With just two weeks remaining until the city makes its decision on the arena, the heat is getting turned up on those vying to do the job.
Inside sports business
We’re into the final two weeks before the city likely picks one of two groups proposing to renovate KeyArena, and the heat is getting turned up.
Last week, the Anschutz Entertainment Group (AEG) — part of the Seattle Partners (SP) effort with Hudson Pacific Properties — rolled president and CEO Dan Beckerman into town for interviews with select reporters and columnists, myself included. While Beckerman mainly discussed SP merits, he also put out a snazzy pamphlet “comparison” between his side and rival renovation bidder Oak View Group (OVG).
It touts SP size and financial clout, saying the partnership owns and operates more than 120 venues worldwide compared with zero for OVG. It takes aim at “unclear” sources of funding within OVG and suggests there are contingencies behind it “not shared with the public.”
As with any offensive mounted by one of these groups — be it SP or Sodo District arena proponent Chris Hansen releasing his own “comparison” tables 2½ weeks ago — the targets are designed to create public doubt. The points may be valid to a degree but usually are open to selective interpretation.
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For now, OVG has held off releasing any similar comparative analysis or detailed retorts. OVG’s local project director, Lance Lopes, did say Hansen’s claim of OVG getting more than $200 million in public subsidies was ridiculous, and Beckerman also disputes that SP seeks a similar amount of subsidies.
At least one part of the SP comparison between itself and OVG is inaccurate — the insinuation that OVG is hiding financials. In fact, OVG initially tried to include all funding details for public consumption when its Request For Proposals (RFP) response was released last month, but the City of Seattle redacted it because the documents contained private info.
“It was the city’s decision during this part of the process to withhold the financial piece of OVG’s RFP during this deliberative process,” Joe Mirabella, spokesman for the KeyArena RFP process, said Friday. “It’s normal for certain parts of the project to be withheld during deliberations.”
OVG told me last month it already had been approved for a $150 million loan from Goldman Sachs with up to $250 million more possible if it acquires NBA and NHL teams. The group also said it was paying the project’s $414 million balance via its own equity and co-investors Madison Square Garden Company and Delaware North.
SP contends in its comparison that while shareholder AEG owns the Los Angeles Kings and part-owns the Los Angeles Lakers, the OVG group can’t claim any team ownership. While technically true — and technically, the SP umbrella group doesn’t own teams, either — MSG as a partner under the OVG umbrella owns the New York Knicks and New York Rangers, and Delaware North patriarch Jeremy Jacobs owns the Boston Bruins.
The SP comparison makes good points about OVG seeking revenue from two city parking garages at Seattle Center, claiming this could cost taxpayers up to $140 million over a 35-year lease. That number assumes OVG gets a two-thirds revenue share.
SP also mentions the 850-stall parking garage pitched by OVG would cost $47 million to build — with OVG seeking an undisclosed Port of Seattle subsidy for it — and would create an additional traffic choke point.
These items, exaggerated or not, are important talking points. Whether it’s SP, OVG or Hansen that ultimately builds the city’s major arena, financial capacity and ability to share revenue with incoming NBA and NHL teams will be paramount.
This is especially true given news of funding troubles for a $300 million MLS stadium project in Miami spearheaded by former soccer star David Beckham and with involvement by OVG chief Tim Leiweke. Sources have stated Beckham is responsible for funding that project, though news reports describe Leiweke as his “top negotiator” in securing that funding.
But this round of SP comparative salvos also comes amid persistent murmurs by sources about that company’s own issues with the City of Seattle over its KeyArena financial and design package. The group’s request for $250 million in public-bond funding is being carefully scrutinized.
The bulk of a suggested $144 million surplus for the city under SP’s plan would not arrive until the final five years of a 35-year lease. Also, there’s concern that some projected revenues are overly optimistic and debt guarantees too low.
On design elements, the SP group proposes “stretching” the roof over KeyArena’s south end and filling in the additional space with more seating. While innovative, the design has raised questions about whether altering the roof would pass muster with historical preservationists.
In “stretching” the roof, the SP group’s center-court scoreboard also could not hang down from KeyArena’s mid-ceiling peak. The notion of an off-center scoreboard has raised questions about interior aesthetics the SP group has been asked by the city to address.
SP initially had Rossetti Architects design a renovation AEG president Bob Newman said in January would be “probably a fraction of the cost of what a new project would cost” and within range of the $285 million projection from the city’s 2015 AECOM report.
But soon after, Leiweke began hinting to reporters and others that OVG envisioned a half-billion-dollar proposal. Around that time, SP brought in the Gensler architectural firm and within weeks revised its plan into the bigger $521 million “stretched” roof design.
Whether the city thinks that revised pitch was too hastily planned remains to be seen. We’ll know when a winner gets picked.
Until then, grab some popcorn and stay tuned. We’re headed to the final round of a heavyweight fight, when haymakers are thrown seeking a knockout blow before the decision gets left to the judges.