Seattle Partners pull out of KeyArena bid process

Seattle Partners, a partnership between AEG and Hudson Pacific, announced in a formal letter to the City of Seattle that they would be pulling out of the KeyArena remodel process. On the surface, it appeared to be a surprise, but to those of us that have been following the story for a while know that AEG was on the cusp of losing the bid anyway. They could have bowed out gracefully, but they decided to take a scorched earth approach to announcing their exit.

The mayor responded to the letter with a statement of his own:

Ed Murray

Seattle Mayor Ed Murray

“It is unfortunate Seattle Partners chose to pull their proposal. As recently as May 19th, Seattle Partners stated in a mass email: ‘We applaud the City for executing a thoughtful public process. Engaging with teams from the City and the public has strengthened our proposal and crystallized our approach.’ We hope to continue our current relationship with AEG and look forward to addressing our path forward on KeyArena, as well as our commitment to engage the community, in the coming days.”

 

And then there was one…at KeyArena

That leaves OVG as the remaining bidder on the KeyArena remodel. It has been rumored that we were going to hear an announcement as early as this week. John Shannon from Sportsnet tweeted that OVG would be in town on Monday (the 5th).

Sodo and KeyArena

Assuming OVG can strike a deal with the City, this will now set the stage for a SoDo/KeyArena showdown that should really be interesting. There are so many differentoutside dynamics at play here; it is impossible to predict. Ultimately, I believe it will come down to the following questions:

Who has the money to build the arena? As part of the KeyArena RFP process, OVG needed to demonstrate the financial means to deliver on the project. Meanwhile, the Hansen group has not revealed how they are financially structured since Ballmer left the group.

Which arena group has support of the leagues? There has been a lot of speculation that Hansen does not have the support of the NBA, but that has never been confirmed by the NBA. Time heals all wounds, so if this really is an issue, it could be fixed. OVG’s CEO, Tim Leiweke has deep ties to both the NBA and NHL, so his relationships seem solid. That said, I expect the City of Seattle to be in contact with both leagues to confirm either or both potential arena partners have the support from both leagues.

Who has a potential NHL ownership group? Both groups have acknowledged that they are talking to potential NHL ownership groups and for all we know, they could be talking to the same groups. Maybe a bigger question is how much this needs to be solidified to decide SoDo vs. KeyArena.SeattleArena

Has Hansen done enough to alter the vote on a street vacation? Since the street vacation vote was denied by the city council last year, Hansen has announced his intent to pull the need for public financing. In my eyes, that is a moot point since the public financing was always tied to procuring an NBA franchise, which was not going to happen before the MOU expires in December.

How this all plays out is anyone’s guess, but it certainly feels like we are closer to getting a viable arena plan that can support an NBA and NHL team. Take that last sentence with a grain of salt, since I’ve said that before.

Tale of Two Leagues…and expansion

As both the NHL and NBA kicked off their respective championships series this week, it provided an opportunity to address expansion in the respective leagues.

Bill Daly

On Monday, NHL Deputy Commissioner Bill Daly made some press rounds. I snipped this quote from the Yahoo Puck Daddy blog. 2012+NHL+Entry+Draft+Rounds+2+7+lyfx4JlSpv9l

“We kinda stopped holding on breath on new arenas in Seattle,” said Bill Daly, NHL deputy commissioner. “If something gets done and it’s a hockey-friendly building, does that make it more likely that at some point Seattle might be a likely site for expansion? Sure. But that’s in the future.”

As for Quebec, Daly said it’s a numbers game now for the NHL. There are 16 teams in the Eastern Conference. There are now 15 teams in the Western Conference. Expansion to Quebec would mean “further imbalance” for the League. “I think we have to address that before we can give more consideration to Quebec City,” he said.

Consistent with a lot of us in Seattle, the NHL appears to be in “I’ll believe it when I see it” mode. That said, they are practically keeping a seat open at the table for us. But how long can they keep it open? Seattle is by far the best open market for the league right now but how long before Portland or Kansas City make the league an offer they cannot refuse?

