New Downtown Arena

[BDP]

Note that this is the lease that expired a couple years ago.

How is the new lease structured?

[PoliSciGuy]

How is the new lease structured?

Great question. I'd love to know that too, especially before voting on $900m+ of taxpayer money.

[BDP]

^

You keep bringing up the other terms like that will somehow make up for the lack of owner investment.

Honestly, I think that;s the only way to evaluate whether the owner investment is "signficiant" or not.

If, say, the lease terms are the same as is (and that's just an *if*, because we have no idea what it will be), and $50MM is just a "hey, we'll chip in this much", then I'd say it's a better deal than if they invested $250MM and gained full operation rights of the arena via the lease like the Bucks' owners did.

[Pete]

^

Again, every bit of evidence about the deals between the City and Thunder suggests the complete opposite of your hope and expectation.

[BDP]

Great question. I'd love to know that too, especially before voting on $900m+ of taxpayer money.

The lease I posted was the Bucks' lease summary, not the OKC lease.

Basically, the Bucks' lease grants them full operating rights and they profit from virtually every event held there as the host. And they pay less rent for that than the Thunder do.

The current Thunder lease is not structured that way at all. The only non-Thunder operating revenue they participate in currently is from luxury areas and that's limited to about 25%.

[Teo9969]

https://law.marquette.edu/assets/spo...%208-14-18.pdf

So, basically, it sounds like the WCD has leased the arena outright to the team. They operate it and can host, and presumably profit from, events such as those listed in the lease summary above.

And, they can do so with the tax exemptions and subsidies created by statute for the district and listed in the article I linked to above.

I want to know that OKC's agreement with the Thunder won't be like this.

[BDP]

^

Again, every bit of evidence about the deals between the City and Thunder suggests the complete opposite of your hope and expectation.

It's neither my hope nor expectation. I have no idea what the next agreement with the Thunder would be.

I'm just saying that if the Thunder should be contributing $250MM to the construction of a new arena because of the deal in Milwaukee, are we also saying they should get full operating rights over the arena for $1MM, plus the subsidies and tax exemptions for the term of the lease?

I'm not really even advocating a position. Just digging into the actual details.

Is there evidence that the Thunder expects full operating rights of the arena? If there is, then of course $50MM upfront is a **** deal for the city.

[BDP]

I want to know that OKC's agreement with the Thunder won't be like this.

That would be helpful for sure.

And If they want full operating rights, then they should pay for it 100% themselves or pay a lot more than $1MM / year in rent like the Bucks do.

[Jake]

It’s almost like obfuscating details and leaving people in the dark on this decision is bad or something.

[chssooner]

The Thunder ownership group has no interest in running the arena. Never have asked for anything like this in the 16 or so years they have been here. You keep saying that they have been greedy for their entire duration, with regards to arena improvements, but want to disregard 16 years of history with regard to their lease. Got it.

[BDP]

It’s almost like obfuscating details and leaving people in the dark on this decision is bad or something.

lol.

Or a strategy.

It may not be as advantageous as they first expected, though.

[Jake]

Ironically, nothing is really more “big league city” than being a mid/small market being strong-armed into voting for a new stadium “or else” just like the Seattles, St. Louises, Clevelands, Cincinnatis, Oaklands, etc. of the world.

We’ve finally made it!

[BDP]

I think Golden 1 Center is probably the best comp next to Milwaukee. I can't find a lease summary for their deal, but the team is listed as the operator. They do pay more than the Bucks do in rent, though. Something like $361 million over the life of the lease.

So, it seems like there's been an increase in team ownership in investment of publicly owned arenas, but through the lease, they become the operators of the venue for all events.

[chssooner]

Ironically, nothing is really more “big league city” than being a mid/small market being strong-armed into voting for a new stadium “or else” just like the Seattles, St. Louises, Clevelands, Cincinnatis, Oaklands, etc. of the world.

We’ve finally made it!

So you think OKC should compare itself to Philly, NYC, LA, or DFW? Got it.

Those markets you listed are exactly who OKC's peers are.

[BDP]

Ironically, nothing is really more “big league city” than being a mid/small market being strong-armed into voting for a new stadium “or else” just like the Seattles, St. Louises, Clevelands, Cincinnatis, Oaklands, etc. of the world.

