Seattle Center Arena media coverage over the last week

Over the last week there was a lot of coverage on the Seattle Center Arena front…

Tim Leiweke profile in the Seattle Times

Last week, Geoff Baker had a great profile piece in the Seattle Times on Tim Leiweke. Baker goes into Leiweke’s deep and connected ties with both the NHL and the NBA. The piece is more about his NBA ties, but he does have this little reference about the NHL…

“It’s expected the NHL will grant Seattle a team if the city council next month approves a Memorandum of Understanding on OVG’s remodel.”

Check out the entire article here.

Councilmember Mike O’Brien’s comments

On Monday of this week, during a rather routine Seattle City Council meeting, King 5’s Chris Daniels caught this little nugget from Councilmember Mike O’Brien about the proposed Seattle Center Arena.

“Designed to deliver NHL team by 2020”
– Councilmember Mike O’Brien

Most of us have speculated that the new Seattle Center Arena opening date of October 2020 enables Seattle to be in the hunt for an NHL team.  The Councilmember’s comment is the first time we’ve heard it called out so directly. This is a great signal, but we have been down similar roads before. Let’s temper some enthusiasm until after the Seattle Center Arena MOU is executed.

Now, the root of the Councilmember’s comments is the desire for more time with the MOU which could delay the Seattle Center Arena vote a couple months. It remains to be seen if other Councilmembers would be willing to push it out for Councilmember O’Brien, but any delays could jeopardize the opening date of the arena and therefore the ability to obtain an NHL team. This would be a doomsday scenario as it would send a signal to the NHL that we still don’t have an arena; at which time the NHL might look somewhere else for their 32nd team.

The Wixey interview

Q13’s Bill Wixey, landed a sit-down interview with OVG owner and potential Seattle Center Arena developer, Tim Leiweke. The entire interview is fascinating with pretty much no topic off the table including traffic and mobility around Seattle Center, his relationship with the NHL and NBA, and how he views Seattle as a hockey market. There is even a hat tip to the Thunderbirds in the video. I found it refreshingly transparent and would highly recommend watching the entire video.

Here are some highlights:

~7:00   Leiweke talks NHL ownership group and Seattle as hockey market.

~22:00 Leiweke addresses the Sonics move and how he thinks it was the wrong decision.

~45:00 He talks the traffic challenges with Seattle Center and the plan to address some of those challenges.

 

An open letter to Chris Hansen: Please openly endorse the Seattle Center Arena Plan

Dear Mr. Hansen,

I’ve been attending your rallies, participating at City and County Council meetings, and supporting your efforts online for the better part of the last 6 years. I was at the unfortunate Occidental Street vacation vote. And, like a lot of Sonics and hockey fans in the area, I was devastated by the outcome.  

Tuesday night, I could not make it to the City Council meeting. I was in Las Vegas attending the first ever Las Vegas Golden Knights home opener game and it was an amazing experience. I had goose bumps from the second they took the ice. It was also very emotional for all the locals as they looked to hockey to help them heal. There wasn’t a dry eye in the house as the announcer named the first responders accompanied by the Golden Knight players. I’ve been to a lot of great sporting events in my life including a Super Bowl, World Series and NBA Playoff game, but none that compared to that game. It reminded me how powerful sports can be in bringing people together.

Your priority is the Sonics and mine is bringing an NHL team to Seattle. I have no issues with our differences in priorities, which made it so refreshing to hear you say that you are open to two arenas. Which is why I am asking you to openly endorse the Seattle Center Arena Plan by OVG and not request any further postponements by the City Council.  

As you may not know, I am on the city’s Arena Community Advisory group for the Seattle Center Arena Plan I am familiar with the process and OVG’s MOU.  In addition to suggesting a delay in the City Council vote on the OVG MOU, some of the comments made by you during your Seattle visit earlier in the week are not correct.  Namely, your statement about OVG’s proposal including a “fair amount of public financing.”

