NHL Seattle president and CEO Tod Leiweke on Thursday afternoon helped guide media members through the first public tour of the massive KeyArena construction project now expected to top $900 million and vowed that its developers won’t skimp on the additional upgrades that have sent costs soaring.
Just two hours earlier, The Seattle Times had reported the privately funded project’s cost had reached $900 million and likely more, and that the targeted reopening had been delayed several months — until at least June 1, 2021 — and would push up against the late-May start of that year’s WNBA season for the Seattle Storm.
Leiweke, after helping lead the tour through an arena rapidly becoming hollowed out, admitted costs have escalated to “between $900 (million) and $930 million” and that “the schedule has slipped a bit” but the project should be delivered by the summer of 2021.
“The project is definitely costing more than we thought, it’s taking a little bit longer, but it’s with great satisfaction that we’re here today saying ‘We are building something special,”’ Leiweke said after the tour, speaking from inside a new preview center across from the arena site where suites sales have begun taking place. “We’ve solved the Rubik’s Cube that was decades in the making in this community. There is so much good going on. This city deserves a world-class arena and they are about to get it.”
While sports leagues can buy teams a few weeks to cover such arena construction delays by having their season start on the road, anything beyond that means OVG would be on the hook for an additional $260,000 per 2021 home game missed by the Storm due to relocation.
The Seattle Times on April 1 filed a public-disclosure request with the city of Seattle seeking monthly documents on the updated time frame for the arena’s completion date that the project’s Los Angeles-based Oak View Group (OVG) developer is required to file as per its development agreement. The city responded April 5 — within the five days required by state law — that it was exercising its right to notify OVG of the request and would provide a further response or update April 25.
Thursday’s media tour of KeyArena and updates on the revised completion time frame were subsequently scheduled by project developers this week.
Storm President and CEO Alisha Valavanis said Thursday she had been “in close contact and communication” with Leiweke on the estimated June 1, 2021 closing date. Valavanis said she’s already been told by the WNBA the 2021 schedule will start before June 1 — meaning the Storm would open on the road for at least a game or two — but then has been assured NHL Seattle and OVG are committed to having their upgraded home facility fully ready.
“We’re really hopeful that June 1 is the date,” she said.
For now, the Storm will play the bulk of 2019 home games at the University of Washington’s Alaska Airlines Arena and the remainder at Angel of the Winds Arena in Everett. Plans for 2020 have not been finalized. Leiweke reiterated Thursday that he and OVG — run by his older brother, Tim — are working to get the Storm back into the building on time.
“We have a deep admiration for them and what they do,” Leiweke said of the Storm. “We have a deep admiration for their championships and we hope it will rub off on the other teams in the building. So, we really feel some obligation to try to get them into the building. They will have been out for two full seasons, and we take it very seriously.”
The Storm and city in June 2017 completed a 10-year lease extension deal that included protections if the planned KeyArena renovation came to fruition. Under the deal’s terms, the team would be reimbursed $260,000 per relocated game up to a maximum of $2.6 million per season until it returns to KeyArena in 2021.
On Thursday, the city and NHL Seattle, which had been having discussions for several weeks about who was responsible for any needed third year of payments, got together on a call to make a final decision. Tod Leiweke said the city wanted the developers to pay for it.
“So I called my brother and told him, ‘Look, we have to own this thing,’ ” Tod Leiweke said. “And he said, ‘OK, so we’ll own it.’ So we now own this thing, as we should. We’re taking full responsibility, and if we can’t get the Storm back in there on time we will pay for every bit of the cost.”
OVG has an office inside the same Queen Anne building as NHL Seattle, and both companies share investors and have worked closely on transforming the 57-year-old venue into a state-of-the-art, expanded facility with nearly double its current footprint while preserving its historically protected roof. NHL Seattle head Tod Leiweke is based here and has assumed the de facto local leadership of the project as his group also awaits the October 2021 arrival of an NHL franchise.
