KeyArena Renovations Reach $900 Million Mark..May Be Ready By June 2021

[WingsFan95]

I know a thing or two about local financing. Apparently the increases won't affect tax payers so it's a straight corporate scheme and that is what it is. Simply put, there's no way you can justify a 900 mill renovation to a 50 year old structure, you're moving money.

 

[DoyleG]

SoDo….just....won't....die

Report: SoDo arena group, NAACP rumored to be meeting in May

 

[GuelphStormer]

OVG is spending $930 million for 30 years worth of revenue streams. City owns the land so no appreciation benefit just a depreciating building asset which come 20 years from now will require another $100 million of upgrades like the ones built in the 90’s are or have undergone recently in Philly, Boston, StL, etc.

That better be one seriously busy building to return $30 million profit each year to make it worthwhile.

i think that's one of the main concerns - location. my understanding is that while nothing in the downtown area is perfect and would likely require additional government investment (roads, sewers, etc.) this particular site is especially problematic for facilitating access by patrons, especially by car.

and on that point, we keep saying this arena renovation project itself is funded privately, but there will be related infrastructure costs ... do we know if those costs are included in OVG's project or if they will require public money?

 

[Centrum Hockey]

SoDo….just....won't....die

Report: SoDo arena group, NAACP rumored to be meeting in May

Durant has nothing to do with the NBA's expansion timeline he just appreciates The legacy of the sonics.

 

[StreetHawk]

i think that's one of the main concerns - location. my understanding is that while nothing in the downtown area is perfect and would likely require additional government investment (roads, sewers, etc.) this particular site is especially problematic for facilitating access by patrons, especially by car.

and on that point, we keep saying this arena renovation project itself is funded privately, but there will be related infrastructure costs ... do we know if those costs are included in OVG's project or if they will require public money?

I would expect the city to pay for public transit improvements to get patrons in and out of the Key as efficiently as possible.

 

[BattleBorn]

i think that's one of the main concerns - location. my understanding is that while nothing in the downtown area is perfect and would likely require additional government investment (roads, sewers, etc.) this particular site is especially problematic for facilitating access by patrons, especially by car.

and on that point, we keep saying this arena renovation project itself is funded privately, but there will be related infrastructure costs ... do we know if those costs are included in OVG's project or if they will require public money?

I would expect the city to pay for public transit improvements to get patrons in and out of the Key as efficiently as possible.

The Seattle Center area is already in the plan to be connected to the mass transit network via the Ballard line, and that was happening regardless of the arena's status. I'm fairly certain the peripheral stuff in the immediate area such as sidewalk upgrades are part of the OVG arena renovation budget, though I've gleaned that from quick glances over the design reviews and renovation agreements.

Full disclosure: It's going to take a decade-plus for the connection to happen, so unless they're doing a shuttle bus operation with some dedicated lanes or hoping people will use the monorail and make a few transfers, it's likely to be a decent nightmare. However, plenty of people do the downtown walk for Sounders and Seahawks games, so it's not too crazy to think people will do the walking thing and take advantage of downtown/Belltown parking for evening games.

 

[viper0220]

OVG is spending $930 million for 30 years worth of revenue streams. City owns the land so no appreciation benefit just a depreciating building asset which come 20 years from now will require another $100 million of upgrades like the ones built in the 90’s are or have undergone recently in Philly, Boston, StL, etc.

That better be one seriously busy building to return $30 million profit each year to make it worthwhile.

What are the chances that the NHL team in Seattle moves to Quebec City after they find out, that it is not worth it.

 

[StreetHawk]

The Seattle Center area is already in the plan to be connected to the mass transit network via the Ballard line, and that was happening regardless of the arena's status. I'm fairly certain the peripheral stuff in the immediate area such as sidewalk upgrades are part of the OVG arena renovation budget, though I've gleaned that from quick glances over the design reviews and renovation agreements.

Full disclosure: It's going to take a decade-plus for the connection to happen, so unless they're doing a shuttle bus operation with some dedicated lanes or hoping people will use the monorail and make a few transfers, it's likely to be a decent nightmare. However, plenty of people do the downtown walk for Sounders and Seahawks games, so it's not too crazy to think people will do the walking thing and take advantage of downtown/Belltown parking for evening games.

