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KeyArena renovation will surge forward despite unexpected delay

By Derek Helling

SEATTLE, WA - APRIL 22: Seattle Mayor Ed Murray speaks at a rally during the March for Science begins with a rally featuring speakers and events at Cal Anderson Park on April 22, 2017 in Seattle, Washington. Participants were advocating for science that upholds the common good and for political leaders and policy makers to enact evidence based policies in the public interest. (Photo by Karen Ducey/Getty Images)
SEATTLE, WA - APRIL 22: Seattle Mayor Ed Murray speaks at a rally during the March for Science begins with a rally featuring speakers and events at Cal Anderson Park on April 22, 2017 in Seattle, Washington. Participants were advocating for science that upholds the common good and for political leaders and policy makers to enact evidence based policies in the public interest. (Photo by Karen Ducey/Getty Images) /
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The announcement of a tentative agreement between the city of Seattle and the OakView Group on renovation of the KeyArena has been delayed by the resignation of now former Seattle Mayor Ed Murray, but that delay is likely to be ineffectual and short-lived.

As representatives of the Seattle city council and the OakView Group were preparing to present the details of their KeyArena renovation partnership to the city’s media, those members of the press had their attention drawn elsewhere by a breaking news item. The resignation of Ed Murray as Seattle’s mayor might have rained on the stadium’s parade, but in the long run it won’t amount to much more than a momentary sprinkle.

On Tuesday, Murray announced his immediate resignation. In concert with Murray’s announcement, a press conference that had been scheduled for Tuesday to announce the existence of a memorandum of understanding between the city and the OakView Group regarding the KeyArena was cancelled. There remains no announcement as of when that press conference will be rescheduled, allowing the council time to attend to the matter of securing an interim replacement for Murray.

While it’s true that Murray was firmly in support of the OakView Group’s bid to renovate the KeyArena, the fact that he no longer holds a position of influence is a moot point. The city council, not the mayor’s office, is the governmental entity that negotiations between the OakView Group and the city will be ran through. That body has also been decidedly in favor of the OakView Group, to the point of ethically-questionable means.

Another reason to believe that the timeline for the final stages of this deal won’t be significantly interrupted is the lack of competing options for the KeyArena. While the tumult of the city government could be seen as a glimmer of hope for Chris Hansen’s recently-proposed plan, that’s a fool’s hope. It’s been clear that the city has no interest in Hansen’s Sodo arena project for months now, as evidenced by the fact that the city council hasn’t scheduled another vote on the sale of a block of public land that Hansen’s arena project says it needs to move forward.

What the delay of the press conference does mean, however, is that there is still much more unknown about the OakView Group’s plan than there is known about it.

TSN shed some light on the proposal Tuesday, reporting that the OakView Group hopes to have the facility ready for use by October of 2020. That would be just in time for the 2020-21 NBA and NHL seasons. The next most important matter is in the city’s role in the facility.

According to TSN, the city will take much more of a back seat in the operations of the facility. The OakView Group will take on the role of the primary lessee, paying a figure that is expected to be $2.6 million to begin with annually over a 39-year term. TSN also reports that there will be two eight-year extension options that can be activated, but it’s unknown whether action by the city, the OakView Group, or a mutual agreement would be necessary to exercise those options.

The OakView Group would then sublet the facility to entertainment partners like an NBA and/or NHL franchise. That not only means that the OakView Group will be the primary body negotiating with the leagues for expansion and/or relocation, but that’s where the pay-off for the OakView Group comes from. Revenues from those sublets and all the other revenues connected to bringing an NBA and/or NHL franchise to Seattle will more than pay for the company’s expenses.

Among those expenses will be routine maintenance and necessary upgrades to the facility over the term of the lease up to $168 million. It’s unclear right now if the city would be liable should costs exceed that figure. The final known commodity is that the OakView Group would get to begin acting as landlord almost immediately. The city’s obligations to the WNBA’s Seattle Storm, who play their home games in the KeyArena now, would be transferred to the OakView Group.

There are other unknown quantities. How the OakView Group and the city would divide revenue from signage, sponsorships and the limited parking at the facility is as of yet unclear. Additionally, whether or not the OakView Group will have sole leverage to select partners for amenities like food service, security and utilities is unknown as well.

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All these questions could be answered soon with the rescheduling of the cancelled press conference. What Seattle sports fans should take away is that Murray’s resignation is essentially irrelevant in regards to the KeyArena renovation, and that much more information will be available soon.

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