Final Analysis: The Sporting Life in 2017

Three predictions for the coming year on a new arena, an old arena and the Mariners.
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As every first-year business student knows, a city’s economy is not considered “world class” until said city has erected at least four shrines to professional sports and these shrines remain empty and unused most days of the year. Seattle is knocking on the door of world classiness because it already has KeyArena, Safeco Field and CenturyLink Field up and running. Occasionally. Just one more monument to appease the great mass of athletic supporters and we’re there. Hallelujah!
 
It’s only a matter of time because Chris Hansen, the San Francisco rich guy who wants to build a new arena on First Avenue South and bring pro basketball and pro hockey to Seattle, is this close to getting his way. In October, Hansen revealed that he and his investors are now willing to pay the whole honkin’ bill for plopping a new arena into the SoDo neighborhood a block from Safeco Field. He still wants a piece of Occidental Way vacated and also expects some tax breaks from the city, but that’s how rich guys are. (See: Trump, Donald.) Besides, the people who believe we’re not world class until the NBA returns to Seattle are salivating over this deal because it’s the best deal we’re ever going to get
 
Of course, these same people said Hansen’s previous offer, which would have required that $200 million in public money be plowed into a new arena, was also the best deal we were ever going to get. 
 
Hansen’s decision to pay more for his arena places the sports economy clearly in the local spotlight this year. Heaven knows we could use more opportunities to pay $9 for a beer and see millionaire athletes selling Jaguars and BMWs on TV. It’s the kind of economic shot in the arm that only comes around whenever a sports league is in a coercive mood. 
 
And so, in the spirit of this January issue’s “looking ahead” theme, we offer three predictions relating to the regional economy as the Hansen arena intrigue continues to unfold.
 
Prediction 1: Hansen, who has already spent more than $120 million buying up property in the area of his proposed arena, will persuade the Port of Seattle, his arch nemesis in this melodrama, to fold up its tent and send all cargo-handling operations to Tacoma. That decision will pave the way for so many trendy bars and restaurants with names like Kale & Kumquat or Cobblestone & Wingtip that Hansen will be persuaded to create a private streetcar system to connect Pioneer Square with the burgeoning Stadium District. 
 
Prediction 2: The city-owned KeyArena, whose very future is clouded by the Hansen proposal, will announce plans to house up to 10,000 homeless persons every day. Even on days when the Seattle Storm and Seattle University basketball teams need the building, the city believes the Storm and the Redhawks could use the attendance boost, so it becomes a classic win-win.
 
Prediction 3: The Seattle Mariners, who still don’t like the arena proposal, will channel their hostility onto the field of play — and still not win the World Series. (This is called pattern-recognition analysis.) However, always mindful of improving the fan experience — because it’s not whether your team wins or loses, but whether you’re inclined not to press charges for being gouged by a vendor — the Mariners will introduce several new fan-friendly food items, plus mani/pedi stations in the pricey seats and roving loan officers to assist anyone trying to finance the purchase of hot dogs and sodas for a family of four. 
 
JOHN LEVESQUE is the managing editor of Seattle Business magazine. Reach him at john.levesque@tigeroak.com.

Final Analysis: The Improbable Marriage

Final Analysis: The Improbable Marriage

Alaska’s union with Virgin America seems odd, but the outcome will ultimately be unsurprising.
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Despite its origins in the rugged north country, Alaska Airlines is a button-down shirt and wingtips. As recently as five years ago, it distributed Bible verses with its in-flight meals.  Virgin America, meanwhile, with a provenance linked to the flamboyant entrepreneur Richard Branson, is more T-shirt and flip-flops. Its aircraft have leather seats and 12 shades of “mood lighting.”  And yet, the two are one. Or at least they’re sitting on the beach under the same umbrella, trying to get along. 
 
The $2.6 billion union of Alaska Airlines and Virgin America under the Alaska Air Group banner had many scratching their heads when it was announced last year. Then it was consummated in mid-December, making Alaska Air Group the fifth-largest airline company in the United States, and many were still wondering.
 
Alaska has gone to some lengths to acknowledge the improbability of this marriage. It created the web domain DifferentWorks.com and populated it with all manner of information to drive home the point that Alaska and Virgin America are “an odd couple that works well together.”
 
This is all a bit of marketing nonsense, of course, since no one really knows if Alaska and Virgin America will work well together. Heck, they’ve been “together” for all of 12 weeks, so this whole “Different Works” campaign is more wishful thinking than honest assessment.
 
If you’ve ever been on the wrong end of a corporate takeover, you know the experience isn’t as seamless — or as painless — as Alaska wants us to believe it’s going to be. Right now, there are hundreds of Virgin America employees who are concerned, confused and cross. Some will buy into the new gospel being preached by Alaska. Some will hesitate. Some will rebel. Happens all the time.
 
Branson himself opposed selling off Virgin America, but as a foreign national he could own no more than 20 percent of a United States airline, so he didn’t have majority control.
 
Rights to the Virgin America name revert to Branson if Alaska doesn’t continue the brand, so Alaska has some incentive to maintain Virgin America as a separate entity.
 
Alaska isn’t tipping its hand. “We appreciate that there is great interest in the future of the Virgin America brand among customers and employees alike,” Alaska CEO Brad Tilden said in December. “This is a big decision and one that deserves months of thoughtful and thorough analysis. We plan to make a decision about the Virgin America brand early next year.”
 
Keep in mind that this is not a merger of equals. Alaska, with nearly a thousand daily flights and a fleet of 223 aircraft, dwarfs Virgin America, which had 197 daily flights and 63 airplanes at the time the deal closed. Seattle-based Alaska had 15,600 employees; Burlingame, California-based Virgin America had 3,200. Alaska’s annual revenue is $5.8 billion; Virgin America’s $1.6 billion.
 
Given that Alaska has successfully initiated the subtle disappearance of its Horizon Air brand these past few years, it seems reasonable to assume Virgin America is due a similar ride into the sunset. In a world where branding is everything, it makes sense for Alaska to keep the Virgin America brand alive awhile as it gets the lay of the land and takes the temperature of Virgin America’s loyal customers. 
 
It took years, after all, for Macy’s to subsume all the regional department store brands it had swallowed up. Alaska Air group will likely follow the same course. It will be gradual. It will be subtle. And, in the end, it will be Alaska. 
 
John Levesque is the managing editor of Seattle Business magazine. Reach him at john.levesque@tigeroak.com.