Kraken Rise — NBA Return?

Huzzahs are engulfing the Seattle Kraken. A surprising leap from the first-year sorrows has the skating cephalopods in the playoffs next week, just the third team in the NHL’s expansion history to make the postseason in year two.

After a 46-28-8 regular season record following a 3-1 home loss to Las Vegas Thursday, the Kraken are the sixth seed in the Western Conference and will face Colorado in the first round. The feat is almost as remarkable as the Oak View Group’s complicated completion of Climate Pledge Arena during a pandemic. The virus mayhem helped drive up the cost of the makeover to $1.2 billion, about double the original estimate for lifting off the roof that came with the 1962 World’s Fair, and setting it down on a wild array of world-class arena innards without public expense.

Largely lost in these feats is a more subtle milestone significant to Seattle’s sports future: They’re shedding the kid-brother syndrome.

If that’s true, it raises another question: Can they thrive with big brother in the same house?

We speak, of course, about the return of the NBA. Gone from Seattle since 2008, when bean baron Howard Schultz became the civic Sauron after selling the SuperSonics to prairie pirates from Oklahoma, a reunion with 41 years of sports history has inched closer lately.

The NBA last week reached an agreement in principle with its players union on a six-year extension of the collective bargaining agreement. That means no labor disruptions through 2029. So the table is set for the next business development that the NBA seems to insist upon before consideration of expansion: A new media rights deal. The one with current partners expires after the 2024-25 season. The NBA anticipates a big bump in rights fees — perhaps to a total value of $75-100 billion. But at the moment, given the national disruptions to over-the-air, cable and streaming platforms, plus the apprehension about a potential recession and sagging ad revenues, nothing is clear.

If media matters mostly settle by 2025, the door opens to expansion. After conversations with two sources, one on the basketball side and one in city politics, who were given anonymity, two things are apparent:

1. If the 30-team league decides to slice its pie to include two more helpings, the expansion cities will be Seattle and Las Vegas. No other American cities are close, and the once-imagined competition from Mexico City has dissipated, for a variety of international and economic considerations.
2. The Kraken ownership, led by University of Washington grad and Boston Celtics part-owner David Bonderman, made clear to city officials that from within its ranks is enough capital to pay the expansion fee. Since the most recent NBA franchise sale in December, when the Phoenix Suns (along with the WNBA’s Mercury) fetched $4 billion — double what former local computer shop operator Steve Ballmer, Hansen’s one-time partner in the ill-fated pursuit of the Kings, paid for the Los Angeles Clippers in 2013 — the expansion fee by 2025 figures to be well north of that.

If the wealthies pull off the feat, that will fulfill the original aspiration of housing the NHL, NBA and WNBA under one (recycled) roof. Which sounds good, except that the two winter sports not only will compete for the best calendar dates, each must reserve the dates from mid-April through mid-June for potential playoffs. That two-month bite out of the events calendar is a crucial loss of income for what has become one of the nation’s premier concert venues. Particularly when the owners borrowed $750 million to complete the arena. And then must pay the $4 billion-plus expansion fee in lump-sum cash to the other 30 NBA owners.

And you thought you needed help with the mortgage.

That’s partly why Chris Hansen hasn’t sold the acreage in Sodo he bought 12 years ago.

Sports fans may remember that the Seattle-born hedge fund majordomo in 2013 tried to buy and relocate the NBA Kings from Sacramento. But he was denied by votes from the NBA owners as well as the Seattle City Council, which nixed a privately funded arena south of the Mariners stadium.

He’s still hanging around for his long shot, likely because of the old sports saying: Ya never know — a phrase been adopted wholeheartedly the last several years by every other aspect of life.

Which brings us back to the success of the Kraken and the brother analogy. Because of major league hockey’s absence in Seattle for a century, the sport had to be re-introduced to a consumer base without a modern history. The project’s owners spent big on the theater, then spent another $650 million expansion fee to hire the actors, who promptly fell in the orchestra pit in 2021-2002. The 27-49-6 record in the inaugural season was 30^th among 32 teams.

Whether because of the unfamiliarity, poor results, lingering covid fears or the high costs of tickets, food, drinks and parking, lots of paid-for seats went unoccupied the first year, leaving season-ticket holders irked over the weak secondary sales market. TV ratings on the Root Sports regional network continue to be low, around one percentage point, much lower than the NBA Trail Blazers in Portland.

So this year’s rebound on the ice was essential, on many levels. While more seats were filled, especially in the past couple of months, a playoff run could go long toward giving little brother some market cred ahead of the hoped-for return of the more valued NBA. And more reason for minority owners to hang in there through the inevitable capital calls to pay the hefty mortgage.

Currently, 11 arenas have NBA-NHL as co-tenancies, so it’s not as if there isn’t a template for managing busy venues. But two NBA teams, the 76ers in Philadelphia and Ballmer’s Clippers in LA, will leave for their own, new digs, where they get 100 percent of all revenues. Among the remaining nine tandems, four (New York, Toronto, Washington D.C. and Denver) are owned by the same person/entity. That’s what the Kraken bosses seek in Seattle — co-ownerships. Otherwise, their fear is that an NBA owner from the outside will resent the financial deal offered by the hockey guys, who are also on the hook for arena construction debt.

Partly in anticipation of expanded business, Bonderman, 80, has appointed his daughter, Samantha Holloway, 42, as co-owner and co-chair of the Kraken. Experienced in tech startups, Holloway moved with her family in July to Seattle and chairs the club’s executive committee, where, along with Kraken CEO Tod Leiweke, decisions will be made about the NBA embrace.

As a former boss of the Seahawks and Sounders, as well as chief operating officer of the NFL, Leiweke brings large credibility to the talks with the NBA. After sweating through the way-over-budget frenzy of opening Climate Pledge nearly on time, as well as helping create this season’s winner on the ice, Leiweke’s next Evel Knievel impression is to help Holloway secure a majority owner among the Kraken’s landed gentry, while pleading with the rest of the royal court to stay the course despite 80-plus event dates surrendered to sports teams and not the more lucrative concert business. And hope nothing goes sufficiently haywire that he doesn’t need to ask Hansen to create the entertainment world’s version of an outlet mall.

The task is formidable. Then again, what about this project has been otherwise?

Seattle last played for the Stanley Cup 103 years ago. Compared to that, two or three years before the return of the NBA is a blink.