New Downtown Arena

[BDP]

What differentiates this from, say, Scissortail Park, is that there's no analogous billion dollar private organization that gets to rent out the park 40 nights a year for free and then pocket everything those events generate, or whose value increases because of the construction of the park. And scale matters here as well. I would be very, very leery of dropping $1b on a downtown park (or really any individual civic project)

You don't think the park had any positive effect on surrounding properties, which contributed zero to the park? Maybe you're okay with it because you don't know their net worth?

[PoliSciGuy]

You don't think the park had any positive effect on surrounding properties, which contributed zero to the park? Maybe you're okay with it because you don't know their net worth?

Those surrounding properties being valued more means they pay more property tax, so they're not "contributing zero" since taxpayer money paid for the park. The Thunder aren't paying property tax on the new stadium.

[BoulderSooner]

What differentiates this from, say, Scissortail Park, is that there's no analogous billion dollar private organization that gets to rent out the park 40 nights a year for free and then pocket everything those events generate, or whose value increases because of the construction of the park. And scale matters here as well. I would be very, very leery of dropping $1b on a downtown park (or really any individual civic project)

the thunder pay rent for every night they have the arena .. and then split all the concession revenue on top of that .. 2 mil a year +/- in rent and then the concession revenue split on top of that ..

[BDP]

Those surrounding properties being valued more means they pay more property tax, so they're not "contributing zero" since taxpayer money paid for the park. The Thunder aren't paying property tax on the new stadium.

Well, of course, they don't own it.

But, it seems like you're saying indirect revenue generated by arena operations via sales tax and potential property tax gains in surrounding commercial properties should be considered as a net positive factor when discussing civics projects like a new arena?

Got it.

[Teo9969]

The other way to recover the financing costs is to move up the timeline for generating revenue. If the revenue stream is enough to cover financing costs, then new taxes would presumably not be needed. If the revenue stream is more than the financing costs, then you'd be delaying the ROI by using the cash method and would effectively be losing money while waiting to raise the cash before starting construction.

Of course, the potential returns can only be estimated, and it seems that exactly how much the current arena generates and how much of that the city actually gets is a bit of a blind spot. IMO, this is one reason knowing lease terms might clear some of it up. Because if financing is involved, then we'd want to make sure that the city is getting at least as much participation in arena operations as would service the debt. I imagine that's why we see a bigger chunk of arena revenue going to ownership groups who contribute in the hundreds of millions for construction of a venue, because they have to have revenue to service that debt.

Of course, all of this is obviously a gray area without knowing the details of how any of it is structured, but, in theory, debt could be serviced by operational revenue instead of taxes.

The increased revenues from profit-shared elements of the arena will not hit $100M/year, let alone the profits. Additionally, in the current lease setup, which by all accounts will be the template for the new arena lease, PBC gets a percentage of sales (not profits) which means that only the city faces exposure to losses and profit margins have to be high in order to benefit the city. Raised ticket prices (which are almost a certainty if we get a new arena) only benefits PBC and would likely hurt the auxiliary sales that the city can benefit from.

With a new arena, yes, the city will make more money, but it will be a fraction of the interest costs.

Those same profits would be just as accessible 2 years later.

[Rover]

It is obvious that there are some who are enthusiastically against the Thunder, wealthy people, and public facilities that might not provide profit for the city. There are those that will approve any shiny new object. Thankfully, most of the citizenry is less emotional or dogmatic as the enthusiasts who argue in this medium. My guess is most of the regular citizens of the city won’t get caught up in self serving arguments and will just vote their feelings about it. I think it will pass about 60%. Most have seen what has been done in this city since MAPS and other initiatives have progressed as handled by the city, and they approve.

[April in the Plaza]

It is obvious that there are some who are enthusiastically against the Thunder, wealthy people, and public facilities that might not provide profit for the city. There are those that will approve any shiny new object. Thankfully, most of the citizenry is less emotional or dogmatic as the enthusiasts who argue in this medium. My guess is most of the regular citizens of the city won’t get caught up in self serving arguments and will just vote their feelings about it. I think it will pass about 60%. Most have seen what has been done in this city since MAPS and other initiatives have progressed as handled by the city, and they approve.

what has been presented represents a pretty significant departure from MAPS. And my guess is that most of the regular citizens of the city recognize that.

they certainly aren't idiots. and i doubt they enjoy eating sh*t sandwiches.