Seahawks games are afternoons on sundays. Sounders can be weekday or weekend. Have like 38 games so 19 home so say half weekend. 10 weekday games spread over like 5-6 months.

Could be doing 2 weekday games a week at various times throughout the season.

 

[BattleBorn]

Seahawks games are afternoons on sundays. Sounders can be weekday or weekend. Have like 38 games so 19 home so say half weekend. 10 weekday games spread over like 5-6 months.

Could be doing 2 weekday games a week at various times throughout the season.

For sure, street/city parking and even parking in the Amazon buildings is free in Seattle on Sundays, so that might have a lot to do with it as well. However, there's a lot of parking available downtown that might make the park and walk plan work without the immediate Link connection. It's a bit of a hike from a lot of those garages, but not much longer than the walk from Westlake if you're coming in on the Link. The idea of parking a decent distance away and walking to a Seahawks/Sounders/Mariners game isn't unusual in Seattle. Hockey just adds to that and takes place in a different part downtown.

 

[CHRDANHUTCH]

What are the chances that the NHL team in Seattle moves to Quebec City after they find out, that it is not worth it.

NONE, since the ownership is approved, Viper, there wouldn't be a Seattle forum created

 

[StreetHawk]

NONE, since the ownership is approved, Viper, there wouldn't be a Seattle forum created

Correct. The nhl team doesn’t own the build from my understanding. There is an agreement for the team to play in the OVG operates Key.

Just a question of whether OVG can make money off this venture given the rising costs up to $900 mill from the original $650 mill estimated.

I know someone who works at Rogers arena in Vancouver during events. People who work events had to do 50% of them a year. Pretty sure he’s well under 100 events a year. 22/23 nhl games plus a couple dozen concerts or events like a Michelle Obama speech for example.

How busy with the new Key be?

 

[CHRDANHUTCH]

Correct. The nhl team doesn’t own the build from my understanding. There is an agreement for the team to play in the OVG operates Key.

Just a question of whether OVG can make money off this venture given the rising costs up to $900 mill from the original $650 mill estimated.

I know someone who works at Rogers arena in Vancouver during events. People who work events had to do 50% of them a year. Pretty sure he’s well under 100 events a year. 22/23 nhl games plus a couple dozen concerts or events like a Michelle Obama speech for example.

How busy with the new Key be?

I WOULD Suspect the new SC will be busy once it is fully ready to be occupied, whether KEY is the title sponsor is unlikely

 

[BattleBorn]

I WOULD Suspect the new SC will be busy once it is fully ready to be occupied, whether KEY is the title sponsor is unlikely

I think that's the major play here. Puget Sound is a large metro area, and for years in the past and the years to come until the renovated Seattle Center Arena opens, people that want to see major shows are driving down to Tacoma to see shows in the old Tacoma Dome. There should be plenty of opportunity for the Seattle Center Arena to host plenty of events and sell tons of tickets just based on proximity to so many more people.

 

[oknazevad]

What are the chances that the NHL team in Seattle moves to Quebec City after they find out, that it is not worth it.

Absolutely none. Sorry, but this is a dumb comment.

 

[StreetHawk]

I WOULD Suspect the new SC will be busy once it is fully ready to be occupied, whether KEY is the title sponsor is unlikely

Keep forgetting about sponsorship.

I’m sure they will get $10-$15 mill per year for naming rights. Makes a huge difference.

Rogers arena up the I5 doesn’t get 300 events a year. Not sure what the Moda Center down in Portland does. Any major act would likely hit all 3 arenas.

 

[MNNumbers]

Tommy has been telling us all along that the deal with the hockey team is like this:

OVG gets half of arena proceeds
Hockey team gets half of proceeds.

I have not seen any official documentation of this. But it makes sense. We all know that very few hockey teams are financially viable without any help from arena management. Seattle is likely to be no exception to that. So, the NHL owners would want a piece of it.

That means that the 900M for OVG, even if NOT financed, has to produce 30M a year for them. Half of the sponsorship stuff will go to the NHL team, so that leaves about 8M/yr for naming rights. Let's say that other sponsorships will amount to about 4M/yr.