Because OVG has been able to identify NHL owners and because the Seattle Center Arena Plan is under serious consideration because it’s a strong proposal, Seattle is so very close to gaining the interest of the NHL to expand a team here. By openly endorsing the Seattle Center Arena Plan and not delaying voting, you will build some goodwill with the City Council and it could buy you some time to address the outstanding issues with your SoDo Project. A Seattle Center Arena could also provide an opportunity with a shorter runway of time to bringing the Sonics back should a team become available. Isn’t that what you have said your primary goal is – to bring back the Sonics? Additionally, by supporting Seattle hockey fans by helping them bring a team to town you will surely win their support in your continued efforts to bring the Sonics back.

Please don’t hinder Seattle’s chances of getting an NHL franchise. The league will eventually look for other options, if we fail to start building an arena. I love the Seahawks, Storm, Sounders, Reign, and Mariners, but the NHL is my passion. I am not alone. Please give NHL fans in the area the sense of community that sports provide.

If you are truly open to two arenas, as you mentioned, then I encourage you to send a letter to the City Council in immediate support of the Seattle Center Arena Plan.

Sincerely,

John Barr

NHLtoSeattle

Bigger than Hockey. #vegasstrong

A post shared by NHLtoSeattle (@nhltoseattle) on

 

Organizational Structure of Seattle Center Arena

There has been some dialogue on how the Seattle Center Arena plan can attract both the NBA and NHL in relation to the organizational structure of the plan. A few people claim there isn’t enough money to go around to lure two major sports anchor tenants. With that said, I researched the organizational structure of ‘arena ownership’ and arena operator’ in the NBA/NHL to understand how the Seattle Center Arena plan compares relative to existing arenas across North America. Arena operations is relevant to analyze since this is how we begin to follow the money.

inside-Hockey

For starters, organizational structure can be thought of as two primary entities, arena ownership and the arena operator. As shown below, arena ownership can be by the municipality OR NHL Owner OR NBA Owner OR a combination of all those listed. Similarly, the arena operator can be a 3rd Party OR NHL Interest OR NBA Interest or a combination. I define “interest” as the majority owner of the operating company is also majority owner of the NHL or NBA franchise. (i.e. Boston Bruins are owned by Jeremy Jacobs. Jeremy Jacobs is also the owner of TD Garden operator, Delaware North. This would be an NHL interest owned operator.)

arena-ownership

Seattle Center Arena plan

The Seattle Center proposal will be 100% Municipality owned arena with OVG operating the arena by creating a partnership with an NHL and NBA owner (“Joint NHL/NBA”). David Bonderman and Jerry Bruckheimer have already committed money to that partnership for the NHL side of the deal, while the NBA group will be added once the NBA signals they are ready to expand (or relocate).

To review, the Seattle Center Arena plan is a Municipal owned building with a joint arena operator partnership.

arena-ownership-Key

In analyzing how other arenas are run…

Arena Ownership

1Ownership

Based on the data, 63% of the 49 NHL/NBA arenas in North America are Municipality owned arenas. In this scenario, the Seattle Center plan is consistent with the norm across North America.

Arena Operator Structure

2OperatorStucture
On the surface, the Seattle Center Arena plan of joint operations appears to be rare for the arena business, but this data is for all 49 arenas, most of which do not have both NBA and NHL teams as anchor winter tenants making “joint arena operator” scenario impossible, so filtering on just arenas with 2 or more winter sports anchor teams.

3Arena Opertor Structure with 2
There are 11 arenas that have both NHL and NBA tenants. Seven out of these 11 arenas also work as joint arena operators. So now it appears the Seattle Center Arena plan is in line with other organization structures across the NHL and NBA.
I could end the analysis there, but I would be remiss if I didn’t also point out that in 4 of the 7 joint operated arenas the arena owners also own both teams that play in the arena: MSG (Rangers/Knicks), Capital One (Caps/Wizards), Air Canada Centre (Leafs/Raptors), Pepsi Center (Avs/Nuggets). If you exclude those 4 arenas, you are down to 3 arenas that have NBA and NHL tenants that have different owners for their respective teams: American Airlines Arena (Stars/Mavericks), United Center (Blackhawks/Bulls), Barclays (Islanders/Nets).
Also, note that 3 out of the 11 arenas operators only have NHL ownership without the outsideNBA. That is to say that the NBA takes no part in arena operations or its revenue. I’d like to surmise that in these cases the NBA relies heavily on TV revenues, but that is an analysis for another day. This does show that the NBA can exist in a dual anchor tenant arena without being part of the Arena Operations. However, this is moot for this argument, since the Seattle Center Arena deal has already been determined to be a joint ownership.
To summarize, for the 11 arenas that exist that have both NBA and NHL tenants, there are 7 cases where both the NBA and NHL franchises take part in arena operations. Then excluding dual franchise ownership, there are 3 arenas from which the Seattle Center Arena plan can emulate.