Adam Silver

Then on Thursday, NBA Commissioner, Adam Silver took to the podium and was asked about expansion. adam-silver-donald-sterling

“From my standpoint, for the league, you want ultimately a league where 30 teams are in a position where they can ultimately compete for championships and also be economically viable.”
“From an economic standpoint, we are doing better than we did historically, but we’re still not at a point where we have 30 teams that are profitable. … I also have to look at the potential for dilution of the existing talent we have before we expand. I have no doubt at some point we’ll turn back to it, but at least in my last discussions with our owners on this, most of them said let’s keep focusing on the health of these 30 teams and the quality of the competition. When we feel we’re in a better place with the 30 teams we have, maybe at that point we can look to expand.”

This is fairly consistent with what we have heard for the NBA for years but most of us figured we were getting closer. This is probably the most specific the NBA has been on the topic and the first time I’ve heard them talk about the disparity in the league. Earlier this week, Rob Johnson was on the Seattle Growth Podcast and said that he hopes NBA expands to Seattle in 6 to 10 years.

All of this is inline with what we have heard over the last several years that the NHL is more than likely to come to Seattle first with the biggest hurdle being an arena. But you knew that already….

Seattle Thunderbirds are WHL Champions

Not much to do with brining the NHL to Seattle but as anyone who follows me on twitter or facebook, knows I love promoting local hockey including our 2 WHL teams. I thought I would do a quick shout out to our Seattle Thunderbirds on winning their first WHL championship in their 40 year franchise history. Tim Pigulski had a great write up of the thrilling game 6 of the Final.

Love seeing the twitter love for the Thunderbirds.

 

NHL teams got in on the action.

Even the Governor and Mayor offered up their congratulations…

Let’s not forget some Tbird alumni…

KeyArena remodel will support NBA/NHL

There has been some concerns raised about KeyArena becoming a music only venue that would essentially lock out the Sonics and the NHL. The concern appeared to originate from a Wall Street Journal article that was quoted and magnified by a local article.
The Oak View Group’s Lance Lopes addressed some concerns raised by the WSJ article:
“Our long term vision includes music, professional sports, and special events,” Lance Lopes, director of special projects for the Oak View Group, who is leading local efforts on the bid, said Friday in response to the article. “The new arena at Seattle Center will accommodate and seek out a wide variety of entertainment rich experiences. Music though is the programming we can count on when we open the doors to the new arena at Seattle Center.”
There still seems to be a little fear by a small percent of fans that worry this could be a ruse to be a music only venue, but I figured I would address it.

The RFP

First of all, the KeyArena RFP calls out NBA and NHL in the first sentence of the City-of-Seattle-Logointroduction and called out on the first objective of the list of City’s Arena Objectives. so clearly the city is making that a priority when seeking proposals.  The RFP also calls for “Confirmation that the proposed conceptual design(s) are intended to comply with NBA and NHL requirements for potential future tenancy.” It seems counterproductive to think that Seattle Partners and OVG would go to great lengths (and cost) to be NBA and NHL compliant, with the intent to never housing teams from those leagues.

Expectations from the leagues

As much as we would love to have the leagues come out and say “If you build it, we will come”, we all know that will never happen. In fact, both leagues are probably tired of answering questions about Seattle. It’s noise that takes away from their product. They want fans and journalists talking about the Stanley Cup Playoffs and NBA playoffs; not franchises that don’t exist and might never exist, if we don’t get an arena. It is crystal clear that the leagues will expand when they are ready and without a built (or half-built) arena we don’t stand a chance of getting a team. Although we have not seen anything directly, we have heard that the bidders (Seattle Partners & OVG) have been in regular contact with both leagues to make sure they are meeting the league requirements in the RFP. It might be wishful thinking, but my hope is that both bidders have validation of compliance with league requirements with a letter from both the NBA and NHL.

The top grossing concert venues.