That leaves 18M/yr profit from running the arena.

Let's say that there are 250 events besides hockey (that would be a very full calendar but bear with me here....)

18M/250 = 72K profit from every nightly event all year.

I don't know enough about the business to say for sure, but that seems like a very high number, doesn't it?

And, that excludes financing of the arena overhaul.

 

[BattleBorn]

Tommy has been telling us all along that the deal with the hockey team is like this:

OVG gets half of arena proceeds
Hockey team gets half of proceeds.

I have not seen any official documentation of this. But it makes sense. We all know that very few hockey teams are financially viable without any help from arena management. Seattle is likely to be no exception to that. So, the NHL owners would want a piece of it.

That means that the 900M for OVG, even if NOT financed, has to produce 30M a year for them. Half of the sponsorship stuff will go to the NHL team, so that leaves about 8M/yr for naming rights. Let's say that other sponsorships will amount to about 4M/yr.

That leaves 18M/yr profit from running the arena.

Let's say that there are 250 events besides hockey (that would be a very full calendar but bear with me here....)

18M/250 = 72K profit from every nightly event all year.

I don't know enough about the business to say for sure, but that seems like a very high number, doesn't it?

And, that excludes financing of the arena overhaul.

Well, 250 events is unrealistic for sure, but 72,000 profit for an arena event seems extremely low. If we cut the events in half and double the $72,000 to $144,000 I think it's not only doable, but likely and likely on the low end. If we assume an arena event brings in 10,000 people on average (again, likely low) they'd only have to grab $14.40 from each attendee in: Ticket Sales, facility fees, concession sales, etc. That's likely a low figure. Of course, you've got concession provider fees, staffing, etc. but it's not a crazy figure at all. That doesn't even include the charge they'd collect to rent the arena for the event itself. Depending on the event, they might even get a taste of every ticket sold as well.

U2 made some news due to ticket prices a few years ago and they (or someone) disclosed that it costed them something like $200,000 just to rent a stadium for the show. Obviously, an arena is smaller, but I think it's safe to assume they're getting $50,000 at least just for rent. Plus, they're likely getting a taste of all the staff costs as well.

I've got some experience in the events industry, it's low level stuff, but we use to charge $20/hr for a security guard that was paid $8.25 for their presence. Everyone got a taste of the money. We were just security. The electricians, the stagehands, the people that sweep afterward, all got similar treatment, and everyone got a taste. The promoter, the facility, the employer, and the employee.

I'm guessing Seattle Center Arena will make their money back based only on facility fees and their little share of alcohol sales. Everything else is just blue sky money.

 

[viper0220]

NONE, since the ownership is approved, Viper, there wouldn't be a Seattle forum created

I was just thinking about the costs, they have put a lot of capital into the NHL team and the arena. If the team does not do good in 5 years, what is going to be the mood of the ownership.

 

[viper0220]

Absolutely none. Sorry, but this is a dumb comment.

Sorry that you think it is a dumb comment. But I was thinking more down the road, 5-7 years down the road.

 

[BKIslandersFan]

I was just thinking about the costs, they have put a lot of capital into the NHL team and the arena. If the team does not do good in 5 years, what is going to be the mood of the ownership.

How will moving them anywhere solve anything?

 

[MNNumbers]

Well, 250 events is unrealistic for sure, but 72,000 profit for an arena event seems extremely low. If we cut the events in half and double the $72,000 to $144,000 I think it's not only doable, but likely and likely on the low end. If we assume an arena event brings in 10,000 people on average (again, likely low) they'd only have to grab $14.40 from each attendee in: Ticket Sales, facility fees, concession sales, etc. That's likely a low figure. Of course, you've got concession provider fees, staffing, etc. but it's not a crazy figure at all. That doesn't even include the charge they'd collect to rent the arena for the event itself. Depending on the event, they might even get a taste of every ticket sold as well.

U2 made some news due to ticket prices a few years ago and they (or someone) disclosed that it costed them something like $200,000 just to rent a stadium for the show. Obviously, an arena is smaller, but I think it's safe to assume they're getting $50,000 at least just for rent. Plus, they're likely getting a taste of all the staff costs as well.

