The soap opera continues.
Earlier today AEG, one of two bidders to renovate the KeyArena, notified the mayors office of their withdrawal from the RFP process.
This shocking Sunday afternoon development occurred amid persistent rumors that the city was poised to announce the selection of their competitor, the Oak View Group as early as Monday. While there was some debate regarding the timing, it was clear that an answer was expected next week, and AEG appeared to be scrambling to make up ground in response to a leaked story indicating the cities preference for the Oak View proposal.
If the decision to formally withdraw from the process came as something of a surprise, then the accompanying letter, written by AEG President bob Newman, was absolutely stunning. The letter, which could only be described as "scathing," included allegations that the city had failed to conduct a collaborative and iterative process, blaming city misconduct for the withdrawal, and directly challenging the credibility of the Oak View proposal.
This stands in stark contrast to an e-mail written by Newman to city consultant Carl Hirsh just a few weeks ago. In this letter, Dated May 18th and obtained by SonicsRising, Newman praises the city process, stating:
"We applaud the City for executing a thoughtful public process. Engaging with teams from the City and the public has strengthened our proposal and crystalized our approach....Our passion for this project has only grown through this process….Thank you for your commitment to bring this vision to reality."
The e-mail also seemed to address what many considered the Achilles heel of the AEG proposal, a surprising request to utilize public bonding capacity to facilitate construction of the arena. In defense of their bonding request, which is something of a standard practice for AEG facilities, the mail prefaces a defense of their financing mechanism by stating:
"It is also important to share a few thoughts about our financing model. We did not take our request to leverage City bonding lightly."
AEG's decision to rely on public bonding capacity came as a surprise to city officials and was viewed by many within city hall as a deal breaker which would surely be rejected by council. AEG's perceived refusal to move away from that model has largely driven the perception that OVG would be awarded the bid.
As the process entered June and expectations for an early decision began to mount, many people close to the process felt that AEG would revise their bid, perhaps removing the request for public bonding and potentially striking a clause that would have prevented competing arenas, such as Hansen's Sodo facility, from being built. Sources close to the situation indicate that the city had hoped that AEG would respond to commentary about the public bonding in similar fashion to OVG's parking lot change last week. As news of a press release today began to spread, the hope and expectation was that it could potentially be a change of terms that would get them back in the game.
No such luck. Rather than modifying their terms AEG, left and burnt bridges behind them, creating a potentially awkward situation as they remain under contract to manage the existing facility for the foreseeable future.
This scorched earth approach is the latest salvo in an escalating, and seemingly quite personal feud between the two companies and their principal owners. In a recent article Billboard Magazine attempted to describe the roots of the conflict:
"Industry insiders note that the seeds of the feud may have been sewn around 2008 when (Oak View Group co-founder Irvine) Azoff was the CEO of Ticketmaster. He and (James) Dolan approached Anschutz about merging the ticketing company with MSG and AEG to take on Live Nation. The negotiations collapsed resulting in bad blood among the parties (and in 2009 Azoff emerged as the CEO of a merged Live Nation and Ticketmaster). Leiweke’s relationship with Anschutz also deteriorated in the wake of his abrupt departure from AEG in 2013."
More information about Leiweke's relationship with AEG is available in this fascinating article which, while several years old, casts some light on the relationships and personalities involved in this high stakes battle of industry superpowers.
In recent months this conflict has only escalated. Azoff, responding to accusations that he had initiated a "booking war" with AEG chose not to deny the allegations. Instead, he defended the process, in which entertainers are blocked from performing coveted shows in OVG's flagship Madison Square Garden if they chose to perform in AEG operated venues by issuing a fascinatingly candid statement which concluded:
While I realize Phil [Anschutz, owner of AEG] may not be happy with Los Angeles being a competitive market, that's the American way.
-- Irving Azoff
P.S. We are extremely flattered by Staples' feeble attempt to replicate The Forum’s game room at AEG's Microsoft Theater... Thanks for loving what we do.
Make no mistake. The city of Seattle has been aware of this competition and has done everything in its power to leverage the feud into better terms than either company would have been likely to offer on their own. It is perhaps for this reason that they were so startled by AEG’s tone deaf decision to include public bonding in the first place, as well as their refusal to craft a solution more palatable to city government. Perhaps nobody expected them to simply “bow out” in this fashion without putting forward a proposal to amend those terms.
As a fan it is most important to me that SOMEONE win this fight. AEG, by choosing to depart the process in this seemingly spiteful manner has cast a blow to the process, and now fans must turn their attention to the two remaining contestants and hope that the city did not overplay its hand by asking for too much, offering too little, and leaving us yet again without a viable opportunity to bring the NBA and NHL to town.
It is time for Chris Hansen and the Oak View Group to show us what they’ve got. I’m ready for the showdown.
Comments
We should...
Definitely put stock into the guy who refuses to give a realistic transportation option and suggest things like drones… instead of the FIVE different groups who have looked at the Key Arena and said that it’s not a great place and you need significant public funds to pencil out…
It’s crazy what ppl are willing to ignore to "get a win"
By blykmyk44 on 06.04.17 7:32pm
It's crazy that people care more about being right
than getting a win.
By Paul Rogers on 06.04.17 7:36pm
That's how we ended up
In this situation in the first place. And, its weird that people don’t expect their elected officials to "get it right"
By blykmyk44 on 06.04.17 7:40pm
I love being right. . . . . but, getting the Sonics back is certainly the most important "win" for me.
Discounting the concerns of those that think a Key re-do won’t bring back the Sonics aren’t saying that have to be right to win. I think that comment is a bit nasty/unfair/uncalled for. There are genuine concerns considering what the history of the Key/Sonics and politicians have been.
Yes, it’s a new day. A new time. A new design. OVG say they can make it work. The more risk adverse folks are more inclined to prefer Sodo due to the well-documented history of the Key/Sonics and current transportation issues. The revenue concerns are understandable and reasonable as well. There are risks to both proposals. Doesn’t mean they care more about being "right" than getting the Sonics back, tho.
By kinsesu on 06.04.17 9:30pm
I was expressing an opinion
that is opposite to the comment I was replying to. I was taking the logic of that comment and turning it on itself. That happens all the time around here. I’m not apologizing for it. It wasn’t nasty. Perhaps no one called for it, but it was an opinion I wanted to express.
By Paul Rogers on 06.04.17 10:11pm
It read uncalled for and nasty to me. Does that mean I'm right ? Nope. Just as you were. . . I'm expressing my opinion.
Nothing more. . .. nothing less.
By kinsesu on 06.04.17 10:21pm
There we are.
By Paul Rogers on 06.04.17 10:28pm
Who are those 5 groups?
By Brian Robinson on 06.04.17 7:36pm
We've seen:
Howard Schultz
Clay Bennet
Balmer1
Hansen/Balmer2
AEG
All look at that place and say…it’s really small and hard to get too so we need a public subsidy to offset those issues. Hansen didn’t even try.
By blykmyk44 on 06.04.17 7:39pm
That isn't true
Howard Schultz sold the team after the city failed to fund his proposal to renovate the key
Clay Bennett did refuse to consider it.
Ballmer was so supportive of a KeyArena proposal that he publicly offered it, along with his partner Wally Walker. You may remember that I worked on that compaign.
Hansen did rule out KeyArena. That was the same year he said any arena was impossible without using $220M in bonding capacity and some public support. It should also be noted that 2 of his 4 announced partners had supported KeyArena options in the prior 3 years. I totally respect Chris’ opinion, but it was an opinion and circumstances have changed.
I met with the CEO of AEG just last week. I can assure you that he did not tell me it was too small and needed public subsidy.
By Brian Robinson on 06.04.17 7:45pm
So.
Schultz asked for public funds for the Key
Bennett didn’t even pretend to make the Key an option
Baller asked for public funds for the Key
Hansen looked at all options and chose not Key because it couldn’t support without subsidy
AEG was told "no public money" and still had to include it for a reasonable proposal.
By blykmyk44 on 06.04.17 7:48pm
Bennett...
… didn’t even pretend to make anywhere in all of Washington State an option.
By MartinHughes on 06.06.17 12:02am
So..l
The CEO said that it didn’t need a public subsidy and yet they asked for one…that seems strange..
By blykmyk44 on 06.04.17 7:49pm
Then why didn't AEG make changes to their proposal?
By gstommylee on 06.04.17 7:58pm
Well...
According to the horses mouth:
Notwithstanding our confidence in the merits of our proposal, over the past two months, Seattle Partners has actively sought feedback from community leaders, City staff and members of the City’s Community Advisory Council, and, in response, we have explored improvements to our proposal. However, consistent with a general lack of active engagement through this evaluation process, the City declined to seek improved terms, refusing requests from us and others to call for a "best and final" offer from both bidders. We have seen little indication of the collaborative and iterative process we were told to expect and is typical of such requests for proposals.
So…it looks like they were open to changing and the City would not engage.
By blykmyk44 on 06.05.17 12:04pm
The whole letter is basically blaming the city as to why they pulled out
They are the one that made a proposal to change the roof-line and put 250m request of public bonds. They lost and is being sour about it. They knew the RFP required 100% private, they also knew about the historic landmark issue and yet they came out with that proposal anyways.
By gstommylee on 06.05.17 12:29pm
OVG did the same thing.
Their offer didn’t match the RFP either.
By BigSmooth13 on 06.05.17 1:23pm
AEG made the financial ask plain and clear. OVG put it in the fine print.
By Trolltossin on 06.05.17 2:55pm
Well...
A few things.
I’ll give you Hansen. He and Bartoszek make two.
By Paul Rogers on 06.04.17 7:50pm
All of them
Needed public money to make the numbers pencil out. It’s pretty clear…
By blykmyk44 on 06.04.17 7:52pm
OVG doesn't seem to think so
And Lieweke used to run AEG. Not his first rodeo.
By Paul Rogers on 06.04.17 7:57pm
Just because their public money comes after the construction
does not mean they aren’t asking for subsidies.
By itsanospreybich on 06.04.17 7:59pm
True
But then again so does Sodo.
By Paul Rogers on 06.04.17 8:02pm
SoDo asks for one tax exemption
that other sports franchises have also been granted. Isn’t OVG requesting it along woth the rest of their subsidies?
By itsanospreybich on 06.04.17 8:20pm
I honestly don't remember
probably asking for fewer subsidies.
By Paul Rogers on 06.04.17 8:27pm