4ArenaOperatorStructure exluding dual

With such a small sample size it is a bit of a stretch to draw any conclusions, but at least we know there are scenarios that fit the Seattle Center Arena organizational structure.
Chalk this one up to the more you know with no hard and fast conclusions.

Seattle Center Arena MOU submitted to City Council

The Memorandum of Understanding (MOU) for the redevelopment of a fully compliant NBA/NHL and music events arena was submitted to the Seattle City Council today which should be viewed as a huge step toward attracting an NHL team. Both Chris Daniels  and Geoff Baker did a great job covering the story, but I will highlight some of the major items.

  • Construction is anticipated to start in October 2018 and opening in October 2020. October 2020….let that sink in. We could see an NHL game in Seattle as early as outsideOctober 2020! Personally, I have been mentally preparing myself for 2022, so I’m ecstatic for 2020. Assuming no major snags on the way, 2020 would be outstanding. Start prepping those mock expansion drafts!
  • Total cost of the new arena will be close to $600M. $600M isn’t a remodel, it’s a completely new building under the old roof, which had to be kept for its historical landmark designation.
  • The arena will nearly double the size of the current KeyArena.
  • Arena development will be completely privately funded and OVG will also assume risk on all overruns.
  • Term of the agreement is 39 years with 2 eight-year renewals.
    • In order to exercise those 2 renewal options, OVG must invest $168M back into the arena for capital improvements.
  • $3.5M will be reimbursed to the city for developer costs for MOU. (Legal, Finance Consultants etc.) OVG will pay for all SEPA mitigations and contribute an additional $40M to a transportation fund that the city will administer.
  • OVG is also setting up a community fund worth $20M, of which $10M is already earmarked for YouthCare.

inside-Hockey.jpg

Next steps

Over the next several months, the Seattle City Council will evaluate the terms of the MOU and conduct their due diligence to make sure the city is protected. In December, the MOU is expected to be voted on for execution.

As most of you know, I try not to get too excited about any news these days, since it often feels like a rollercoaster. It hasn’t stopped some of the hockey beat writers from talking about it….
(Two tweets and articles about NHL to Seattle)

Hansen’s ‘Hail Mary’

Yesterday the Hansen Group threw up a ‘Hail Mary’ by sending a letter to the Seattle City Council on a possible redevelopment plan of their own for KeyArena. As I’ve said in KeyArena_SoDoGroupprevious posts, the three main challenges for SoDo is the lack of money, no NHL partner, and political support inside and outside city hall. His potential plan for KeyArena is interesting, but does nothing to address those challenges.

The proposal

The proposal would subdivide KeyArena into 3 separate venues: a 500-seat theater, 3000-seat covered amphitheater and 6200-seat indoor concert venue. If there wasn’t already a viable redevelopment plan to accommodate NHL and NBA team, i.e. OVG’s proposal, I think this would be an interesting proposal. The Hansen Group would not start this Amp_KeyArena_Hansenproject until after a SoDo arena would be completed. Based on the information posted on Hansen’s website, the SoDo arena would still not begin until an NBA or NHL team is procured. Based on a Steve Ballmer interview last spring, he estimates the NBA in Seattle is closer to 10 years away than 5. You add it all up and we would be looking at about 2027 for SoDo to be open at which time I would not expect the NHL to wait for Seattle. The Hansen Group has mentioned they would be willing to work with an NHL partner, but their track record so far tells a different story. Each of the known prospective NHL Seattle partners, Don Levin, Ray Bartozek, and Victor Coleman, have been unable to reach terms with the Hansen Group. By adding this KeyArena component, he just increased the cost of business for any prospective partners.

