New Downtown Arena

[soonerguru]

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.

I think that's a little melodramatic. Other than PoliSci and April in the Plaza, I haven't read anyone here who plans to vote no. Perhaps I missed a couple.

If you polled this forum, My guess is 75% plus will support the arena, probably more than even the general public.

[Teo9969]

I'm struggling to reconcile the reporting Pete received with this info:

https://law.marquette.edu/assets/spo...ty-thunder.pdf

At least based on this it would seem, unless concessions are operating at a loss, that minimum we should receive is $68,000 per game (~$3M/year) and then naming rights (either $400k or $1.6M/year, their summary wasn't clear on that statement).

Is there an easy way to get ahold of the operating agreement with SMG? That should also be taken into account in this vote since they operate as a middle man between PBC and OKC

[Pete]

I'm struggling to reconcile the reporting Pete received with this info:

https://law.marquette.edu/assets/spo...ty-thunder.pdf

At least based on this it would seem, unless concessions are operating at a loss, that minimum we should receive is $68,000 per game (~$3M/year) and then naming rights (either $400k or $1.6M/year, their summary wasn't clear on that statement).

Is there an easy way to get ahold of the operating agreement with SMG? That should also be taken into account in this vote since they operate as a middle man between PBC and OKC

ASM took over from SMG a couple of years ago, which makes it even more confusing.

And I'm not sure if those lease payments are made to the City or if they go to ASM since they are the operators of the arena.


In any event, the City budgeted $10.8 million last year to cover the anticipated shortfall from owning Paycom arena.

[Plutonic Panda]

Does any of this take into account the amount of revenue generated as a whole due to Thunder events happening at home games? How much money people not only outside the city who come in and stay at hotels etc. but people around the state as well. There’s no way there’s a net loss from hosting the Thunder.

[chssooner]

ASM took over from SMG a couple of years ago, which makes it even more confusing.

And I'm not sure if those lease payments are made to the City or if they go to ASM since they are the operators of the arena.


In any event, the City budgeted $10.8 million last year to cover the anticipated shortfall from owning Paycom arena.

ASM and SMG are the same company....

.

[BDP]

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

I would have never assumed nor did I think I said that having more stake in arena operations guarantees a net operating profit for the city. I don't even have enough information to make such a statement.

All I said is that having no stake in arena operations guarantees ZERO direct REVENUE from arena operations to service whatever contribution or ongoing expense a city has with an arena and therefore a city must cover those items completely from other public resources.

I seriously wasn't trying trying to win some argument here, just wanted to participate in the discussion and highlight the nuances of these deals beyond up front contributions, as everything you've posted about the city's position with the Paycom Center has also done. It's super good information and a lot of it is what needs to be known and understood by anyone who wants to truly understand all that really goes into these deals and have good faith discussions about them. As with everything you do with this site and your reporting, it's very much appreciated and has provided a great deal of insight that I think a lot of people have been seeking.

At the end of the day, those seeking to only support public projects that result in a direct accounting net operating profit from that project aren't going to find very many. And I certainly wasn't trying to say that I assumed or expected this one to if the city kept the operating rights. Sorry if I was unclear about that.

[Pete]

ASM and SMG are the same company....

.

ASM Global was formed in October 2019 from the merger of AEG Facilities and SMG.

[Pete]

All I said is that having no stake in arena operations guarantees ZERO direct REVENUE from arena operations to service whatever contribution or ongoing expense a city has with an arena and therefore a city must cover those items completely from other public resources.

I'm still not sure of your point, but you have repeatedly said you can't judge the aspects of the deal we do know ($1 billion in public funds vs. $50 million in ownership investment) until you know the value of the lease deal the City has with the Thunder.

I've just shown the City budgeted $10.8 million in operating shortfall last year, so you know there is no positive offset of those capital costs -- quite the opposite.

So, time to lay that caveat aside and focus on the capital costs and in that light, the OKC deal looks monumentally bad. Like off the charts, complete outlier, not based remotely on anything that has ever happened before bad.

[Teo9969]

Does any of this take into account the amount of revenue generated as a whole due to Thunder events happening at home games? How much money people not only outside the city who come in and stay at hotels etc. but people around the state as well. There’s no way there’s a net loss from hosting the Thunder.

That is very hard to quantify.

But I will say that the lion's share of financial benefit from the Thunder goes to the state of Oklahoma and not the city of OKC. Remember that >50% of sales tax receipts are state revenue, not municipal revenue. There is no reason that the Thunder and OKC should not have received investment at that level. That's arguably the easiest second-hand financial impact to quantify given that you can easily multiply a reasonable percentage of the salary cap times 5% to get a portion of the tax revenues. That is at least $5M/year to the state coffers.

The Thunder are almost sure a net positive on OKC, but paying $1.5B probably flips that equation on its head drastically.

[Pete]

^

This should have been all handled at the state level, as they did in Wisconsin.

There is no reason the citizens of OKC (and yes, I know people outside city limits pay some sales tax in OKC) have to foot all of this enormous bill.

Also, it would have brought all these issues out into the open where people could have seen the details all the way along. This was sprung on City Council only a few weeks before their vote and now the public doesn't have much time either, with tons of unanswered questions.

Our process is absolutely laughable and designed specifically just to ram things through with as little actual info as possible.

