1993. Ackerley has said the Seattle Center Coliseum - with its 14,132 seats making it among the smallest of the National Basketball Association's home courts - limited Sonics' earnings.
The arena project included a deal with the city of Seattle hammered out over months of bluff and negotiation among Mayor Norm Rice's office, the City Council and Ackerley.
According to the agreement, the city would pay Ackerley $1 million per year from admissions taxes generated by the new arena and in return get several days of public use of the arena, up to 5,000 free basketball tickets for low-income youths, advertising on the arena marquee and a guarantee that the Sonics would stay in Seattle for 30 years.
That agreement is being challenged in the state Supreme Court by several Seattle Center employees who contend it is an unconstitutional gift of public money.
The lawsuit is another factor that has made financing the Ackerley arena difficult, adding more unknowns for nervous bankers burned by the industry's losses in real estate and commercial investment during the 1980s.
Another potential source of difficulty is the environmental reviews that may have been required for the project, sources said.
Thompson said the Sports Council committee will still look at the possibility of a new arena, not just for the Sonics, but for a possible NHL franchise.