Tale of two arenas, here and in Denver, is revealing

The Denver Nuggets made the NBA playoffs this year. But that's not the only reason the Seattle Sonics have to envy their Northwest Division rivals.

The Nuggets' posh basketball arena, the Pepsi Center, is almost twice the size of KeyArena. And team owner Stan Kroenke gets all the profits from the building — just the sort of arrangement Sonics owners covet.

How did the Nuggets land such a sweet deal? Simple: The $180 million Pepsi Center was built seven years ago almost entirely with private money. Kroenke owns the arena and has no obligation to share the profits with taxpayers, as the Sonics must at city-owned KeyArena.

So why don't the Sonics owners pay for their own arena here?

That's a question critics of tax subsidies for pro sports — and even some local business leaders — have been asking as the Sonics continue to push for a taxpayer-funded $220 million KeyArena expansion.

Sonics President Wally Walker acknowledges a private arena might save owners a lot of headaches. "I wish there was a way for it to work privately," he said.

But Walker said he doubts a private arena would pencil out financially for the Sonics in the absence of another major sports tenant — such as a National Hockey League franchise.

KeyArena vs. Pepsi Center


Denver's Pepsi Center was built almost entirely with private money. It offers many of the amenities the Sonics want. Some are asking whether the Sonics should build their own private arena here, but team officials say it wouldn't pencil out.

Pepsi Center

Year completed: 1999

Cost: $180 million

Ownership: private, Kroenke Sports Enterprises

Size: 675,000 square feet

Seats: 19,300

Source: Kroenke Sports Enterprises

KeyArena

Year completed: 1995

Cost: $104 million (includes some subsequent improvements)

Ownership: public, city of Seattle

Size: 368,000 square feet

Seats: 17,072

Source: city of Seattle

"What we know is an NBA-only facility cannot support the amount of investment that is required and that we compete against," he said. And so far, there are no plans to bring an NHL team here. "We won't talk to the Pittsburgh Penguins about moving to Bellevue."

In Portland, billionaire Paul Allen tried to make a private arena work with the Trail Blazers as its only major sports tenant. But the Rose Garden arena declared bankruptcy two years ago, and Allen has recently said the Blazers need public help.

An expert hired by the city of Seattle said he doubts the Sonics alone could anchor a private arena.

"It's highly unlikely a single team can privately finance a building," said Bill Rhoda, a consultant with Dallas-based Convention Sports and Leisure International, who completed a study of NBA arenas for a Seattle Center task force this year. "The Nuggets couldn't have done that by themselves."

The Nuggets, like most of the dozen NBA teams now playing in private arenas, share their buildings with major-league hockey and other sports.

In Denver, the Pepsi Center also is home to the NHL's Colorado Avalanche, the Arena Football League's Colorado Crush and the Colorado Mammoth of the National Lacrosse League. Those teams — all owned by Kroenke — keep seats filled when the Nuggets aren't playing.

Diversity increases draw

"Having the four teams play here maximizes ticket revenue," said Brian Kitts, spokesman for Kroenke Sports. It also pumps up advertising contracts, concessions and suite sales. Basketball and hockey are the main attractions, but the smaller sports help, too.

The Mammoth, for example, are not well known outside Denver, but the rough-and-tumble lacrosse games have become a big attraction. The team drew an average of more than 16,000 to each of its eight home games and won the league championship.

Besides sports, the Pepsi Center hosts concerts, tractor pulls and the Denver Grand Prix, an annual car race around the arena. The 675,000-square-foot arena also boasts a massive parking lot, restaurants and an outdoor amphitheater. USA Today last year named the building the most "fan friendly" in the NBA.

Smallest NBA venue

KeyArena lacks those extras and is the smallest NBA venue at just 368,000 square feet.

While Seattle struggles to figure out a future for the Sonics, the private-arena model has worked well for politicians and the teams alike in Denver — a city with a smaller population and fewer corporate headquarters. "We didn't seem to be able to get into the second round of the playoffs. Apart from that, it's been an equitable transaction," said Denver Mayor John Hickenlooper, referring to the Nuggets' playoff loss to the Los Angeles Clippers.

The notion of a private arena for the Sonics has surfaced in Bellevue, where a group of business and civic leaders says it will explore that option should talks between the Sonics and Seattle break down.

Developer Kemper Freeman said such an arena probably would need other sports teams in addition to the Sonics and WNBA Storm, as well as concerts, trade shows and other events.

"Let's look worldwide at who has built these facilities successfully that hasn't relied on a [taxpayer] bailout," said Freeman. "I believe there is no political will for a bailout at this point."

A new basketball arena would cost as much as $400 million, according to estimates by the Sonics and the city of Seattle. No firm plans or funding proposals have emerged for such an arena. Sonics owners, led by Starbucks Chairman Howard Schultz, have offered to pay about $18 million toward a $220 million KeyArena expansion and cover any cost overruns.

Talk of a private arena for the Sonics has come up before. In the early 1990s, then-Sonics owner Barry Ackerley proposed building a 17,500-seat arena south of the Kingdome that might also have accommodated major-league hockey. Ackerley shelved that plan in 1991, citing financing problems and potentially expensive legal challenges from opponents.

Failure in Portland

The Sonics settled in 1995 for a $104 million remodel of the old Seattle Center Coliseum, which became KeyArena.

At around the same time, in Portland, Allen's $267 million Rose Garden project was built with mostly private money. That included $155 million in loans to Allen's Oregon Arena Corp. that were supposed to be paid back from sales of luxury suites and courtside seats.

But after years of high payrolls, poor team performance and public resentment of the previously beloved Blazers, the arena company filed for bankruptcy in 2004, saying it could no longer meet its $15 million annual debt payments. Earlier this year, Allen called the Portland model "broken" and said the Blazers need public help. The team and arena are for sale.

Denver situation unusual

If the Sonics do explore a private arena, they'll be bucking the recent NBA trend. Since the Nuggets completed the Pepsi Center in 1999, the past five new NBA arenas have been built largely with public money and are publicly owned.

And even private arenas like Denver's don't let taxpayers completely off the hook.

To complete the Pepsi Center, Denver allowed the Nuggets out of their lease at city-owned McNichols Arena, which was torn down to make way for the Pepsi Center parking lot. The city also paid for road and other infrastructure improvements and gave up a "seat tax" it had collected in its old arena.

In exchange, the Nuggets agreed to play in the city for at least 30 years — longer than the term of most NBA leases at publicly owned buildings. (The Sonics' 15-year KeyArena lease expires in 2010.)

"We owned the old facility. We gave up a great deal in letting this new one be built," said Hickenlooper. "But I think the ultimate result has been very positive for both sides."

Jim Brunner: 206-515-5628 or jbrunner@seattletimes.com