Imagine a banker considering loaning money to a builder who proposes a renovation project for an entertainment building he does not own, and on land he does not own, while preserving by law the entirety of an architecturally significant 56-year-old roof, then forecasting financial viability in a location so plugged that the Donner Party would have turned back.
Presumably, the banker would have recommended that the prospective client pound sand at his earliest convenience.
The City Council Monday, by an 8-0 vote, said the same thing bankers apparently said about the renovation plan — audacious as it is outrageous — for KeyArena: Go for it, dudes.
I get why the electeds said yes: Oak View Group and partners are providing at least $700 million help fix a chronic town problem, the economic viability of the city’s living room, Seattle Center. Not only that, OVG will cover the project’s inevitable cost overruns. And pay $40 million to the neighborhoods for traffic mitigation. And throw in $10 million to a nonprofit helping kids.
And listen politely to all the residents who call up shouting at 3 a.m. as dump trucks full of dirt rumble around the Lower Queen Anne neighborhood.
But why would a bank say yes when it could invest in something sane, like burlap bubble gum?
So after several dozen congratulatory handshakes and hugs outside council chambers after the vote Monday vote, OVG CEO Tim Leiweke Monday was asked what he told the banks.
“We told them, and they learned through their own due diligence, is that this is the best market in North America without a winter pro sports franchise,” he said. “Secondly, the marketplace doesn’t have an arena. KeyArena today is not a viable venue for music and live entertainment, and everyone knows that. There really isn’t an alternative on the market.
“Building a world-class arena, having (global entertainment company) Live Nation as a partner that gives us a huge pipeline to (concert tours and shows), and (prospective hockey-team owner) David Bonderman immediately stepping in to answer the need for one, if not two, sports franchises to join the Storm — you won’t see another opportunity like that anywhere else in North America in our lifetimes.
“This is the last great shot to build a state-of-the-art arena with a new pro sports franchise and be the sole source in the marketplace for top entertainment.”
Now before you suggest that the city has a helluva lot better uses for $700 million than a playpen for jocks and chanteuses, keep in mind two things.
If homelessness had a way to make money, the problem would long ago have been solved, and
The OVG guys, their investors and bankers, are taking all the risks. This isn’t the city creating 20-year construction bonds for an earlier Key renovation, then giving the Sonics a 15-year lease, or King County building a concrete Kingdome to last a thousand years and topping it with a 10-cent roof.
Among the most foolish things a municipal government can do is get into the entertainment business. It’s like SpongeBob SquarePants taking up rodeo. Best to stay in one’s lane.
Leiweke has done many previous arena projects and has three underway elsewhere. He’s used to burning through other people’s money, and sweated out many crises. In fact, he admits to having one now, one that may jeopardize the arena’s promised completion by the start of the National Hockey League season in October 2020. It has nothing to do with the city’s constipated politics, neighborhood opposition or traffic mitigation.
Seattle’s construction market is so robust that it is hard to find workers and equipment to start the demolition that may begin as soon as next month.
“The hardest part of the project, and it continues, is the 65 cranes in the air here,” he said. “Subcontractors are few and far between.”
Leiweke’s hope is that the project’s high profile and celebrity will make it a prestige job worthy of shifting resources.
“When you see a project like this, this is the one (contractors and workers) want to work on,” he said. “Down the road, when you take your kid to an event in the arena, you can say dad or mom helped build this.
“We’re counting on that emotion and pride to give us a bit of an advantage compared to other projects.”
What is known for sure is that Monday’s approval of the transactional documents, including a 210-page lease, ends the memorandum of understanding and begins a public-private partnership with OVG and the city. The next step is a presentation Oct. 2 in New York before the executive committee of the National Hockey League, in which OVG will be joined by Mayor Jenny Durkan and other city officials.
If they answer all the questions of club owners, a committee recommendation to approve will advance to a Board of Governors meeting in December. For an expansion fee of $650 million, Seattle can be voted into existence as the NHL’s 32nd franchise — 101 years after the Seattle Metropolitans won Lord Stanley’s Cup.
As for the return of the NBA, it should be a little less than 101 years, but still a ways away. Monday, council member Sally Bagshaw offered up 2025 as the earliest possible expansion date, a time that coincides with the expiration of the current TV contracts. The thinking is that the NBA’s new TV deals will increase annual revenues sufficiently to provide a cushion to give up slices of the cash pie to two new locations.
One is likely to be Mexico City. Seattle wants to be the other, but whether the NBA seven years from now will like the town and the gym any better than in 2008 remains to be seen.
Meantime, the epic civic wrangle of who will pay what to whom and where, is over. As one observer of the saga put it, “Dog catches bus.”
Now the real work begins. If you have a shovel and some time, Leiweke would like to have a word with you.