Oklahoma City Thunder arena finally finished, time to talk about building a new one

The Oklahoma City Thunder‘s Chesapeake Energy Arena was opened in 2002 and just finished being renovated this season, but according to at least one fan blog, it’s already obsolete:

There will come a day when the Thunder, metaphorical hat in metaphorical hand, come to local voters asking for money to re-renovate the Peake or money for an entirely new arena. And judging by recent history, and the lamentable timing that led the Peake to be designed barely before the truly modern standards for revenue-generating arena plans came to full fruition (most visibly, for example, a second deck of suites along the sidelines), that day might be coming sooner than people think.

Oh no! We forgot to build double-decked suites!

I’m not actually sure that two levels of suites is so vital to the NBA business, especially in a smallish market like OKC, that it’s worth tearing down an 11-year-old building just to build a new one that’s tricked out like the kids in the big cities have. But don’t let me stop Michael Kimball of the Daily Thunder, who’s off to the races explaining why even though new arenas don’t really help your local economy so much, building another one would still be worth it:

Yes, people spend money at Thunder games, in and near the arena, on many things, and the city gets to keep the sales tax revenue. And yes, a lot of those people come from suburbs and other places outside of Oklahoma City. But at least some of those dollars, coming from a person’s or a family’s entertainment budget, would have been spent elsewhere in the local economy. The Thunder’s presence certainly provides some marketing and advertising for the city, but the amount is hard to calculate.

Still, the Thunder were competitive in the NBA after only half of the inaugural season, and legitimate title contenders in only the third season in OKC. That remains the case, and will remain the case as long as Kevin Durant and Russell Westbrook are on the team. From a fan’s perspective, there’s hardly any more than you can ask for. And from a voter’s perspective, with some imported tax dollars undoubtedly rolling in and Oklahoma City’s increased national and international profile, it’s hard to argue that there’s at least some true and tangible benefit for having the team in town.

So what he’s saying here is that … you can’t put a price on the attention you get from playing in the NBA Finals, I guess? Of course, he also includes a long section on how Oklahoma City did good by paying cash instead of borrowing the arena money, thus avoiding interest payments — which, yes, but it also means you have to shell out the money now rather than putting it off till later, when it’s worth less in present value, something that anyone who’s taken out a home mortgage should understand. So maybe it’s not really worth addressing Kimball’s actual arguments, but better just to sit back and admire the aesthetic perfection of someone arguing on behalf of building a new arena to replace one that’s only just finished being built. Take this any further, and somebody’s going to have to call in the Campaign for Real Time.


19 comments on “Oklahoma City Thunder arena finally finished, time to talk about building a new one

  1. It just seems like the entire world is getting dumber. Can’t people see the pattern here? The NBA has set itself up very nicely with these “state-of-the-art”-clauses they stick in these arena contracts. Yeah, you may have a 10 year, or a 20 year, or even a 35 year lease, but if you sneak in one of these “state-of-the-art”-clauses, the number of years is completely meaningless… And the NBA knows this.

    Every new arena has to be in the top 10%, and, of course, that’s impossible. So you get one of those clauses in there, and eventually, every single landlord — the cities — is very quickly out of compliance. So not only do they convince us that paying 75% of the costs is warranted, they also convince us that we have to keep the arena leading-edge.

    And mayors, who are only interested in making strides up the political ladder, see no harm at all. Heck, signing these suicidal deals is seen as a badge of honor.

    I really think I’d like to retire in a City where there is no NBA team. But, of course, I shouldn’t single out the NBA here; it seems like all leagues do this. All any new arena does is force the bottom-10 arenas out of business; that’s just now the sports leagues like it.

    When is the breaking point going to be here? Is there something I can do to help its arrival come faster?

  2. “Is there something I can do to help its arrival come faster?”

    Despite the overwhelming evidence, there’s surprisingly little interest in an opportunity for communities to save $billions. At this point, praying for divine intervention seems as likely to work as anything.

  3. In a more rational world, I’d expect the Tea Party types to be leading the anti-subsidy charge. But “rational” isn’t a much-used word these days.

  4. Personally, I’m of the opinion that sports welfare for billionaires is just another sign that a 10km asteroid on a direct collision trajectory with earth is now some way overdue.

    It’s time the reset button was pressed.

  5. I’m not sure there’s a planet in the universe where more Tea Party members means more rational thought.

    We don’t have a lot of evidence to refute that.

  6. I hate to change the subject, but I’m laughing pretty hard over here:

    http://www.sacbee.com/2013/10/29/5863295/sacramento-kings-officials-present.html

    They’re going with a smaller arena than they currently have, and calling outdoor SRO “capacity”. Great. That shouldn’t add any built-in obsolescence.

  7. I think it will be interesting to see how well the Thunder do if Kevin Durant leaves. This could be a very real possibility. I’ve been there. It’s a very small city.

  8. Roger: It is, but it is essentially a one (pro) sport town… and that does mean something… even if many of us would like to think otherwise…

  9. Hi Neil. Thanks for your comments on my post.

    Just wanted to point out that I wasn’t actually advocating for a new arena or saying that one should be built, with or without public money. I even had a passage at the beginning of the discussion saying that I didn’t want to even attempt to debate the merits of public financing of an arena, because that’s another argument — and, for the record, I don’t think that public investment in arenas is a good thing on balance.

