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OVG head says new Seattle arena is their ‘highest priority’

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Tim Leiweke views KeyArena renovation as his company’s “flagship” project

Oak View Group (Populous/ICON)

"I'm betting the house on it."

Oak View Group CEO and founder Tim Leiweke told KJR 950 AM radio Tuesday that his group views their bid to renovate Seattle's KeyArena as their highest priority. He referred to the project as their "flagship" and plans to build OVG around it.

In a 30-plus minute interview with KJR's Dave "Softy" Mahler, Leiweke and project head Lance Lopes covered everything from their motivation behind the project, to the viability of the Seattle Center location, to differences with the competing AEG-backed Seattle Partners bid, to confidence in getting both NBA and NHL teams.

Some highlights and takeaways from the conversation:

Motivation - Why this project

Leiweke mentioned his younger brother Tod, the former CEO of the Seattle Seahawks, kept impressing upon him the opportunity that Seattle had "no winter sports team" and "no great arena." He didn't get into the project until he researched it thoroughly, which included reaching out to Chris Hansen, the investor behind an effort to build an arena in Seattle's SoDo district to bring back the Seattle SuperSonics NBA franchise. When he decided to move forward, he contacted Hansen again to let him know directly.

"I applaud Chris for 7 years worth of hard work and vision. And I'm a fan of the fact that he's an entrepreneur and he has tried to do the right thing here. But I also think that, at the end of the day, if you want to get an NBA team or an NHL team or both back here, there's a way that we're going to have to do it. And the first thing that has to be done is we have to build an arena first."

Why they're confident we'll get teams

They insisted the arena must be done first because Seattle is "not in the eyes or in the vision of the NBA." Leiweke reiterated that nobody is going to guarantee Seattle teams. The NBA is not thinking about expansion or moving teams, Leiweke pressed, mentioning NBA deputy commissioner Mark Tatum's recent terse comments that they do not see a team in Seattle in the next 4-5 years.

"We need to understand no one's going to make any commitments, there are no expectations, there are no secret deals, there are no winks. This is very simple: If we build it, they will come."

They believe NHL will come to Seattle first, trading on the common sense that the uneven league alignment speaks to an eventual desire for the league to want to expand again. They also believe that securing an NHL team and proving the viability of the arena and the market is the "easiest, best" way to get an NBA team.

Partnered with Live Nation Entertainment, the venue manager, operator, and event booker with 80% marketshare of the concert industry, OVG is willing to live off of the music and event business until the teams arrive.

But what about Kansas City?

A common refrain from skeptics and detractors of the KeyArena projects is the example of Sprint Center in Kansas City, one of the projects championed by Leiweke during his time as president of Anschutz Entertainment Group (AEG). Sold as an effort to lure professional basketball and/or hockey to the Missouri city, the building opened in 2007 and has not, to date, secured an anchor tenant.

Leiweke stated he won't ever apologize for the project, pointing out that they've paid off their bonds and the building does well with concerts & events, as well as helped to revitalize downtown Kansas City. He mentions both former mayor Kay Barnes and current mayor Sly James have written letters of recommendation to the City of Seattle to support OVG's bid.

He also reminds naysayers that they came very close to bringing the Pittsburgh Penguins to Kansas City in 2007. Owners Mario Lemieux and Ron Burkle were close to signing with AEG to relocate the team before a last-minute effort by the Pennsylvania state government kept the team in the Steel City.

Following the NBA rules

"And the first thing that has to be done is we have to build an arena first. They will not come and then let you build an arena. They're not going to do that. They want to see certainty."

Making sure not to step on the long-term effort of the SoDo arena group, Leiweke says that with his years of experience no one in the Seattle arena game has as good of relationships with the NBA (and NHL) as he does.

Leiweke: "I think what we have to do is take a step back and understand ... if we want an NBA team, let's play by the rules of the NBA. And what you don't do with the NBA is you don't get ahead of the owners and the commissioner, and we have to wait our time."

Softy: "[...] You mention playing by the rules of the NBA. Has that not been happening in Seattle?"

Leiweke: "No."

Softy: "Why?"

Leiweke: "Look, I believe we're going to stay focused on the positive of our arena. I'm a big admirer of what Wally and Chris have done down there with their entrepreneurial spirit, but right now I do not believe there is a team coming. [...] We gotta go get the arena built first, and Chris can't do that; I get that. Guess what? We can, we will, and we are gonna do that. And when we do that, we're gonna get one, and I think two, teams here."

Why the KeyArena site is better

The location has worked for 55 years, Lopes stated. He believes it will continue to and Seattle Center is the future because the population growth in the city is obviously going north of downtown. Leiweke drew attention to the fact that Seattle Center is one of the Top 5 destinations for tourism in the country, with 12 million people visiting the campus each year.

With that many people traveling to the site already, they contend that people have already found ways to get there. They say that most of the money spent on infrastructure in the city is spent on that part of town.