[Teo9969]

In my mind the state should be chipping in $150M at a minimum.

[Plutonic Panda]

That is very hard to quantify.

But I will say that the lion's share of financial benefit from the Thunder goes to the state of Oklahoma and not the city of OKC. Remember that >50% of sales tax receipts are state revenue, not municipal revenue. There is no reason that the Thunder and OKC should not have received investment at that level. That's arguably the easiest second-hand financial impact to quantify given that you can easily multiply a reasonable percentage of the salary cap times 5% to get a portion of the tax revenues. That is at least $5M/year to the state coffers.

The Thunder are almost sure a net positive on OKC, but paying $1.5B probably flips that equation on its head drastically.

Thanks for pointing out that fact about sales tax. I did not know that. I always assumed the cities got the majority of it.

[Laramie]

In my mind the state should be chipping in $150M at a minimum.

Agree 100%

[April in the Plaza]

In my mind the state should be chipping in $150M at a minimum.

Do we think the city even asked?

It would be political malpractice if it didn’t, imo.

[Laramie]

You would think the state would help out Oklahoma City considering the amount of GDP OKC contributed to the state's total.

[HOT ROD]

you can guarantee if OKC asks that Tulsa will be in line shortly. Not that I disagree with them also wanting funds if OKC gets it; unlike Wisconsin, Oklahoma has two major metro areas.

Personally, I think cities should get all (or most) of the tax revenue from venues they fund. It is a bit unfair for the state to get more than half the tax receipts yet has no contribution to facilities and ties citie's hands limiting them to only a segment of sales tax for all revenues. ...

[Laramie]

^ ^ ^
Agree, If Tulsa were getting an MLS franchise, the State IMO should help out.

This is not to say that concerns in other parts of the state should be ignored. Example: Oklahoma has invested a lot to keep
Tinker AFB competitive and operational in OKC--helps with obtaining government contracts for maintenance workers to secure
jobs at this massive facility.

[Thunderbolt]

I fall in the category that I think most people will fall in - I think this a terrible deal and the Thunder ownership is taking full advatage of the astronomical leverage it has in the situation...but will still vote yes. There is NO alternative where the Thunder changes its mind and decides to pay for half of the venue. It very much seems its this deal...or ownership sells for billions and move to Vegas/Seattle/wherever.

I'm empathetic and understand why folks would vote no (it's a bad deal!) but it's the only deal we will realistically have...

[mugofbeer]

The likelihood of them selling and moving in our lifetimes is minute.

[BoulderSooner]

^ ^ ^
Agree, If Tulsa were getting an MLS franchise, the State IMO should help out.

This is not to say that concerns in other parts of the state should be ignored. Example: Oklahoma has invested a lot to keep
Tinker AFB competitive and operational in OKC--helps with obtaining government contracts for maintenance workers to secure
jobs at this massive facility.

OKC and Oklahoma county have been the ones doing most of that regarding tinker

[Teo9969]

I think there is zero chance this ownership moves the team. Jeff Records and George Kaiser (for example) are not going to move the team and risk losing accounts at their banks.

If OKC says "no" they will either sell the team, or go back to the drawing board. If they sell the team, it's because they have an appetite for it anyway.

If OKC had a vote for a 2031 opening instead of 2029, I have a hard time believing the ownership would sell the team.

This one change reduces our cost by a year of collections. If ownership doesn't want to contribute more, fine, but don't also ask us to incur additional financing costs just because you can't wait a few years longer.

[Wild]

Pete,

What is your goal here?

Are you trying to change how things are done in the future, calling for this to go back to the drawing board (fail) or do you have another objective?

When has the state shown adult leadership and when does the state act in a way that benefits OKC?

[OKC_Chipper]

I think there is zero chance this ownership moves the team. Jeff Records and George Kaiser (for example) are not going to move the team and risk losing accounts at their banks.

If OKC says "no" they will either sell the team, or go back to the drawing board. If they sell the team, it's because they have an appetite for it anyway.

If OKC had a vote for a 2031 opening instead of 2029, I have a hard time believing the ownership would sell the team.

This one change reduces our cost by a year of collections. If ownership doesn't want to contribute more, fine, but don't also ask us to incur additional financing costs just because you can't wait a few years longer.

LOL if you think any significant amount of people would leave BOK or Midfirst over a minority owner of the team selling and the team leaving. Kaiser has done so much for Tulsa it wouldn’t have any negative impact on him at all.

[Teo9969]

LOL if you think any significant amount of people would leave BOK or Midfirst over a minority owner of the team selling and the team leaving. Kaiser has done so much for Tulsa it wouldn’t have any negative impact on him at all.

Few would fault them if they sold, especially if an arena is shot down. But if these owners were the group that moved they team, yeah, that'd ruffle feathers.

[john60]

LOL if you think any significant amount of people would leave BOK or Midfirst over a minority owner of the team selling and the team leaving. Kaiser has done so much for Tulsa it wouldn’t have any negative impact on him at all.

BOKF especially is a very large bank. I'm not in banking but I think BOKF makes most of their money on business not in Oklahoma/OKC. There are not enough OKC residents/companies who could be disgruntled enough to move their business to another bank for it to make a significant impact to BOKF's bottom line.