Seattle has announced that the Oak View Group is its preferred partner to renovate Key Arena. The goal is to bring the NHL to Seattle and have a NBA ready arena for when a team becomes available. This announcement comes as Chris Hansen is continuing to work on gathering political support for his Sodo arena proposal.
In the 1990’s former Sonics’ owner Barry Ackerly’s attempt at a privately financed arena in Sodo failed and he began to threaten that he would sell the team if he didn’t get an arena. The city agreed to finance the renovation of Key Arena in return for a 15-year lease to keep team in the Seattle Center. This decision to renovate the Key Arena proved to be shortsighted as the small footprint and lack of revenue producing restaurants/concession stands led the team to relocating about 13 years after the renovated arena opened.
In 2017, we have two competing proposals…one in Sodo and one at the Key Arena site. Both proposals are privately financed, both promise to provide a brand new arena with all of the bells and whistles that are expected by NBA and NHL franchises.
The financial plan for renovating the Key Arena is betting heavily on private lenders. Oak View Group will seek $200 million in financing from Goldman Sachs; $50 million in a federal tax credit (if Key Arena is recognized as a historical landmark); $40 million in tax revenue from the Seattle Center to help fund the renovation. Oak View Group will be receiving $1 billion in financial backing from the Madison Square Garden Group, which recently completed the successful renovation of the LA Forum.
Meanwhile the Sodo proposal will be receiving its loan from JP Morgan Chase; Hansen’s group plans to use seat licensing and other revenue streams from the arena to pay back the loan. The biggest news is that Hansen’s ArenaCo will no longer be pursing public bonds to help pay for the arena, and the admissions tax would no longer be used to pay back said bonds. Without the public bonds, the memorandum of understanding is no longer in effect and there is no pressure on Hansen to get an NBA team before he starts to build the arena; he can now pursue a NHL first option…and that means that he needs a potential partner to step up as a hockey investor.
While the Sodo group doesnt’ have an NHL partner yet, OVG does. Jerry Bruckheimer, yes that Jerry Bruckheimer, and David Bonderman are the primary investors that are interested in bringing the NHL to Seattle in partnership with OVG at the Key Arena site.
Between the two sites, the site for Hansen’s proposal provides easier access to I-90 and I-5; there is also two light rail stations within walking distance to the site. Key Arena only has easier access to Highway 99 and is located in a neighborhood with limited parking (although OVG’s plan does include a $25 million parking garage) and no immediate access to light rail — to get to the nearest light rail station you’d have to take the Monorail to West Lake Center then access light rail through the bus tunnel.