We’ve finally made it!

It's a step up from Wal-Mart and Bass Pro!

[Jake]

So you think OKC should compare itself to Philly, NYC, LA, or DFW? Got it.

Those markets you listed are exactly who OKC's peers are.

Other than maybe Dallas, those cities listed also had teams threaten relocation at some point or outright leave entirely.

[chssooner]

Other than maybe Dallas, those cities listed also had teams threaten relocation at some point or outright leave entirely.

And are in a different stratosphere than OKC. OKC has nothing else going for it, on a national scale.

[Jake]

And are in a different stratosphere than OKC. OKC has nothing else going for it, on a national scale.

Okay. Was just making an observation.

[OKC_Chipper]

Of course it isn't binary. Why would it be? Why would this deal be the first in the history of sports to be non-negotiable?

And as you mention, there are at least 3 years to negotiate.

So you think this could get voted down and then a year later they’re like hey actually we’ll chip in $250,000,000? There’s absolutely no chance.

[Pete]

So you think this could get voted down and then a year later they’re like hey actually we’ll chip in $250,000,000? There’s absolutely no chance.

We're not to a vote yet.

Hasn't even come before City Council.

[OKC_Chipper]

We're not to a vote yet.

Hasn't even come before City Council.

Ok let me rephrase it for you.

So you think if this was passed by the city council and then voted down by the people that a year later they’re like hey actually we’ll chip in $250,000,000? There’s absolutely no chance.

[April in the Plaza]

And are in a different stratosphere than OKC. OKC has nothing else going for it, on a national scale.

Not Necessarily. I do think you’re selling The City awfully short there, Sport.

[Mississippi Blues]

Ok let me rephrase it for you.

So you think if this was passed by the city council and then voted down by the people that a year later they’re like hey actually we’ll chip in $250,000,000? There’s absolutely no chance.

Why do you think there’s no chance?

[Mississippi Blues]

Not Necessarily. I do think you’re selling The City awfully short there, Sport.

I can only guess what “on a national scale” implies, but that statement was overwhelmingly accurate in 1993 when the first MAPS was voted on. If Oklahoma City still has nothing going for it besides the Thunder, then every MAPS item that wasn’t directed to the Ford/Chesapeake/Paycom Center has been a failure along with the billions spent on private and public investment citywide since then.

[Teo9969]

Maybe another way to frame this discussion:

Oklahoma City does not need another arena. Professional Basketball Club LLC needs a new arena.

Now, PBC provides a lot of value to Oklahoma City, and OKC has provided to PBC a relatively reliable fan base and a facility at a very reasonble cost.

PBC now wants OKC to build them a new facility that OKC doesn't need in order to increase PBC's profitability to provide essentially the same product to OKC. OKC should recognize the benefit they will receive from having a nicer facility but also has to reconcile the opportunity costs of spending these resources on something they already have.

I believe we should vote yes if:

1.We have reasonable assurance that the Thunder will stay in OKC after we build this arena

2. We believe that the sum value of (a) the amenities the investment brings outside of the Thunder + (b) the value of the improved experience at the games together is worthwhile,

3. We are okay with missing out on what we can do with the funds allocated in a different manner due to the value brought by 1&2.

In my mind, the only way to guarantee the Thunder stay is by a sizable financial commitment to the city. So either an up front sunk cost or a poison pill lease. Passing on the sunk cost hoping PBC is going to take a poison pill is foolish. The issue for me is not PBC being dishonest, it's the lack of leverage based on the order of operations. If they revealed at least enough about the lease that gave me confidence we were safe with the team, then I probably feel like value outweighs a negative result on #2&#3. I need to know the lease is unbreakable or only breakable with an amount that relieves the pressure of our $1B mistake in misallocating our resources in good faith, because PBC's good faith only exists as long as they hold the team.

#3 is obviously a loss for the city any way you slice it, BUT it is negated substantially by the Thunder's presence. Getting to keep what you have and like is valuable, but only to a certain point.

#2 is where I think Mayor Holt and PBC have the most opportunity to cast some vision to the voting public and why they haven't publicized more about it is really bewildering. Like, PBC should be able to use their connections to gather quality information on this. Spending $1M to get this out in a convincing manner is not a bad business decision.