KeyArena, trying to remake itself by attracting concerts and other events, is poised to turn a small profit for the first time since 2000.
Editor’s note: First of two parts examining the impact of the Sonics’ move. Today, changes at KeyArena. Thursday, the effect on Seattle and Oklahoma City.
Nearly a year since the city of Seattle agreed to a settlement that allowed the Sonics to leave town, KeyArena is still fighting an image problem created by its former tenant.
For years the Sonics complained the building was outdated while lobbying state lawmakers for financial assistance toward a multimillion-dollar renovation.
Now that the Sonics have moved to Oklahoma City, an arena designed exclusively for basketball in a 1995 remodel is attempting to remain relevant by marketing itself as an all-purpose building and attracting non-sporting events.
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“They were a very big and successful partner with us, but we’re about so many other things,” KeyArena manager Edie Burke said. “I want families here. I want Women of Faith. I want old rockers and young rockers and everybody in between.”
So far, so good.
Despite the loss of its two main tenants, KeyArena is poised to turn its first profit since 2000. But look beyond the building with the giant neon-red KeyBank sign and you’ll find a growing number of vacant restaurants and empty streets in a neighborhood that hasn’t recovered from the exit of the city’s NBA franchise and the Thunderbirds junior-hockey team.
Burke is trying to fill the void with concerts, family shows and high-school graduations. She budgeted 117 performances in 2009, including the Sonics and Thunderbirds, but now expects 89 events this year. It’s a dramatic decline from the 144 events in 2007.
Despite fewer events, Burke said KeyArena will be profitable for the first time in nearly a decade because last year’s $45 million settlement with the Sonics that allowed the team to relocate enabled the city to pay off KeyArena’s $34 million debt from the previous remodel.
“We obviously have to bring in all lines of revenue — concessions, parking, sales, ticket fees — that we get, but we won’t be spending more than we bring in,” Burke said. “So that’s profitable.”
According to city records, KeyArena last turned a profit in 2000 when the building generated $600,030. Over the next seven years, the city lost $13.4 million. Before the settlement, Seattle Center paid an average of $6.7 million annually to pay down the debt beginning in 2001.
“With the mortgage paid, now everything we make is either used for improvements or it goes into the profit line,” Burke said.
The city spent about $2 million from the settlement on building improvements, including a renovated HD Lounge, painting and lighting upgrades, concourse signage, a digital reader board, increased event-level catering space, development of a concert club room and a new Web site.
The improvements are nowhere near the kind of renovations proposed by former Sonics owner Howard Schultz for $118 million.
Burke isn’t bothered that KeyArena lacks the amenities of the newest sports facilities.
“We’re taking care of Joe Fan, and Joe Fan doesn’t care about fancy schmancy club seats,” she said. “The average fan doesn’t want to spend a whole bunch of money for VIP things.”
KeyArena signed an agreement with AEG Facilities, which will oversee sponsorships inside the building, advertising, premium-seating sales, suite sales and event-day operations that were handled by the Sonics’ staff of more than 200. The Seattle Center will continue to manage general building operations, marketing of the venue and event bookings.
Marc Jones, director of marketing and business development, said KeyArena has been able to successfully compete with the Tacoma Dome, Everett’s Comcast Arena and Kent’s ShoWare Center, which is the new home of the Thunderbirds.
“What we’re finding is promoters still want to be in Seattle,” Jones said.
KeyArena’s no-frills approach has been attractive enough to keep the Storm, which will play 17 home games, and to lure the Seattle University men’s basketball team, which will play 10 games there next season. The building will also host five Rat City Rollergirl events, a Portland Trail Blazers exhibition game, Gonzaga and Washington State men’s basketball games and 12 concerts, including Elton John and Billy Joel.
“For college basketball, KeyArena provides a perfect atmosphere,” said Seattle U. athletic director Bill Hogan, who is completing negotiations on a long-term deal with the city. “You’ve got a good combination of suites. You got special rooms where you can cultivate corporate sponsors and donors. What we’re hearing from our fans is they like the neighborhood feel of the building.”
The neighboring businesses, however, have been hit hard. Jill Arno, Queen Anne Chamber of Commerce executive director, said businesses near KeyArena reported a 50 percent decline in sales in the past year.
“It’s hard to separate the post-Sonics effect from economic downturn because they’re overlapped,” she said. “The restaurants in this area — not all of them, but a lot of them — counted on those nights with the Sonics as being their big nights and a big boost for their business, and they don’t have that now.
“While KeyArena is getting some events in there, and obviously concerts are great and bigger events are good, the other events don’t fill out the arena to the same extent that the Sonics would. You just don’t see events that bring the 40-, 50-year-old crowd. I know they’re trying over there, but right now everybody is hurting.”
Percy Allen: 206-464-2278 or firstname.lastname@example.org