    My point was that because of the way things are, Thunder ownership will eventually request public subsidy even though the arena is new. And because of the way things are, people will vote on it, and will probably consider the success or failures of the team and how they feel about the team when deciding, for better or worse. So the sports angle is that people will feel more comfortable saying yes, when the time comes, if ownership is investing in the team. Only those voters, if they’re educated to the point where they understand the dubious nature of the actual value of the public investment, can decide if the investment is worth it to them as residents of the city and/or fans.

    So that’s my only quibble. I’m not “arguing on behalf of a new arena.” I’m arguing the team’s owner has work to do if he’s going to someday convince voters to vote for a new or renovated arena.

    Thanks again for your commentary on my post.

  10. Quibble acknowledged, and sorry if I mangled your intent any.

    I’m not entirely sure I agree with you on “people are more likely to vote for this if ownership is investing in the team,” though. There are many different tactics that team owners use, from “the team is great, we need an equally great arena!” to “the team is terrible, we need a great arena to make us great!” to, of course, “the team is great, give us a new arena or we’ll take our greatness to another city!” or “the team is terrible, we need to move to another city to become great — unless, of course, you make it worth our while…”

    In my experience, teams that are winning tend to do slightly better in these arguments, if only because teams that are losing nobody much cares about. (On the other hand: the Sacramento Kings.) But the real game-changer isn’t won-lost record, it’s how much money you spend on lobbying and referendum campaigning. Most voters, Oklahoma or otherwise, are prone to thinking, “Argh, taxes!” and not “Yay, sports!” when they get to the ballot box, so Bennett’s going to need to spend big if he wants to get them thinking with their souvenir jerseys and not with their wallets.

  11. Thank you for the clarification Mr. Kimball.

    If it were true that “the people” will get to vote on whether or not to subsidize arenas and that that vote will be binding on all parties, I would suggest we would have a lot fewer publicly funded arenas and stadia in North America.

    Even as a confirmed opponent of public financing for highly profitable businesses, I have no issue if the people of Minnesota or Ohio are asked a simple and straightforward question on whether or not to fund a new stadium for their plucky billionaire sports franchise owner and vote to do so. The problem is they are rarely asked at all, and when they are the issue becomes so muddled under the weight of deliberate misinformation campaigns that the result often has little or nothing to do with the actual will of the people who will be paying for the facility.

    I think we all know the reasons why politicians and franchise owners try extraordinarily hard to prevent binding public votes on stadium funding.

  12. Points acknowledged, Neil and John.

    Oklahoma City may be somewhat of an outlier in the things both of you mention, all of which have good supporting arguments behind them. But the penny sales tax that OKC voters have approved several times since the 1990s that was used to fund the arena and later its renovation is still broadly popular — the penny tax is spent on capital improvement projects that are credited with an urban revival in downtown Oklahoma City, and other benefits to other parts of the city. For the most part, the improvement projects have had a demonstrable return on investment so far.

    In OKC’s case, at least, the funding for the arena was clearly spelled out in the first vote on the tax in the 1990s. It was part of several projects in the downtown area, including a renovated performing arts center, a library, a recreational canal and a minor league baseball stadium. The second iteration of the tax, also approved by voters, was to build or renovate every public school in the city (the public schools are part of several districts, none of which are operated by the city government). The third was the arena renovation, which was the only item the third version of the tax funded, so it was also clearly spelled out. The fourth iteration of the tax is for more capital projects, also mainly downtown, like a transportation hub, convention center, streetcar, senior health and wellness centers, sidewalks and some improvements to a river racecourse.

    The last vote on the tax was the closest since the first vote about 20 years ago. So although the projects, and the tax, remain broadly popular, there’s some work to be done before the city decides on the next set of projects and convince voters to support it. But at least so far, Oklahoma City voters have been relatively well-informed before the votes take place, and have been happy with the results.

    The fact that OKC residents still feel mostly warm and fuzzy about the tax itself, to say nothing of the team, in a political climate that is otherwise hostile to taxes in general says a lot about how much local voters value the tax and its results so far. And I do think, personally, that means that emotion about the team and the tax will actually come into play more than might be the case in a similar vote somewhere else, although that’s not something I can prove with numbers. But suffice to say that it’s a popular tax, with intentions and results clearly visible to OKC voters each time it has been approved.

    (Incidentally, the version of the tax with the most dubious results so far is actually the version that paid for the new school building. The idea was that the city’s capital investment in the schools would free up more money and time in the school districts to address shortcomings in the educational system. But so far, the investment into the neediest and largest of the school districts, Oklahoma City Public Schools, has not resulted in better student performance. That’s difficult to pin on the city, though, since they have no control over the school system itself. But there’s no question that the facilities available to the district are vastly better than they were before the tax. There were schools that had to shut down classrooms because of leaks in the ceilings and other problems. At least OKC students are warm and dry while the school system tries to sort itself out.)

    Thanks again for your comments. This is an interesting and valuable discussion.

  13. I love the term “penny tax”, because “1% sales tax” might actually cause people to do some math.

    OKC is 621 sq miles. There’s one way to capture your tax base……

  14. I remember the 1% sales tax campaign well — it was the MAPS plan sold by Rick Horrow, who’d tried and failed to get it approved in Virginia Beach and Birmingham before he brought it to Oklahoma City. I’m glad that people feel like it worked out well, but having seen his promotional materials at the time, I’m not sure I’d say that voters were well-informed going into it.

    OKC did manage to get an arena for a relatively low price, and did manage to land an NBA team despite building on spec. (Unlike, say, Kansas City, on both counts.) But I wonder how people would feel about the project if Clay Bennett had decided to take up buying something other than NBA teams as a hobby.

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