I've got some experience in the events industry, it's low level stuff, but we use to charge $20/hr for a security guard that was paid $8.25 for their presence. Everyone got a taste of the money. We were just security. The electricians, the stagehands, the people that sweep afterward, all got similar treatment, and everyone got a taste. The promoter, the facility, the employer, and the employee.

I'm guessing Seattle Center Arena will make their money back based only on facility fees and their little share of alcohol sales. Everything else is just blue sky money.

I'm a little confused by the math here, BB.

Let's say I rent the place for a concert or monster trucks or something....
I'm not giving the Arena all the ticket fees. No way. That's where I make my money. All that stuff ends up being negotiated, doesn't it?

And, it's a bit picky, I'm sure, but I am not at all sure that 10,000 in the place for 125 nights a year is a sure thing. You're maybe going to have some things like High School sports tournaments, and the Seattle Storm, and maybe some other stuff that doesn't sell as many tickets as well.

All in all, OVG must have penciled the whole thing out, because that's really the first thing you do, including the interest on their financing.

But 25% cost overruns at this point must not be something they were anticipating...

 

[BattleBorn]

I'm a little confused by the math here, BB.

Let's say I rent the place for a concert or monster trucks or something....
I'm not giving the Arena all the ticket fees. No way. That's where I make my money. All that stuff ends up being negotiated, doesn't it?

And, it's a bit picky, I'm sure, but I am not at all sure that 10,000 in the place for 125 nights a year is a sure thing. You're maybe going to have some things like High School sports tournaments, and the Seattle Storm, and maybe some other stuff that doesn't sell as many tickets as well.

All in all, OVG must have penciled the whole thing out, because that's really the first thing you do, including the interest on their financing.

But 25% cost overruns at this point must not be something they were anticipating...

Of course it's not all the ticket fees. However, I'm sure that they'll get a piece of whatever seller end fee there is if it involves them. For example, ticket office sales. Whatever it is, there's 10,000 tickets.

High school sports tickets are likely a loser since you don't sell alcohol, but I'm sure they get some sort of fee for facility use. Plus, they're still selling hot dogs, nachos, soda, etc. and likely getting a piece.

 

[MNNumbers]

Of course it's not all the ticket fees. However, I'm sure that they'll get a piece of whatever seller end fee there is if it involves them. For example, ticket office sales. Whatever it is, there's 10,000 tickets.

High school sports tickets are likely a loser since you don't sell alcohol, but I'm sure they get some sort of fee for facility use. Plus, they're still selling hot dogs, nachos, soda, etc. and likely getting a piece.

In any case, the most amazing part of this discussion is the comparison to the GRA in Glendale. In that arena, the managers LOSE money every year, never mind a 30M profit. That disparity is so striking that it beggars belief.

 

[BattleBorn]

In any case, the most amazing part of this discussion is the comparison to the GRA in Glendale. In that arena, the managers LOSE money every year, never mind a 30M profit. That disparity is so striking that it beggars belief.

I think that if GRA was the only venue in town and was significantly older, that it would be a good comparison to the Tacoma Dome. It's successful because there's really no other option other than Veteran's Memorial/Key Arena.

If someone wanted to throw an arena in downtown Phoenix while GRA was the only option, they'd likely make a lot more than GRA and I think the existing TSRA does exactly that.

Now transfer that to Seattle/Puget Sound where Scottsdale/the fancy areas are 5 miles away from downtown across a lake (Bellevue/Eastside) and the city is actually dense, wealthy, and significantly more likely to attend cultural events/concerts.

I said it years ago, and I'll say it now. The fact that it took as long as it did to get Seattle an arena is insanity. I don't care whether it was in Seattle Center, Bellevue, or SoDo. It was going to make money because big shows here now either pass the city entirely or play in the freaking Tacoma Dome, which is at least an hour away at event time and also old, stinky, and in Tacoma. I think people get the impression that Tacoma is some sort of equal to Seattle since the name is on the airport, but it's really just a city with a port on the periphery of the metro area. It's not really a place people from the Puget Sound should go for these types of events.

 

[KCC]

Way too much for renovations. Tear it down and just build a brand new arena.