What does Hansen have to lose?

In short, nothing. Worst case for Hansen is that the situation remains status quo and the city rejects/ignores his proposal and continues to go down the path with an NHL/NBA arena in Seattle Center with OVG. Best case for him is that the city rejects the OVG NHL/NBA solution and gives Hansen 5 more years to wait for the NBA to either expand or relocate a team to Seattle. He will also need to acquire a whale of an NBA partner and if he can’t strike a deal with the economic proposal of both SoDo and KeyArena, he can go back to the City to request a more appealing deal to lure the NBA. By that time, the NHL will have probably expanded to 32 teams somewhere else.

SoDo is Dead

I know there are a lot of folks that wanted to see the SoDo site be the location of Seattle’s arena to host NHL and NBA teams, but the door seems to have been closed indefinitely as the City of Seattle shared that they will not be re-voting on the Occidental Street Vacation that the Hansen would need to build their arena in SoDo.SeattleArena

I have said SoDo is dead before and nothing has really changed my mind since I originally posted in May of 2016. That post was before KeyArena was brought up as an option. It was clear to me that the current City Council decided that SoDo is not where they wanted another sports facility to be built. Since that post, nothing has materially changed. Hansen offered to forego his $130M in public financing for the street vacation, but that was much ado about nothing. It didn’t go over well, but I chalked this up as “no news” news. The financing has always been tied to Hansen procuring an NBA team and since the NBA has made it clear that they were not expanding before the MOU was set to expire, the financing was a non-issue.

The reasons for the unwillingness for the city to revisit the street vacation could be any combination of the following reasons:

  1. No money. When Ballmer left the group that eliminated Hansen’s majority owner/partner. Hansen could have addressed this, but, for whatever reason, hasn’t added any investors to his group. Now it is relatively impossible to replace a significant partner, like Ballmer, with over a billion in net worth. As far as I can tell, the City doesn’t grant street vacation on speculation that a company, organization or individual can attract more investors. The city expects to see all the financing in order before a street is vacated.
  2. No NHL partner. It’s no secret that the NHL is ready to expand before the NBA. Many sources have made that clear. Over a year ago, Hansen’s partner, Wally Walker confirmed that the Hansen group has continued to talk to prospective NHL owners but in 6+ years, they have not been able to bring any of them on board.
  3. Politics. Yep, flat out politics. It is easy to blame the Port of Seattle, since they were the most vocal opponent over the last 5 years. The Mariners & Seahawks were also quiet opponents of the SoDo arena plans. Those are 3 powerful groups that are difficult to overcome.
  4. Relationship with the NBA. For years there have been rumors & reports that Hansen’s relationship with the NBA has some challenges. The city has acknowledged that they have been in communication with both the NBA and NHL during the KeyArena RFP process to make sure it is viable. If this relationship issue did exist, it is certainly conceivable that the NBA would have confirmed it to the City of Seattle during these conversations.
  5. KeyArena has become viable. At the time of the Occidental Street Vacation vote, KeyArena was not really talked about as a viable option to host the NBA and NHL. outsideSince then, the City issued an RFP and got two responses to redevelop KeyArena from two power houses in the industry that have deep ties to the NBA and NHL, AEG and OVG. Both RFP responses confirmed that KeyArena could be redeveloped into a building to support NHL and NBA. The city confirmed that the Mayor’s Office were in communication with both leagues on the viability of the proposals.

KeyArena or Bust

The demise of SoDo leaves only one option for an NHL/NBA arena, a revamped KeyArena. NBA aside and focusing on the NHL, with the addition of Vegas this year, the NHL is set at 31 teams with 15 teams in the west and 16 in the east. This would imply 1 additional opening for an expansion franchise. The league will not wait for Seattle forever, especially with interest starting to percolate in Houston and Kansas City, both of which could plug and play fairly easily in the western conference and already have existing arenas. With no other options in the Seattle area, it looks like KeyArena is our only hope to see the NHL here anytime soon. There are certainly other scenarios that could play out, but it feels like our window of opportunity is now, otherwise we might be waiting a long time for an NHL team.

inside-Hockey