Leiweke’s group hopes to stage the June 2021 NHL Entry Draft and Expansion Draft at KeyArena to help jump-start that franchise’s launch a few months later. But any decision on that likely won’t happen until the league sees how construction proceeds.
During Thursday’s tour, Leiweke and project executive Ken Johnsen pointed out various construction complexities to explain why the costs have risen from an initially envisioned $600 million with a completion date of October 2020.
Johnsen noted the arena will no longer have any “back of the house” items above ground and that loading docks and staging areas and a 400-stall parking garage will instead move underground. Pointing out a vast, empty spread of flat ground adjacent the arena, he explained how the former loading docks and small surface parking lot will become a public square leading into the arena.
Large windows — which are also historically protected — removed from the arena now sit “cataloged” off to the side in organized piles so they can be put back into place once heavy construction is complete. Inside the arena, all seats have been removed and only the concrete grandstands remain.
Johnsen explained how the project’s “base work” will take place over the next year and involve digging down an extra 15 feet to where the arena’s main floor sits 53 feet below the surface. From there, he added, the arena’s sides will be widened to allow for enhanced seating capacity of 17,300 for hockey and 18,600 for the NBA as well as all of the new loading docks, staging areas and the parking garage. In addition, supports will be put in to keep the venue’s 44-million-pound roof suspended while construction takes place beneath it.
After that, Johnsen added, the project “will start coming back up” where a brand-new building is constructed under the current roof.
“In any type a project of this size, this complexity, it’s when you start coming back up that you have a bit more schedule certainty,” Johnsen said. “So, we’re gong to be about this time next year that we’ll really be able to say, ‘All right, this is the target.’ But like everything else with a project, it’s important we do it right, we do it safe. And the schedule we have now, I think it’s a good one.”
Cost estimates have also escalated because of higher local building material and labor prices and upgrades implemented by OVG and NHL Seattle. That includes more lavish suites, limited to a single level of the venue so that the remainder of seats can be positioned as steeply as possible for the best sightlines.
Leiweke told reporters those sightlines will especially suit an NBA configuration of the arena should a team become available.
He also said the luxury suites — designed by East Coast architect David Rockwell — were enhanced with the idea of, among other things, potentially generating further revenue for such an NBA squad. But hiring Rockwell’s firm, he added, would never have been possible had the NHL not delayed the expansion team’s launch by 12 months from its initial October 2020 target.
“I look back on that, and we would have missed that mark pretty well, so (NHL commissioner) Gary Bettman was right,” Leiweke said. “But the additional time has also brought some additional ability to better dimension the building, better design the building.”
OVG and NHL Seattle were having differences over timing and cost with the original general contractor, Skanska Hunt, and both sides parted ways just days after the December awarding of the NHL franchise.
A political source told The Seattle Times in December that OVG had been pushing Skanska Hunt to sign a maximum guaranteed price (MGP) agreement to contain costs from escalating beyond the group’s control. Days before the contractor switch to Mortenson, project executive Johnsen said in an interview the NHL team would have been forced to play “a month or so” on the road had it launched in October 2020 as originally expected.
That scenario indicated Johnsen, OVG and NHL Seattle at that point still envisioned there could be a late 2020 or early 2021 completion date. Johnsen even said the NHL team’s launch delay bought the project three extra months of cushion to be ready for the Storm’s return.
Now, that cushion is apparently gone. But Leiweke said there is more cost certainty because a recently finalized MGP contract with Mortenson caps construction costs from going any higher and built-in contingency funds should keep the project at $930 million if surprises arise.
The contract also contains penalties if the construction drags beyond early June. Leiweke called the project the most challenging that he, his brother or main financial backer David Bonderman have ever faced and “requires real courage and determination.”
But in the end, he added, it will be worth it.
“This building is going to be better than we thought,” Leiweke said. “I mean, we had high hopes. But as the building is now finishing and we’re looking at a price tag of over $900 million, it’s going to be a brand-new building with an historic roof, and we’re thrilled with the outcome.”