According to this article from Billboard Magazine in 2015 of the list of the world’s 10 Top-Grossing Concert Venues, 4 of the 6 North American properties on the list have both NBA and NHL franchise.
Top grossing venues
I am not an expert in Arena economics but I think it is fair to say that having only a few tenants (NHL, Sonics & Storm) that book half the calendar is a good thing and the list of top grossing concert venues supports that claim.

2 proposals for KeyArena RFP process

As you have probably seen by now, two groups have submitted their responses to the City of Seattle’s Request for Proposal (RFP) to renovate KeyArena into a world-class entertainment facility that could someday accommodate the return of the Sonics and the arrival of an NHL franchise. Seattle Partners (AEG & Hudson Pacific) and Oak View Group delivered some stunning proposals; exceeding most people’s expectations on what could be done with the KeyArena site. It would be premature to do so, but neither group announced any potential NBA and NHL ownership groups. I am sure neither league would appreciate implying expansion while both leagues have said (at least publicly) that they are not expanding.

Oak View Group

The Oak View Group is spearheaded by none other than Tim Leiweke who has a long and healthy resume working for NBA and NHL clubs. Most notably he was the CEO and President of Maple Leafs Sports & Entertainment, the parent organization of the Toronto Raptors and Maple Leaf Sports.

Their proposal:

  • Cost of Project: $564M
  • Square Footage: 660,000
  • NBA Capacity: 18,350
  • NHL Capacity: 17,100
  • Public Financing: None

Seattle Partners

AEG & Hudson Pacific have come together to submit a bid as Seattle Partners. If you recall, AEG is majority owner of the Los Angeles Kings and minority interest owner in the Los Angeles Lakers. Victor Coleman, CEO of Hudson Pacific, has been clear on his intent to bring an NHL team to Seattle.
Their proposal:
  • Cost of Project: $520M
  • Square Footage: 600,000
  • NBA Capacity: 18,113
  • NHL Capacity: 17,120
  • Public Financing: $250M in public bonding (They have recently backed off on this “suggestion,” so it is unclear the current state of this piece of the response)

Summaries

I cannot summarize the proposals any better than executive summaries themselves and a lot of the details have not been revealed, so here are some links to the proposals and the better articles I’ve read on those proposals.

What is next?

Brian Surratt, Director of Office of Economic Development laid out the evaluation criteria to the Seattle City Council and the timeline with the following slides:
KeyArena RFP Eval Criteria 2017-04-17

KeyArena RFP Overview 2017-04-17

My Take

Both proposals look promising and would appear to be able to bring the NHL to Seattle and bring the Sonics back as well. People still seemed concerned about traffic and parking but it is a very subjective piece to measure. Especially when you consider the traffic patterns will be shifting once the 99 tunnel is completed and the 2 additional streets open up. Additionally, the density is changing while car ownership decreases in more urban areas.  How the Mayor & City Council weigh all the pros and cons of KeyArena is anyone’s guess. I appreciate the evaluation criteria but it seems very unclear on how it all comes together. The hope is that one of these options will be recommended to the City Council. One thing is for sure, it is going to be a busy 3 months.

Oak View Group round up and Bettman comments on Seattle

The Oak View Group’s Tim Leiweke was in town and made a couple key stops to speak with sea_key_arena_entrthe Seattle Times and King5’s Chris Daniels. As you might recall, the Oak View Group is one of the two expected bidders on the KeyArena redevelopment RFP that could host both an NBA or NHL team. Before today, it was assumed that either AEG or OVG would be the operators of a remodeled KeyArena and not the owners of either an NHL or NBA franchise.

Seattle Times Article

The Seattle Times was definitely an enlightening read, filled will lots and lots of quotes from Leiweke himself. I urge you to read the entire article to make sure not to take my thoughts below out of context.

Here are some of the article’s highlights:

“We believe it’s going to take three or four years, preferably three,’’

My take: Seems pretty optimistic based on the snail’s pace that the SoDo project has gone. However, this is a project the city initiated vs a developer initiated project; the city might be a little more inclined to expedite the process to meet their timeline. There wasn’t a whole lot of urgency from Hansen after the Sacramento deal fell through. I honestly have no idea how long this will take. Seems like arenas can go up in a hurry, if the partners are motivated.