[soonermike81]

Is NSync getting back together?!?!

[chssooner]

what has been presented represents a pretty significant departure from MAPS. And my guess is that most of the regular citizens of the city recognize that.

they certainly aren't idiots. and i doubt they enjoy eating sh*t sandwiches.

This will pass by a fairly large margin. They also realize this isn't a sh*t sandwich, like a vocal minority think it is. Most are more than ok with a high-quality, top-notch arena for $.01 per dollar.

[PhiAlpha]

what has been presented represents a pretty significant departure from MAPS. And my guess is that most of the regular citizens of the city recognize that.

they certainly aren't idiots. and i doubt they enjoy eating sh*t sandwiches.

How long have you lived in OKC?

[April in the Plaza]

How long have you lived in OKC?

Pretty much as long as I can remember.

Why won’t The Ownership Group say anything about this deal?

Can’t remember the last Oklahoman article that was free:

https://x.com/theoklahoman_/status/1...8XUerLzXZZnxMA

[Pete]

Pretty much as long as I can remember.

Why won’t The Ownership Group say anything about this deal?

Can’t remember the last Oklahoman article that was free:

https://x.com/theoklahoman_/status/1...8XUerLzXZZnxMA

From that article:

“If the city, in fact, puts in 95%, then they’re putting in much, much more than is typical,” Zimbalist said.

Fiserv Forum, which opened in 2018 and hosts the Milwaukee Bucks in Wisconsin, cost $524 million to build, but the Bucks ownership contributed $174 million, or 33%, toward the construction. The Little Caesars Arena in Michigan, home of the NBA's Detroit Pistons and the NHL's Detroit Red Wings since 2017, saw $539 million, or about 63%, of its $863 million construction cost privately financed. And in 2016, Sacramento's Golden 1 Center opened at a cost of $558 million, with the owners of the Sacramento Kings NBA team contributing an estimated $284 million, or about 51%, toward the arena construction.

Bradbury described the new OKC proposal as "one of the worst deals for a basketball arena that I've ever seen." He believes the current agreement with the Thunder is "a horrendous deal" with what he sees as no redeeming qualities.

[Jake]

Pretty much as long as I can remember.

Why won’t The Ownership Group say anything about this deal?

Can’t remember the last Oklahoman article that was free:

https://x.com/theoklahoman_/status/1...8XUerLzXZZnxMA

Good article.

[Rover]

what has been presented represents a pretty significant departure from MAPS. And my guess is that most of the regular citizens of the city recognize that.

they certainly aren't idiots. and i doubt they enjoy eating sh*t sandwiches.

Just curious of the departure? Approved canal, library, baseball park, civic center theater, arena, etc. None had private financing. None with a profitable proforma. All were quality of life projects. To you, apparently they were all sh.. projects. I doubt the public agrees.

[April in the Plaza]

Just curious of the departure? Approved canal, library, baseball park, civic center theater, arena, etc. None had private financing. None with a profitable proforma. All were quality of life projects. To you, apparently they were all sh.. projects. I doubt the public agrees.

I would be more amenable to voting “yes” if the project were structured like the projects you mentioned. But it is not.

Assuming there isn’t a recession during the collection period, 72 months of a 0.01 tax will yield roughly $1.5B.

600M represents a significant amount of cost overruns and interest payments, no? Show me another maps project that ended up costing 66% more than its budgeted value.

[chssooner]

I would be more amenable to voting “yes” if the project were structured like the projects you mentioned. But it is not.

Assuming there isn’t a recession during the collection period, 72 months of a 0.01 tax will yield roughly $1.5B.

600M represents a significant amount of cost overruns and interest payments, no? Show me another maps project that ended up costing 66% more than its budgeted value.

I mean, that additional money will be used for future upgrades or capital maintenance, stuff OKC would be on the hook for. So you better hope they collect more than budgeted.

