Seattle City Council Approves Arena Plan

The Seattle City Council has approved the Key Arena redevelopment Memorandum of Understanding (MOU) with Oak View Group (OVG) today with a vote of 7-1. This is a MONUMENTAL milestone to bringing the NHL to Seattle. If you have been off the grid the last 6 months or just new here, OVG is planning a $600M remodel of Key Arena to make it a modern, world-class arena to attract the NHL and NBA. In addition, OVG has already named the potential NHL franchise owners: David Bonderman and Jerry Bruckheimer.

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What next?

 A change of tone from the league

To date, the NHL has dismissed the thought of another expansion process while the league sits at 31 teams (16 teams in the Eastern Conference and 15 in the Western Conference). Commissioner Bettman has stated multiple times that they are not going to expand for sake of symmetry. When there aren’t any potential expansion cities in the western part of North America, then the statement is a fair one. But with the approval of the MOU, I am now looking for a change of tone from the league on expansion. As Chris Johnston reported over the weekend, expansion is not formally on the agenda, but there is a strong feeling that “..the Oak View Group could have its $600M arena proposal approved by council to get things going.” Johnston continues “that will obviously get the attention of the NHL owners should that go through.” I expect to hear some timliewikeandgbacknowledgment of Seattle by the NHL through their approval to perform a season ticket drive to gauge the market or opening up the expansion process. This is what they did in 2015 prior to Vegas being approved for expansion. As a reminder, Las Vegas ran their ticket drive in February 2015, completed it in April 2015. The league then opened their expansion process in late June 2015, with the application due by mid-July. The actual Vegas expansion franchise was then approved in June 2016, pretty much a year after the process began.

From OVG

OVG still has plenty of work in front of them. Once the MOU is approved they will then need to continue down the Environmental Impact Study process as they drive toward obtaining all the necessary building permits. There are several long form agreements that they will need to be completed. We should expect to hear some news as all those items progress. I also expect to see more renderings of the Arena as OVG iterates the physical plan for inside and around the arena.

NHL Ownership Group

David Bonderman and Jerry Bruckheimer have been the reported (potential) NHL Seattle franchise owners for the last 6 months, but they have been fairly silent in this entire process. This seems rather deliberate to avoid creating public pressures and to allow the NHL to conduct the order of events as they deem appropriate. If the league gives them a little longer leash, we could start seeing this NHL Seattle ownership group being a little more public. By comparison, well before the expansion process began, Bill Foley, owner of the Vegas Golden Knights, would often make public appearances and comments about his desire to bring a team to Las Vegas. So it may just be a matter of time before this group starts to be more public facing.

 

Seattle is ready for the NBA and NHL

From Brian Robinson and John Barr

Seattle’s rapid and inspiring growth over the last decade has placed our city atop many important lists. For example:

Even as we enjoy this unprecedented regional growth and the opportunities it has brought, we still find ourselves with another very dubious distinction: Seattle is the largest city in the United States without a winter professional sports franchise. It is long past time for this to change.

The City of Seattle is very close to formalizing an agreement with the Oak View Group (OVG) that would transform historic Key Arena into a world-class modern sports venue, paving the way for the return of the NBA and the introduction of an NHL team. The City Council will vote on a proposed memorandum of understanding (MOU) on December 4.

After years of waiting, Seattle sports fans, and countless businesses that will benefit from our new teams, should be ready to celebrate.

Why now?

 Seattle is an ideal location for an NHL franchise. It’s bigger than 15 of the current 31 cities with NHL teams. A Seattle franchise would also add geographical balance. The league’s recent expansion to Las Vegas leaves the NHL with 15 teams in the Western Conference, compared to 16 in the Eastern Conference.   Meanwhile, Seattle’s growing economy, and its strong basketball tradition, will ultimately call for a return of the NBA.

However, the commissioners of both the NHL and NBA have made it clear in their public statements that Seattle must build a world-class arena to house any prospective new franchises.

“I have no concern that the building proper won’t meet our requirements,” NBA commissioner Adam Silver told the Seattle Times in a recent interview, adding that serious discussions can’t begin until an arena gets built.  The article goes on to say that Silver wouldn’t bet against Leiweke getting something done. “He’s always delivered in all of my business dealings with him.”

Knowing that time is of the essence, OVG’s construction schedule will result in the new building opening in October of 2020.  And OVG’s rebuild would produce a facility capable of attracting the NBA when a franchise becomes available.

Why Seattle Center?

Seattle Center is a cherished historic showcase for our city. A new arena on the campus would fit the broader revitalization that city leaders have envisioned for many years. Along with Seattle Storm basketball, an NHL and NBA team will complement the vibrant music, theater, and performing arts events at Seattle Center, expanding the versatile spectrum of activity that reflects Seattle’s diverse community and lively culture. The OVG project has the support of surrounding communities and local government.  After years of conflict with potential arena neighbors it is exciting to see neighborhoods including Uptown, SLU, Queen Anne, and Belltown engaged in a thoughtful process aimed at building the community’s support and expectations into the revitalization of Seattle Center campus.

Why OVG?

 OVG is a world leader in the arena, sports and entertainment industries. Few people in the world possess the deep relationships across the NHL, the NBA, and the music industry that Tim Leiweke and his team bring to the table.  OVG’s point person in Seattle is Lance Lopes who has been in leadership roles with the Seahawks, Sounders and Huskies since 2001.  Lopes is a great leader for this effort who knows the Seattle sports landscape as well as anyone.

OVG has demonstrated the ability to deliver a world-class arena that will be successful for decades to come. Perhaps most importantly, OVG has proactively reached out to community members to build collaborative relationships. The OVG team in Seattle has hosted and attended several public events to hear input and concerns of neighborhoods, Seattle Center tenants, labor unions, local businesses, fans, and other stakeholders.

Over the last decade, we have seen that building a world-class arena capable of bringing back the NBA and attracting the NHL is an incredibly difficult and complex task.  OVG has the expertise and business savvy required to work with the City’s multiple constituencies and address the specific needs of major sports leagues.

The OVG team is ready to take the first step toward restoring Seattle’s place among the ranks of great American sports towns. Fans of pro basketball and hockey should recognize this great opportunity and look forward to many nights of professional basketball and hockey in the years ahead.

-Brian Robinson and John Barr

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

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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.

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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.

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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)