Seattle city leaders have approved a memorandum of understanding (MOU) with Los Angeles-based Oak View Group (OVG) to renovate KeyArena with the hope of attracting both National Hockey League (NHL) and National Basketball Association (NBA) teams. City councilmembers and other stakeholders agree that the agreement is critical for revitalizing one of the city’s main entertainment venues to attract visitors and additional spending.
“It’s a gem and it is aging,” said Deborah Daoust, Director of Communications for Seattle Center. “It needs upgrades and it really needs what OVG will give to turn it into a state-of-the-art sports and concert arena.”
Seattle Center, the city department that manages and oversees KeyArena, also serves as the landlord for nearby attractions including the Seattle Repertory Theatre, Seattle’s Children Theatre and the Museum of Pop Culture. Under the new agreement, OVG would become the tenant of KeyArena and invest $600 million in private funds to redevelop the facility.
The business has agreed to contribute a number of local benefits including:
- $250,000 to develop a neighborhood mobility action plan with a transportation consultant;
- $3.5 million for expert consultants and legal counsel during the MOU negotiation process;
- $40 million on transportation improvements over the 39-year lease;
- An estimated $2.6 million per year on guaranteed baseline rent and tax payments; and,
- Prevailing wages for current qualified KeyArena employees.
This fall, OVG announced it would have the building ready by October 2020 if it obtains all environmental approvals by October 2018.
OVG CEO Tim Leiweke told USA Today the MOU “sends a very strong message now to the NBA and to the NHL that everyone worried about…’Will you ever possibly get this deal done within the politics of Seattle and the Seattle process as everyone likes to call it?'”
“Guess what? Game, set and match. We clearly send a message to everyone that this will get done, this will get built and we are ready now to go get one and hopefully soon, two teams,” he added.
On December 4, the Seattle City Council voted 7-1 to authorize Mayor Jenny Durkan to execute a MOU with OVG.
“We are experiencing a unique moment in our City’s history and with it comes an opportunity to preserve one of our (city’s) most iconic public assets for the benefit of the public good,” said Councilmember Teresa Mosqueda in an online statement. “This project recreates a world-class, multi-purpose sports and entertainment facility (including women’s sports!) which will become a cherished part of Seattle’s legacy.”
Council President Bruce Harrell agreed. “The City negotiated one of the strongest arena agreements you will find in the country, protecting our taxpayers and the City,” he said.
He continued: “I am confident this will be a partnership of success with OVG in building a state-of-the-art arena, generating economic vitality, and the ultimate goal of getting an NHL team and bringing back the Sonics.”
On December 6, Mayor Durkan signed the MOU between the city and OVG. After the signing, Durkan tweeted, “Today’s investment is the best path forward to bring back our Sonics, recruit a NHL team, make Seattle a world class music city and drive investment in the future of Seattle Center.”
Daoust told Lens the revamp will nearly double the size of the arena with increased capacity and more interior space for hockey and basketball games. “Hockey has never been successful in the building because of sight line issues right now, but those will be taken care of,” she said.
One day after the signing of the MOU, NHL Commissioner Gary Bettman allowed Seattle to file an application for an NHL expansion team.
Seattle would become the league’s 32nd NHL team, with a price tag of $650 million.
“It will be a boon for all the restaurants here because there will be many more events,” said Daoust. “That’s more people dining out, more people shopping in the retail spaces around here and more parking on the surface lots.”
Daoust added OVG will more than compensate Seattle Center its average revenue while using the space, as laid out in the MOI. “From the city’s general fund standpoint, that’s always a benefit.”
The lease term is 39 years with the addition of two eight-year renewal options.
Also, OVG is required to invest a minimum of $168 million of capital improvements into the building during the life of the lease. Daoust said that this way, the arena will be in state-of-the-art condition when the city reclaims the arena.
“From start to finish, it’s truly a privately financed redevelopment of the arena,” said Daoust. “In the mind of the city, it’s really an agreement that will set a new standard for arena redevelopment in this country.”