Traffic and parking around KeyArena must be addressed, and you’d expect any MOU, which is scheduled to be released Tuesday, to begin that process.
Inside sports business
At long last, local sports fans come Tuesday should have some arena facts and figures they can sink their teeth into.
That’s when the City of Seattle makes public its draft Memorandum of Understanding (MOU) with the Los Angeles-based Oak View Group (OVG) on a KeyArena renovation for NBA and NHL teams. When that happens, we should have some questions answered, myths dispelled and a window to how the whole thing would work.
Sure, we’ll likely have more questions, too. But up to now, there’s been mostly guesswork. There also has been a lot of griping about how certain things can or can’t work, without anyone knowing the full picture.
Much of that chatter is coming from those preferring that a Chris Hansen proposal for a new arena in the city’s Sodo District be greenlighted instead. Still, those griping about KeyArena simply because they prefer Sodo have raised issues worth examining.
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Traffic and parking around KeyArena must be addressed, and you’d expect any MOU to begin that process. Much has been made about the extra $10 million Hansen offered to complete a Lander Street overpass in Sodo to ease traffic congestion in exchange for advancement of his arena project.
The Port of Seattle recently took care of that by funding the additional $10 million to complete the overpass without Hansen’s help. That has led to more griping that the city allowed public Port money to be used for infrastructure instead of taking Hansen’s private offer.
And that much is true. But a more measured take is there is likely some type of reciprocal plan still unfolding.
The clue to that, as some have noted, is that the Lander overpass deal between the city and Port contained a clause specifically mentioning that KeyArena is “an important civic asset, a historic anchor” to the surrounding Uptown neighborhood “and a valuable source of tourism and entertainment for the City.’’
Some find it odd a deal involving a Sodo bridge would mention KeyArena. But read the context of the greater funding deal, and it’s clearly about regional concerns, including the streets near KeyArena the Port relies on for freight transit.
Hence, a big thing to look out for in the MOU will be whether OVG contributes private funds to help ease congestion in that neighborhood. That would give the Port traffic relief there and explain why KeyArena would be mentioned within its funding effort in Sodo.
Just a hunch, but OVG almost certainly has to spend some private money on traffic to offset the impact of not using Hansen’s overpass money in Sodo.
Another thing to watch is whether OVG receives any tax breaks.
A recent study done by the University of Washington’s Evans School of Public Policy — paid for by Hansen’s Sodo arena group — suggested OVG would not pay property tax at city owned KeyArena. But state law maintains OVG can be charged leasehold excise tax of up to 12.84 percent “in lieu” of property tax on the full $564 million amount of its renovation.
Also, it will be a good idea to keep an eye on any additional tax-diversion attempts plus potential revenue generators such as parking and advertising. One fear expressed about Key-Arena is an NBA owner wouldn’t want to go there as a third-party tenant.
That argument ignores that those owners would immediately save big by not spending to build the arena itself — a good thing, because arenas typically depreciate in value and aren’t the prime revenue generators for franchises they used to be. Instead, much of the revenue for teams these days comes from ancillary businesses or television deals both national and local.
An interesting component to a renovated KeyArena would be what type of regional sports network approach OVG takes — either starting a new one or merging with Root Sports NW —- in what would be one of the nation’s largest geographical TV markets across multiple states.
No idea whether an MOU would go into TV detail, but it’s worth checking on.
Finally, you’d expect the MOU to have a definitive start date for construction and a timeline for reopening. Sodo advocates have warned it could take five to seven more years for Key-Arena to be renovated. So any start date for construction — with the city’s input this time — would give clues as to how accurate those warnings are.
What an MOU won’t do is give us answers on Hansen’s project.
The Sodo group made news last week by proposing an alternative KeyArena renovation — for between $90 million and $100 million — into a split venue for concerts and music. The city quickly shot the offer down.
Whether the city council decides to conduct its own review of Hansen’s new proposal remains to be seen.
Certainly, that offer is leverage the council can use if the draft KeyArena deal seems too lopsided in OVG’s favor.
For now, though, OVG remains the only group offering to build “on spec” without teams. And the only group to fully detail its lineup of investors and sources of funding.
It’s one thing to make promises, but quite another to show how you’ll pay for them.
The Houston Rockets just sold for $2.2 billion, meaning the cost of an arena and NBA squad in this city is likely to surpass $2 billion.
Add the NHL, that’s likely $600 million more.
So, this MOU should offer a clearer picture of how OVG plans to foot the bill. And provide some facts to up the city’s arena debate to a level beyond speculation.