Leiweke: Mayor’s resignation “has no effect” on KeyArena renovation

Oak View Group CEO Tim Leiweke, the man behind the proposed renovation of KeyArena, spoke recently to Amplify magazine about former Seattle mayor Ed Murray’s resignation and what it means for the project.

Leiweke said that the change in leadership will have no effect on the project as it is already in the hands of the City Council. In fact, OVG hasn’t met with the Mayor in some time.

“We actually haven’t seen or talked to the Mayor since we won the bid as staff and experts took this over. We finished and signed the MOU on Monday (Sept 11) and sent it to the Council for final approval.

The MOU is now in their hands and we expect about two months of additional public hearings and meetings with the Council to provide info and support for the MOU. We expect to be fully approved and have a signed agreement by the new Mayor by early December.

The change in leadership is unfortunate for Seattle but we have a great relationship with the President of the Council and the Council members. We met with most of them one on one these last few days and indicated our continued enthusiasm for Seattle. Although unfortunate for those directly impacted by this issue, it has no effect on us or the process for the new Arena at Seattle Center.”

Leiweke acknowledges that many people, including both the NBA and NHL, have been skeptical of getting an arena done in Seattle. A failure to do so in 2007 cost us the SuperSonics and, despite the best efforts of Chris Hansen, one has still not been built.

“And the council is even more committed to prove that this Seattle process can work and they can develop these win-win partnerships with the business community. And our MOU has been widely praised by all for its commitment to protecting the taxpayers from any risk, by guaranteeing the City makes as much in the new partnership as they currently make today with KeyArena and that this profit margin will grow. And that we assume all the risk and pay all the taxes associated with the development of the new Arena.”

The MOU presented an aggressive timeline that would see the arena opening in time for the 2020 winter sports season. Leiweke confirmed that timeline and also said that his group features partners looking to acquire an NHL team, as well as an NBA team (emphasis mine).

“We expect to be on schedule to open in October of 2020. And we remain committed and have the partners that are ready to acquire an NHL and or an NBA team should one be available.”

Of course, “should one be available” is a huge caveat, but one that was at least somewhat addressed in an article by ESPN’s Brian Windhorst and Zach Lowe. That article quotes NBA financial records that show almost half of the teams in the league lost money last season. Nine of those teams lost money even after revenue sharing. There seems to be a growing frustration with larger market owners that if you can’t support your team where it is, maybe something needs to change.

"National revenues drive up the cap, but local revenues are needed to keep up with player salaries," one owner told ESPN. "If a team can't generate enough local revenues, they lose money."

This is the big argument against expansion. When you have half the league using their own revenues to keep the other half afloat, why should you add more teams? One reason might be to add more revenue giving teams, but then teams would have to split profits from things like the national TV deal or merchandise sales even more than they already do.

ESPN says expansion was brought up at a recent owners meeting by “at least one owner,” citing the massive expansion fee that they would receive and would not have to split with the players. However, some larger market owners “bristled” at the idea, instead suggesting that teams who can’t stay afloat in their current locale should consider relocating somewhere else, like... Seattle (emphasis mine).

The concept of changing the placement of teams could become more of a focal point as Seattle nears its decision on a plan to renovate KeyArena or clear the way for a new building to be constructed in the city's SoDo district. A decision could come by the end of the year. If a viable building emerges in Seattle, it could kick-start a deeper expansion/relocation debate within ownership.

The conversation is gaining steam and Seattle is right at the heart of it. We still have the same problem we’ve always had, the lack of a viable arena, but that appears to be headed towards a conclusion as well. To quote Tim Leiweke one last time:

“We move on!”