[chssooner]

FAFO (you know what that stands for) - OKC is trying to find out just how easily a team can sell, and Louisville or KC or Seattle is going to crush any momentum OKC has.

Way to go, Daily Oklahoman. 1 chance it all we will get. Can't replace the Thunder, and we will be screwed going forward.

[Teo9969]

I mean, that additional money will be used for future upgrades or capital maintenance, stuff OKC would be on the hook for. So you better hope they collect more than budgeted.

No, it will mostly be paid to whatever bank is financing the project.

[BDP]

Fiserv Forum, which opened in 2018 and hosts the Milwaukee Bucks in Wisconsin, cost $524 million to build, but the Bucks ownership contributed $174 million, or 33%, toward the construction.

I'm always surprised when I see this one held up as a "good deal". There's extensive local reporting from the time in what I assume is their "alt weekly", Urban Milwaukee, much of which discusses the true costs to the city of the deal. Essentially, the city gave all direct revenue from the designated district to the team. So, while the team contributed more upfront, the city lost any way to service any part of its contribution through operations of the arena and much of the revenue from the district around it.

The net effect is that every bit of the actual cost to the city, which the Urban Milwaukee estimated at $800 Million after interest, subsidies, and tax breaks, must be paid for (taken from?) other projects and revenue sources, because it doesn't seem like it can come from arena operations. The owners get that. If all of that is true, that sounds like a horrible deal for the city, imo. It sounds like maybe the state got a good deal, with a pretty good return tied to an $80 million contribution, but the city gets no revenue tied to the arena outside of the $1MM / year lease payment from the the bucks.

Does that mean the deal with the Thunder is a good one or even a better one? I don't think I have the information to compare the two, but from what we do know they seem very different. It just seems ironic to me that if one is looking for deals that support the "city gets nothing, owners get everything" model, Milwaukee is it. Yet, it's held up as a "this is what good owners do" example, simply because of the front end contribution, even though they're getting much much bigger portion of the "everything" from the arena. Sure, if the Thunder get the Milwaukee deal for $50MM, it's a "horrendous deal" for the city. It seems like a horrendous for the 33% the Bucks contributed, too. IMO, for the bucks deal sounds more like they de facto own and operate the arena but only paid 1/3 of its construction.

Obviously, many people are dismissive of what the city actually gets from the asset it's building and just want to see the anchor tenant pay more upfront, regardless of their back end. I just feel that no civics project should sell off all its operations from any publicly built asset to any one private entity that didn't fully pay for that asset. IMO, that is what socializing risk and privatizing profit actually looks like, because potential profits are wholly granted to the private entity and the city has no revenue from the asset itself to service its contribution. It guarantees that it that comes from the public for the entirety of the agreement.

I honestly haven't decided yet, but I basically don't want the public to participate and it effectively end up wholly being the Thunder's arena like these other deals. I guess that's the simplest way to say it and I'll just leave it alone unless and until we actually find out more of how it's going to be structured. Unfortunately, too much of all of this is just conjecture and projecting other deals onto this one at this point, as if we know they'll be the same on the back end.

[Pete]

I'm always surprised when I see this one held up as a "good deal". There's extensive local reporting from the time in what I assume is their "alt weekly", Urban Milwaukee, much of which discusses the true costs to the city of the deal. Essentially, the city gave all direct revenue from the designated district to the team. So, while the team contributed more upfront, the city lost any way to service any part of its contribution through operations of the arena and much of the revenue from the district around it.

It's a huge assumption that the City MAKES money off the arena and development.

With the Paycom Center, the City of OKC owns it but also owns all the related expenses. Based on reports forwarded to me by a member of City Council, it appears the City loses money on Paycom and then has to provide millions out of the City's general fund. It's difficult to get straight answers on this as the numbers are buried deep in the City's budget and not separated out in a way that makes it easy for an outside party to report.

So, it is likely that the City loses money by owning the arena, making the Milwaukee deal look even better for taxpayers in comparison, not worse. And this doesn't even take into account the millions and millions the taxpayers continue to pour into Paycom which is funded through sales tax (subsequent MAPS): scoreboard, seating, and tons of other improvements.

