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

[StreetHawk]

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.

Just using Rogers arena in Vancouver, they have 6 events in May, 5 in June, 3 in July, 1 in August, 4 in sept, and 3 in Oct.

22 events in 5 months. Now new ones can be scheduled, but 250 events for Seattle seems high.

 

[AdmiralsFan24]

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

It's still dumb.

 

[LadyStanley]

NHL deputy commissioner Bill Daly: No rush on awarding 2021 drafts to Seattle

Seattle seems to be interested in hosting 2021 draft. But they've got a year to make a decision....

“It’s something we’ve talked about with the club, obviously, on a number of occasions, as to whether they can be in a position to host the draft in 2021 — including the expansion draft,’’ Daly said. “Obviously, we’re intrigued by that possibility. I think we have some time to make that decision.’’

Of prime importance, he added, is gauging the city’s available hotel space and making sure there are no major event conflicts. Daly said the league can afford to wait as long as until June 2020 before making a final call.

And that arena is available (to host entry draft).

 

[viper0220]

It's still dumb.

No it is not.

 

[AdmiralsFan24]

No it is not.

Sure is.

 

[viper0220]

Sure is.

We will down the road.

 

[BKIslandersFan]

We will down the road.

So according to you, to stop bleeding money from arena, the solution is to remove guaranteed dates from the arena. Think about what you are saying.

 

[gstommylee]

~250 days of events is possible 82 games regular season (NHL and NBA once we get the NBA back) + pre-season games let say 5 each that puts it at 92. Playoffs is an unknown factor for both. (lets put it as 3 games at minimal if both make playoffs) (98) Concerts lets say 80 (live nation has 85% of the content) would put it at 178 games, there is WNBA games 1 pre-season game then 17 regular season games + playoffs 5 games. Storm are 2018 WNBA champs (WNBA has odd playoff format ) 33 games. (211), Seattle U at let say 6 games (217) then other events. So yes 250 days of events is within a possibility.

 

[GuelphStormer]

~250 days of events is possible 82 games regular season (NHL and NBA once we get the NBA back) + pre-season games let say 5 each that puts it at 92. Playoffs is an unknown factor for both. (lets put it as 3 games at minimal if both make playoffs) (98) Concerts lets say 80 (live nation has 85% of the content) would put it at 178 games, there is WNBA games 1 pre-season game then 17 regular season games + playoffs 5 games. Storm are 2018 WNBA champs (WNBA has odd playoff format ) 33 games. (211), Seattle U at let say 6 games (217) then other events. So yes 250 days of events is within a possibility.

what did OVG say in their proposal to the city?

 

[viper0220]

So according to you, to stop bleeding money from arena, the solution is to remove guaranteed dates from the arena. Think about what you are saying.

I am not saying, what I am saying is, if the team is losing money, than what happens.

 

[MNNumbers]

~250 days of events is possible 82 games regular season (NHL and NBA once we get the NBA back) + pre-season games let say 5 each that puts it at 92. Playoffs is an unknown factor for both. (lets put it as 3 games at minimal if both make playoffs) (98) Concerts lets say 80 (live nation has 85% of the content) would put it at 178 games, there is WNBA games 1 pre-season game then 17 regular season games + playoffs 5 games. Storm are 2018 WNBA champs (WNBA has odd playoff format ) 33 games. (211), Seattle U at let say 6 games (217) then other events. So yes 250 days of events is within a possibility.

what did OVG say in their proposal to the city?

However, Tommy....

The NHL dates won't do anything for OVG (except the cross ownership). NHL is going to get everything inside the arena on game nights.
NBA dates...Same thing.
I suppose that the WNBA would have the same.

So, OVG is only going to make money on non-pro sports. Is that correct?

 

[GuelphStormer]

I am not saying, what I am saying is, if the team is losing money, than what happens.

In and of itself, I do not think that the franchise will lose money. Folks in town seem quite enthusiastic about fan support and it's a safe bet that the franchise will do well. People will buy tickets and merch and watch games on TV. Seattle seems to be a good market that will be able to support a team.

What is becoming troubling however, are the increasing costs of this arena renovation and how that will affect Oak View Group's ability to do well. It's still not clear what the exact relationship is between OVG and the franchise so its difficult to comment on how/whether losses on the "OVG as arena manager" side of the ledger (due to these cost overruns on the arena) will impact the financial viability of team itself.

"Parent" companies like MLSE or MSG do quite well because they are so diversified, and they don't drain the coffers of the Leafs or Rangers, for example. The more the renovation costs on Key go up, though, the less likely OVG can remain a financially stable parent to the team. That's the more problematic aspect here. And FWIW, I doubt that OVG could survive only on event/venue revenues, certainly not while being saddled with close to a billion dollars in renovation debt.

