Two developers propose KeyArena redo with no public money, except for maybe some public money

As promised, the city of Seattle received two proposals for renovating KeyArena this week, and—

One of the groups interested in renovating KeyArena for NBA and NHL is prepared to spend more than $500 million on a complete overhaul of the 55-year-old facility.

The Oak View Group (OVG), based in Los Angeles, has produced a $564 million plan it says can have the arena renovated by approximately October 2020 – leaving it ready for the 2020-21 NBA or NHL season – spokesperson Steven Gottlieb said—

Hey, hey, Seattle Times, thanks for reporting what one of the developer spokespeople said, but the city of Seattle has made available the actual proposals, so let’s just go read those, shall we, and see what’s actually in them?

  • The Oak View Group (aka Tim Leiweke and friends) is proposing that $564 million redo, expanding the underground part of the arena — which is most of it — to modernize it for basketball, hockey, and concerts. (And probably change the whole seating bowl, since that’s necessary for hockey.) Oak View promises that the project “will not require any City investment,” with the developer covering all constructions, operations, and capital improvements, as well as paying $1 million a year rent; however, it does note that the city will still own the land (so presumably it will remain property-tax-free) and that “OVG will work with the City to identify a mechanism for reinvestment of new revenue streams back into the project,” which is just vague enough to be slightly ominous.
  • Seattle Partners, aka AEG and friends, aka Leiweke’s former employer, doesn’t put a dollar amount on its renovation plans, except to say that it will be “world-class.” As for funding, the only promise (in the executive summary, anyway, which is all that the city seems to have made available) is that the developers will “guarantee all financing, public and private, through revenues that would not exist but for the renovations proposed for the Seattle Coliseum,” which is usually code for tax increment financing or some similar scheme to kick back taxes that can be claimed to be due to the renovated arena, even if they’re ultimately cannibalized from spending elsewhere in the city.

Neither of these is quite a “no public money” promise, which is what the city was requesting. But they’re potentially close, which is kind of crazy, given that everything we know about arena operations is that spending half a billion or so on upgrading these buildings doesn’t usually generate a great return on investment. But this is a weird moment in the arena biz, what with AEG, Live Nation, and Madison Square Garden (who would be Leiweke’s financial backers) engaged in a nationwide war for control of the concert industry, meaning that they could be more likely to overbid in an attempt to lock their competitors out of the Seattle market. That’s an opportunity for anyone doing business with them, and Seattle is smart to be trying to play this for all it’s worth.

In short: This still needs way more analysis of the competing groups’ funding plans, and in particular of how weaselly those weasel words are about arena-related revenue streams. But it’s well worth exploring, since this might be a rare chance for a city to be in the driver’s seat when it comes to getting a new or renovated arena. Getting a team will be another story — hello, Kansas City — but cross one hardball negotiation at a time.


11 comments on “Two developers propose KeyArena redo with no public money, except for maybe some public money

  1. A big risk with the Key Arena renovation idea is that no matter how much they tear down and rebuild, even if they only reuse a single brick from the old arena, 10 years from now whatever team occupies the arena will complain that they are playing in a 65 year old arena and want a new one.

    • If its not tax payers paying for it, then my question is “who gives a shit?” That’s mostly an issue where a team gets a shiny new arena built on the tax payer dime, and then 10 years later they’re asking for a tax payer handout again. If no tax payer money was used in the first place, do we really care if a tenant complains the arena is old?

      In this case, its a private operator fronting (just about all of) the cash. If a tenant team comes back asking for more, what did the city lose on the deal? AEG could build a new arena every year for all I care as long as Seattle tax payers don’t have to pay for it.

  2. “..guarantee all financing, public and private, through revenues that would not exist but for the renovations proposed for the Seattle Coliseum,”

    So are will the developers/owners be willing to allow for a tax on tickets, parking and concessions?

    Likely not I would guess, but that is the only directly associated revenue from the improvements.

    • Hansen’s MOU allowed for those taxes, but they were then collected and allocated into paying back the bonds/public financing.

      The tables way down in this document had the old MOU bond payback models.

      clerk.seattle.gov/~clerkItems/fnote/117609.pdf

    • I wouldn’t have a problem with a tax like that since it would only theoretically affect people attending events at the Coliseum, although parking is a grey area because the parking at/near Seattle Center is largely not specific to any venue.

      I’ve been totally behind Hansen’s revised all-private plan because the location would be so much more accessible than Seattle Center (which is, and would remain, a trafic nightmare), the City of Seattle would almost invariably be knuckleheaded landlords and, well, it’d be all-private.

      Oak View’s proposal has changed my POV and for the first time in years, I find myself saying the City is playing it right. Besides, is there any question whether the City-owned facility will be the one the City chooses? Seattle’s leaders aren’t the sharpest pencils in the pocket protector, but they’ve got a good handle on self-interest.

      Unless Seattle Partners comes back with something better, this one’s all but a done deal and Hansen may have to come up with a Plan B for all that SoDo property he’s been buying up. That’s still valuable real estate.

  3. $520 million is the number we are hearing for Seattle Partners’ bid. And it sounds like they’re looking for a $250 million public contribution through bond financing to be paid back by the arena and tax revenues, just like Hansen’s original offer for the SoDo arena proposal.

    • They back tracked on that in the Times today, basically saying “Oh… OVG is going all private?…. Shit… I mean…. just kidding! We can go all private too if we want to… we were just… suggesting the $250mil in TIF!….”:

      http://www.seattletimes.com/sports/nba/aeg-president-suggests-public-bonds-for-keyarena-plan-but-group-prepared-for-all-private-funding/

      • That’s public *bonds*. Nobody cares (or should) who’s letting the bonds, it’s who pays them off that’s the issue. Whether TIF money is used has nothing to do with whether it’s public or private bonds.

Leave a Reply

Your email address will not be published. Required fields are marked *.
NOTE: Both personal attacks on other commenters and trolling (posting inflammatory remarks solely to start a fight) are not allowed in comments, and will be deleted. Any commenters who repeatedly ignore these rules may be placed on moderation, or banned.

HTML tags are not allowed.

760,034 Spambots Blocked by Simple Comments