I don't think it's a coincidence that those openly campaigning for the arena (like Mayor Holt) -- who also know the real numbers behind arena operating costs -- haven't mentioned whether there is a net income or loss from our current arrangement or the same for future projections. You have to know that if there was profit, they would be including it in their completely one-sided presentations. The fact they never mention this is very telling.


And remember, the Cox Center is viewed as a liability, thus the rationale for signing a deal with Prairie Surf where the City is losing a substantial amount of money.

It also looks like Paycom will be razed once the new arena is ready to go, so what is the value to the City of owning these structures? The land is valuable, but not the improvements. In fact, they are a liability as there is great trouble, disruption, and expense to have them demolished.

The City would probably be way better off NOT owning the arena and just ground-leasing the property to the owners, even if we end up kicking in several hundred million $.

[chssooner]

So the OKCTalk consensus seems to be voting no on this. And by 2025, the Thunder will be in Seattle or Louisville or KC. Sometimes, when owners make threats, you have to believe them. OKC needs the Thunder a whole heck of a lot more than they need OKC. Especially now that the future looks bright for their roster.

Can't call a bluff from a position of no leverage or weakness, which OKC is in. Seattle tried and failed, even from a position of strength.

Maybe I am one of the few who sees the intrinsic and intangible value the Thunder bring to the city and state. Oh well.

Because there is almost no way there will be a second deal offered with more private money. This is very likely a take it or we're leaving deal. Which sucks, but that is what you get when you are a middle of the road city without a ton of positive momentum, overshadowed by almost pig-headed state leadership, with no corporate relocations coming to bring new citizens in. This is almost all OKC has to brag on a national scale about. People in Des Moines will know the Thunder. May not know players, but they know they are an NBA team. They wouldn't know anything else about OKC, aside from someone bombed a building here 28 years ago (might not even know that).

Tangent and rant over. Just know that these owners have very likely already had numerous calls from potential buyers, and are waiting for the vote results to decide when, or if, they call back. They could sell them tomorrow, I would imagine, if they wanted.

[Pete]

So the OKCTalk consensus seems to be voting no on this.

I never take a position on public votes.


However, it's a very scary thing that many people in OKC see open discussion about spending well over $1 billion in tax money as akin to not wanting NBA basketball here.

[chssooner]

I never take a position on public votes.


However, it's a very scary thing that many people in OKC see discussion about spending well over $1 billion in tax money as akin to not wanting NBA basketball here.

I appreciate your reporting on the subject.

And yes, I wish the owners were contributing more. But the fact they aren't is my proof for them having already talked to buyers, and are simply a return phone call away from having the particulars on a sale done in 23 hours (after a quick 1 hour call).

So, unfortunately, with no leverage, it is that simple. OKC can't walk and have other wealthy people buy a team. These are many of the wealthy Oklahoma City people who are contemplating sale. Milwaukee at least had the Brewers to help add some muscle to their negotiations. Who does OKC have? The Dodgers. Not even a major college team, unfortunately.

It is always nice operating from a position of having the leverage. So it is a + b = c, in this case.

[Pete]

Well, unfortunately, with no leverage, it is that simple. OKC can't walk and have other wealthy people buy a team. These are many of the wealthy Oklahoma City people who are contemplating sale. Milwaukee at least had the Brewers to help add some muscle to their negotiations. Who does OKC have? The Dodgers. Not even a major college team, unfortunately.

It is always nice operating from a position of having the leverage. So it is a + b = c, in this case.

This is just an argument based purely on fear and misinformation.


It would be a huge deal for Milwaukee to lose the Bucks; I was born there and have tons of family in Wisconsin.

[chssooner]

This is just an argument based purely on fear.

It would be a huge deal for Milwaukee to lose the Bucks; I was born there and have tons of family in Wisconsin.

It would be a huge loss, but not as big as OKC losing the Thunder, on a pro rata basis, IMO. OKC has embraced the Thunder and they are very much engrained in the city. If they left, a lot of civic pride goes, as well, IMO.