Leiweke said he’s in constant contact with Bettman and NBA commissioner Adam Silver and has been assured there is no imminent expansion or team relocation on the horizontimliewikeandgb for either league.

My take: Both Leiweke and AEG have strong relationships with both NHL & NBA and so I would expect both Oak View and AEG to be in lockstep with the leagues. I see this as a competitive advantage these guys have on bringing either an NHL or NBA team to Seattle over Hansen.

“I think that there are certain leaders in this community that finally took a step back and listened to Adam Silver when he said ‘There’s no expansion coming, and we’re not giving a team to Seattle right now because there’s no team moving.’ I don’t think that’s politics. I think that’s the reality of understanding the truth. And I personally believe you’ve been misled.”

My take: This isn’t really anything new. Other than an isolated report several months back reporting that expansion was happening, the league and owners have consistently said there will be no expansion anytime soon. Of course, we heard that for about 2 years leading up to the NHL’s expansion process, so it is within the realm of possibility that the league could do a 180 on this in one day. With no mention during Silver’s presser at the All-Star game and now this, it still feels NBA expansion is a ways out.

Speaking about Hansen’s attempt to buy and move the Sacramento Kings to Seattle, Leiweke said. “I don’t think that was a good day for Seattle, and I’m speaking just as a (Toronto Raptors) member of the board of governors at the time and watching that. … You don’t threaten (then-NBA commissioner) David Stern. And I’ll leave it at that.”

My take: Hmmm…there is some smoke there, but hard to know what Leiweke was talking about. Sounds like there might still be some fence mending that still needs to happen between Chris Hansen and the NBA. I’ve heard the NBA is still reluctant to deal with Hansen, but I never could substantiate that theory, so I’ve largely dismissed it. This does not validate it either. But there is something going on here between the NBA and Chris Hansen.

King 5 Piece

Later in the day, Chris Daniels from King5 published this article. The story line was similar to the Times piece with a couple added thoughts. (full interview posted here.)

Speaking about the traffic conditions down there, Oak View Group’s Lance Lopes said, “Frankly, a lot of it is based on misperceptions.  A great example: Mercer mess. If you go to Mercer at six o’clock at night and look at what the westbound traffic looks like, it actually flows quite well. Eastbound is difficult, we’re actually not going eastbound, we’re having people coming in to that area.”

My take: I travel westbound on Mercer a couple times a week between 4 and 6 from I5 to 99 and it does flow relatively well. How it will perform when there are high capacity events at KeyArena could be a different story. Then again, traffic in Sodo also increases dramatically for events at Safeco and Century link field.

“(Bettman) is fully dedicated to finding a solution in Phoenix. We cannot and we will not ultimately go prey on trying to move franchises. That was a major mistake and we will not make that mistake.”

My take: I know there has been some speculation that the Coyotes might move here, but I’ve remained pretty consistent that this will not happen. The NHL has proven that they will do everything they can to keep the team somewhere in the greater Phoenix designated market area (DMA).

Bettman in Vancouver

Coincidentally, Gary Bettman was in Vancouver last night and was asked about Seattle. Bettman says “We aren’t paying a lot of attention to it because there is no building.” He then proceeds to name all the players trying to get an arena deal done….but he’s not paying attention. This is as good as it will get from the Commissioner. I would love to hear a statement from both leagues saying that they are in regular communication with AEG or Oak View Group to ensure that the RFP responses can work as a long term home for both the NHL and NBA, but we will never get that from a commissioner until the opening faceoff or tipoff.

The arrival of Leiweke and AEG on the scene can only help the situation. Getting some honest and candid comments from any of the arena players is refreshing and I anticipate we will continue to hear more and more from AEG, Hansen, and maybe some potential NHL team owner one day.

Let’s view this as a significant progress report that people are talking to the leagues and working though some of the unique challenges with a redevelopment of Key Arena.