 

[StreetHawk]

In and of itself, I do not think that the franchise will lose money. Folks in town seem quite enthusiastic about fan support and it's a safe bet that the franchise will do well. People will buy tickets and merch and watch games on TV. Seattle seems to be a good market that will be able to support a team.

What is becoming troubling however, are the increasing costs of this arena renovation and how that will affect Oak View Group's ability to do well. It's still not clear what the exact relationship is between OVG and the franchise so its difficult to comment on how/whether losses on the "OVG as arena manager" side of the ledger (due to these cost overruns on the arena) will impact the financial viability of team itself.

"Parent" companies like MLSE or MSG do quite well because they are so diversified, and they don't drain the coffers of the Leafs or Rangers, for example. The more the renovation costs on Key go up, though, the less likely OVG can remain a financially stable parent to the team. That's the more problematic aspect here. And FWIW, I doubt that OVG could survive only on event/venue revenues, certainly not while being saddled with close to a billion dollars in renovation debt.

MLSE now gets $20 million I assume CAD for naming rights per year which is $15 million USD. But that’s with both nhl and nba teams. Seattle only has nhl but I would imagine the naming rights deal will include an increase if they get an nba team. So say $10 million for naming rights with just nhl. Still leaves OVG having to profit $20 million per year to cover their costs over 30 years.

Rogers arena in Vancouver gets maybe 200 events per year at best and I would imagine the same number for the Moda Center in Portland. Don’t see how the new Key will get that much more unless UW events go there but they have their own facilities on campus.

Nhl team will need a certain amount of arena revenue to make it financially.

So interesting to see how these increased Reno costs impact OVG.

 

[gstommylee]

However, Tommy....

The NHL dates won't do anything for OVG (except the cross ownership). NHL is going to get everything inside the arena on game nights.
NBA dates...Same thing.
I suppose that the WNBA would have the same.

So, OVG is only going to make money on non-pro sports. Is that correct?

No idea where you are getting that idea but OVG will operate the arena and gets a share of all revenue.

 

[StreetHawk]

No idea where you are getting that idea but OVG will operate the arena and gets a share of all revenue.

They will for sure. But majority of nhl teams who play in non owned arenas get sweetheart deals where they get the majority of the revenue from the game and pay a small amount of rent. These dates are not as profitable as say a concert.

 

[gstommylee]

They will for sure. But majority of nhl teams who play in non owned arenas get sweetheart deals where they get the majority of the revenue from the game and pay a small amount of rent. These dates are not as profitable as say a concert.

They'll be paying rent to the city not to OVG. All would be paying rent to the city including the NBA team if it returns.

 

[GuelphStormer]

They'll be paying rent to the city not to OVG. All would be paying rent to the city including the NBA team if it returns.

hmmm, this is news to me ... i thought OVG had some tenancy revenues ... gosh, this is even worse for OVG than I thought. what exactly are their revenue streams?

MLSE now gets $20 million I assume CAD for naming rights per year which is $15 million USD. ... [snip]

Scotiabank is actually paying C$800M / 20 years = C$40M a year

 

[MNNumbers]

No idea where you are getting that idea but OVG will operate the arena and gets a share of all revenue.

Could you please supply the details of the revenue agreement between OVG and the NHL team?

 

[BKIslandersFan]

hmmm, this is news to me ... i thought OVG had some tenancy revenues ... gosh, this is even worse for OVG than I thought. what exactly are their revenue streams?

$20 beers.

 

[gstommylee]

hmmm, this is news to me ... i thought OVG had some tenancy revenues ... gosh, this is even worse for OVG than I thought. what exactly are their revenue streams?


Scotiabank is actually paying C$800M / 20 years = C$40M a year

The city owns the arena and OVG is going to operate the arena this they pay rent as per the lease to the city. How is this worse? It was always going to be the case from the beginning.

 

[gstommylee]

Could you please supply the details of the revenue agreement between OVG and the NHL team?

All i know its going to be 1/3 of all revenue that's what was stated original.

 

[doublejman]

$20 beers.

Even concert promoters gets a percentage of food/beverage and merchandise sales when a concert goes on.

I'm surprised we haven't heard on how many years it will take for OVG to turn a profit.

 

[gstommylee]

Even concert promoters gets a percentage of food/beverage and merchandise sales when a concert goes on.

I'm surprised we haven't heard on how many years OVG expects to turn a profit.

It depends on how much of the split of the arena cost is between OVG and the NHL group.

 

[GuelphStormer]

The city owns the arena and OVG is going to operate the arena this they pay rent as per the lease to the city. How is this worse? It was always going to be the case from the beginning.

it's worse in that I think a lot of people here had the impression that OVG would be deriving some revenue from tenancy. can you reference something that outlines this? thanks.

All i know its going to be 1/3 of all revenue that's what was stated original.

where was that stated?

It depends on how much of the split of the arena cost is between OVG and the NHL group.

this is what we are asking you about. was none of this made public during the renovation negotiation phase?