For comparisons to KeyArena existing in an urban neighborhood with limited parking and seemingly restrictive street access, Leiweke shines a light on Staples Center and Madison Square Garden. 60% of Lakers and LA Kings ticketholders did not want to go to an arena downtown, yet the building is now one of the most used in the world. That despite only 3 parking garages with up to 3000 spaces on-site. MSG has no parking but a good subway system and continues to thrive.

"Today, people are living downtown, people are working downtown, and people are playing downtown."

When asked about transit, Leiweke admitted what we all know: Seattle has a traffic problem. Lopes pointed out that transit exists there today and that it will be improving with light rail coming in at the half-way point of the lifecycle of the arena and additional improvements. In a race from Capitol Hill to get to Seattle Center or to take light rail to the proposed SoDo site, Lopes said, it's not only faster to get to the Center but that he'd "have time to eat lunch before you get [to SoDo]."

Leiweke added that because KeyArena will be a historic landmark that will never go away, it makes more sense economically to build the new arena there. In addition, there are not two other sports facilities they have to navigate conflicts with.

Arena size

They reiterated the idea that the trend in newer NBA and NHL arenas is smaller not bigger. Their design and construction partners, Populous and Icon, have built most of the newest arenas in both leagues and have 16 total arenas for both leagues between them. As far as arenas go, OVG's group is "really good at this," Leiweke said.

"[We are] the most experienced group of people that have come into this city to talk about, not only building an arena, but getting you a team. There's no one you will probably hear as good as a rapport and a relationship as you will about us and the league."

Differences with the AEG/Seattle Partners proposal

Like the rest of us, Leiweke and Lopes have not seen Seattle Partners' full proposal for the renovation, just the executive summary. What they could comment on was the appearance that parking is included in the OVG plan but not in the competing plan. They also reassured that they will not be asking for any public bond capacity to pay for the construction, operation, or maintenance of the new arena, unlike an expected ask for $200 million-plus from AEG on their proposal.

Timeline

Much ado has been made about Seattle landing the first two rounds of the 2019 NCAA Men's Basketball Tournament to play at KeyArena and the impact to construction timelines if the renovation is selected. Leiweke and Lopes both felt that the prospect of playing the tourney rounds in a new building would help to renegotiate the contract to host another year. If they had to wait until after the tourney rounds, they aren't concerned with missing opportunities for teams because the leagues have indicated no teams are imminently available.

They plan to work through their entitlement (review & permitting), landmarks, and design processes all at the same time. Their goal is to be done and ready for construction by the end of 2018. Their current plan is to start construction in January 2019 with a prospective open in October 2020.

Team ownership

Leiweke was tight-lipped when it came to whether they had NBA and/or NHL ownership groups already lined up because he didn't want to "get ahead" of league owners and commissioners, as has become a sort of mantra of his in this process.

They are willing to share not just revenues under a lease agreement with team ownership(s) but to share in ownership of the arena. OVG is not able to participate in team ownership because of their connection to the MSG group, which owns the NBA's New York Knicks and the NHL's New York Rangers, but Leiweke said he was able to personally contribute to an ownership group. He couldn't write the check, but he knows the people who could and said he talks to those potential investors "every day."

They have offered for Chris Hansen and his investment group to join in as the basketball partner at their new arena, if they are committed to getting the team back to Seattle and feel they can get the job done.

Despite their insistence they can build on-spec without focusing on teams, Leiweke said he envisions the new arena will open with an anchor tenant. "And I'll leave it at that."

Conclusions

Yes, they briefly touched on the monorail and the kookier aspects of OVG's sales pitch like the oft-derided mention of drones as transportation. In these regards, Leiweke comes across as a tech geek who is genuinely interested in these new ideas of the future. It's less silly fantasy and more being open to where technology is going.

Overall, the conversation was good. Whether or not you bristle at the ego and brio, Leiweke is a connected man with a vision and drive, as well as the resources and experience to see the project through. The confidence might be off-putting to some, but no one should ignore that this is a heavyweight in the field with a goal to get this done in Seattle.

That said, there are still legitimate questions and concerns. If there are already that many people going to Seattle Center each year, what does adding 82 dates for sports plus additional concerts and events do to an already taxed infrastructure system? This in addition to the worker traffic for Amazon, Google, Facebook, and Expedia expected to explode over the next few years.

Hansen’s project in SoDo incorporates the team training facility on site. Where do they plan for these facilities?

The examples of close comparisons to MSG and Staples are a bit dubious. New York City has existed on a foot and transit culture for far longer than Seattle by sheer necessity. Staples is also conveniently located near I-10 and the 110 freeway in L.A. And for trying to sell the Center location on its regionality, the focus seems to be more on the population that will be living in and around downtown in the hopes that it will be the lifeblood of arena-goers.

It can't be denied that Leiweke and Oak View Group make a compelling case for their proposal. Now, we need to get into the minutiae of the proposal to see how it truly stacks up.

Listen to the full interview with Softy here: