AEG and OVG Bid For KeyArena Redo

Two industry heavyweights battle it out to win Seattle contract

  • by Brad Weissberg
  • Published: April 13, 2017

(Above) A rendering of the Oak View Group’s KeyArena plan shows the bowl will be 15 feet deeper than the current one to create added seating. (Photo Credit: Oak View Group); (Below) A rendering of Seattle Partner's KeyArena plan shows the exterior of their proposed rebuild. (Photo Credit: Seattle Partners)

Two of the biggest players in the venue world submitted the only viable bids to the City of Seattle to win the contract to rebuild KeyArena by yesterday’s (April 12) deadline. The Request For Proposals process started only last January.

The Oak View Group (OVG), led by Tim Leiweke, former CEO of Anschutz Entertainment Group (AEG) and Maple Leaf Sports & Entertainment, and mega-music manager Irving Azoff, has unwrapped a $564-million package. Seattle Partners, an alliance between Anschutz Entertainment Group (AEG) and Hudson Pacific Properties, has proposed a $520-million pitch for the renovation. (Full disclosure: Venues Today LLC is a subsidiary of OVG.)

The proposals will be under scrutiny for the next two months, with a choice to be presented to the mayor of Seattle by the end of June. A third, amended proposal to build an arena at a different location, brought by Sodo Group, is also before the city council for a decision before the end of the year.

Both KeyArena groups have plans to lure National Basketball Association (NBA) and National Hockey League (NHL) teams to Seattle but will commit to the project without any assurances from either sports league.

Seattle was previously the home of the NBA’s SuperSonics who played home games at KeyArena, originally known as Seattle Center Coliseum, for 33 of the franchise's 41 seasons in Seattle.

The OVG proposal calls for a 660,000 sq.-ft. venue. It will have 18,350 seats for basketball, 17,100 seats for hockey and a concert capacity of 17,100. The completion date would be October 2020. OVG’s arena expansion method is to place the lower arena bowl and floor 15 feet underground to create a 660,000-sq.-ft. blueprint.

OVG’s bid comes with $350 million in financing from Goldman Sachs, which guaranteed up to $400 million, with the additional $150 million coming from OVG and its equity partner Madison Square Garden (MSG). Concert giant Live Nation has also pledged financial support and Delaware North has signed on as the concessionaire.

Seattle Partners plan envisions a 600,000 sq.-ft. facility. Its projected NBA capacity would be 18,113. For hockey, it would seat 17,120 and a concert capacity would be 19,202. The company projects it would take 24-26 months to complete after approval. Seattle Partners development would expand the roof over the south side of the arena.

Seattle Partners financing relies on its partners AEG and Hudson Pacific Properties to come up with the cash, although they do plan to ask the city to participate in the form of public bonding to attain tax advantages.

OVG’S PLAN

“We believe that Seattle is a top-10 music market and the fact that they have not had an arena update since 1995 makes them badly in need of a new state-of-the-art music venue and one that can bring back the NBA and recruit the NHL,” said Lance Lopes, OVG, director of special projects. “We look at this as a tremendous opportunity to do all of those things at one time.”

“We first and foremost are excited about doing something in Seattle Center and maintaining the historic nature of the building,” he said. “It’s a special place in Seattle’s heart dating back to the World’s Fair in 1962. What’s special is that we are going to build a new arena under the existing roof.”

Features of the OVG bid are a revolutionary two-scoreboard system, one sitting  over each end of the arena, and Lopes envisions this as the new standard that will replace traditional center-hung scoreboards. An atrium at one end of the arena called the Millennial Area, where there will be a bar and people circulating, “will have a spectacular view of the Space Needle. It’s going to be a pretty cool feature,”added Lopes.

OVG brought in ICON and Populous as partners to design and build the arena. “It will take 20 months to complete the building and we hope to be open in October 2020,” he said.

Lopes believes OVG has assembled the most powerful team that’s ever been put together for a proposal. “With Live Nation on board, we will have a leg-up on content,” he said.

Lopes is also proud of the community support that OVG has built into their bid. “OVG has pledged over $10 million to tackle teen homelessness through a group called Youth Care. We’ve also offered internships and training and we’ll bring all the things we can to help them solve this critical issue.”

As far as delivering an NBA and NHL team, Lopes said, “We’re not getting ahead of the franchise commissioners. We understand we need to build an arena before we can get a team. We continue to communicate with them on a regular basis and when they are ready to expend, we’ll be ready and well-positioned.”

AEG AND HUDSON PACIFIC PROPERTIES PROPOSAL

Aaron Pickus is spokesman for Seattle Partners. “This is a unique opportunity,” he said. “It’s the best location in a great city for a world-class arena that is also a civic asset.”

“KeyArena has a great story and history. Our proposal will make it not only a great music venue but also up to the standards for a prospective NBA and NHL franchise in the future.”

“We’re looking at a $520-million budget and it should take about two years to complete,” he said. “We plan to take advantage of the historic rooflines of KeyArena and our proposal takes advantage of the ’12 man’ (the fan is the 12th man) concept of Seattle. There’s a great culture of intimate, loud, dynamic fan experiences here.”

“Seattle Partners members clearly bring the most experience to urban arena developments,” said Pickus. “AEG has been in Seattle a long time. Hudson Pracific Properties owns a lot of property here and AEG owns and runs the two Showboxes in Seattle. We have a deep bench of local partners to help, including Sellen Construction, Nelson/Nygaard who will consult on transportation, Gensler Architecture and Rossetti Associates.”

SODO STILL IN THE GAME

A third player in the KeyArena stakes is entrepreneur Chris Hansen who has proposed abandoning the KeyArena site altogether and wants to build a new venue in a different location. Hansen’s Sodo Group’s proposal was shot down by the City Council last May after public outcry over its call for over $200 million in public financing. Sodo Group has drafted a new proposal, without city financing, that must be voted on by the council by the end of the year.

The unique situation has not been lost on city officials. “We’re thrilled by the fact that there are three different groups willing to invest multimillions of dollars in the City of Seattle,” said Brian Surratt, director of the Seattle Economic Office of Development.

“KeyArena has been a great venue for us for music and other entertainment.” he said. “The Seattle Storm play there and we have college basketball and about a hundred other events. What this opportunity presents is an opportunity for the city to re-imagine KeyArena as a facility that meets NBA and NHL standards.”

“We’re excited that the two leading giants in this space agree,” he said. “Each are willing to invest over $500 million to go down that path and we can take KeyArena to the next level with these partners. It’s astonishing that these groups were able to get the architectural concepts, financing, operations and bring in their own partners in only four months.”

“Both proposals are really impressive and do an amazing job of preserving the look and feel and roof of the building,” he said. “Both will accommodate the NBA and NHL and will make this a premier entertainment facility.”

Sturratt did want to acknowledge that two graduate students from the University of Washington submitted a proposal as well. “We got a kick out of their proposal but, of course, it had no funding attached.”

THE PROCESS NOW

Surratt said the process from here starts with internal teams from the city looking at the proposals including transportation and community benefits. The next step is for an outside panel, comprised of local civil and business leaders, to examine the proposals.

The outside council will be led by former Sonics coach Lenny Wilkens. The other nine members are Jan Levy, chair of the Seattle Center Advisory Committee; Deborah Frausto, KeyArena subcommittee chair of the Seattle Uptown Alliance; Nicole Grant, executive secretary of the King County Labor Council; restaurateur Ethan Stowell, music executive Megan Jasper, business leader Ollie Garrett, former pro hockey player Todd Humphrey, architect Rico Quirindongo and Jill Nishi, chief of staff for the Bill and Melinda Gates Foundation.

An open house is scheduled for May 11 where anyone in the community can question representatives from OVG and Seattle Partners at KXP radio station, which is next door to KeyArena.

Following the open house, the community panel will give Surratt, the city’s budget director and the director of Seattle Center their feedback and advice. The trio will then ultimately deliver a recommendation to Seattle Mayor Ed Murray by the end of June.

The Mayor will then make the final call. If he picks either OVG or Seattle Partners, lease negotiations will start with the victor and the result of that process will be submitted to the city council for a vote.

“If they vote ‘yes’ we’ll start permitting, transportation planning and then speed along to groundbreaking,” he said.

Both groups addressed increasing the number of loading docks in their proposals and both tackle traffic and parking around KeyArena with a monorail upgrade and rideshare solutions. OVG’s parking plan is to install an 850-car parking garage, while the Seattle Partners say they will subsidize $5 million for improvements and expansion of the current city transportation links.

Both groups have deep ties to both the NBA and NHL that could help them secure NBA and NHL franchises.

Half of the NHL’s 30 teams are part of OVG’s Arena Alliance; Leiweke was part of the NHL executive committee for the Toronto Raptors. He also had four-percent equity in AEG, which operates Staples Center, Los Angeles, where the Lakers play. Florida Panthers Executive Chairman Peter Luukko is co-chairman of the OVG Arena Alliance. OVG’s proposed concessionaire Delaware North, owned by Jeremy Jacobs, is chairman of the NHL’s board of governors.

AEG has built or operates many NHL teams, including the Los Angeles Kings, and hockey arenas, including Staples Center, Los Angeles, and Hudson Pacific Properties is owned by Victor Coleman, who has made it known he wants to bring an NHL team to Seattle. AEG has also built and/or manages numerous NBA venues and is part-owner of the Los Angeles Lakers.

  • by Brad Weissberg
  • Published: April 13, 2017