New Downtown Arena

[Teo9969]

To be abundantly clear, I have no personal insight whatsoever what the Thunder’s ownership is thinking or planning. A few pages back I DID say that my gut tells me some members would probably cash out after the building is online, because that’s a logical thing to do in business.

They have an asset that likely doesn’t pay them a lot (I know, hard to believe, with all of the money changing hands, but teams have unreal overhead), but yet an asset that is worth billions. The solid business play is to build value and then sell the asset. And nobody lives forever. It just makes sense from a business and human nature standpoint that there will be transactions.

There’s nothing nefarious about selling, ESPECIALLY if they’ve already secured the team’s long-term future in OKC.

The idea that they’ll sell to someone if it DOESN’T pass is also supposition, but one founded in realities, and essentially acknowledged by the mayor publicly. Without a new building the team becomes less and less able to cash flow, and less and less able to afford to remain competitive. They become a poverty franchise. Owners start to LOSE money. The team loses game after game with no hope to compete. Fans stop coming (we now know tha this is the reality in OKC, like many markets). Nobody wants that…do they..?

And it goes without saying that billionaires in other non-NBA cities will immediately line up with offers. With high resale value, no prospects for a new building, an election rejection by hometown fans in a marginal, one-team market, diminishing potential for success, a potential (even likelihood ) of millions of dollars in losses, not to mention stupidly-high offers coming in one after the other, what do you THINK will happen? Again, let an understanding of human nature be your guide here.

All of this is fair. Unfortunately, I think both sides flubbed the economic modeling here. This was announced 7/14/22 so it was likely being talked about as early as 2021. The economy has probably surprised both sides. When this was announced, the Fed Rate was at 1.75, was probably at 1.00 when discussions heated up and today it's at 5.5 with the threat of rising and also staying higher, longer. It doesn't need to be nefarious for us to change course, it's what a good business would do.

Vote no, drop the team Subsidy, delay construction 1 or 2 years and gather state incentives. That's a better deal that only screws over the hypothetical bank that will profit off the interest and asks the State to make a contribution to a major producing asset for them.

[Urbanized]

So, once again for those who are struggling to connect the dots in my posts: while I do know a few highly placed people at the Thunder, I haven’t spoken with ANY of them on this topic, and have zero specific insight into what they’re thinking/doing/planning.

What I DO have is several decades of working closely with people at the City of OKC in multiple capacities. I know how municipal government works (it can be confusing for the uninitiated), and I’ve tried to share details here about various things the City can and cannot do based on City charter, structure, ordinance, state law and precedent. I’ve tried to explain the civics behind this to those who care to listen. If you choose to not listen, to not believe it, to mock me for telling the truth…well…that’s on you.

[soonerguru]

All of this is fair. Unfortunately, I think both sides flubbed the economic modeling here. This was announced 7/14/22 so it was likely being talked about as early as 2021. The economy has probably surprised both sides. When this was announced, the Fed Rate was at 1.75, was probably at 1.00 when discussions heated up and today it's at 5.5 with the threat of rising and also staying higher, longer. It doesn't need to be nefarious for us to change course, it's what a good business would do.

Vote no, drop the team Subsidy, delay construction 1 or 2 years and gather state incentives. That's a better deal that only screws over the hypothetical bank that will profit off the interest and asks the State to make a contribution to a major producing asset for them.

Who cares about economic modeling? Why are people overcomplicating this?

Economic modeling is hard. The Bureau of Labor Statistics routinely misses on employment projections from month to month. Statistics are not irrelevant but it doesn't take a Wharton MBA to understand the value the Thunder brings to this city. By the same token, it doesn't take a Nobel Laureate to understand the absolute hit this city would take should it lose its only professional franchise.

Come on, people. It's as if you just love arguing for argument's sake. Exhausting and very short sighted.

[PhiAlpha]

#1. The market only matters in this academic argument and to those who can afford to pay more for tickets. The narrative that will be driven if the lower middle class and especially if the middle class is priced out from an activity they used to be able to afford will be "evil greedy rich" people. Voting is a matter of perception, not being "correct".

#2. It's not $150M. It's $1.5B. And what I am actually willing to wager is that the situation is not as urgent as it's being made out. If I truly felt the owners were going to sell in the next 5 years, I'd probably vote yes, but you know what, they can clear that up for me real quick if they're willing to sell. In my mind, the earliest they'll sell is when the SGA Thunder era comes to an end. So, yes, absent information they have foolishly withheld from the public, I believe we have more time. We'll see what this "campaign" that's coming is all about and what additional information it will bring. I'm not convinced a MAPS level push is going to be made...the strategy they have employed up to this point is that they want this to quietly pass and it likely will.

#4 I'm still not risking $1.5B on precedent, much of which is not apples to apples, nor am I awarding a terrible approach to the public for this effort.

Ok, I thought it was you who said you’d be okay with the plan if the owners were contributing $100-$150 million more or the cost was dropped.

If the Thunder are here, this will happen at some point regardless. What price tag do you think is appropriate?

At some point we’re going to build an arena that’s at least in the neighborhood of $1 billion…we will be doing so with the same assurances being offered now that the team stays but nothing more. At what point are you willing to take that gamble and why does it make a difference if it’s now or in 5 years?

[Rover]

Prospective owners from other larger cities know that if they buy and move from OKC they can immediately improve their net worth by 1to 4 BILLION dollars. Whereas it is worth maybe $1.75 Billion here in OKC, it would be worth anywhere from $3-$6 Billion in a larger metropolis. This is why other owners can afford to pay more than the Thunder owners, not that they are more generous. Investment in the team, media rights, merchandise, real estate, etc. is all worth more in bigger cities. I don’t know why that is so hard to understand. How much do you expect the current owners to turn down to be “loyal”? A Billion?$ 2 Billion?

[Urbanized]

^^^^^^^
This.

[Laramie]

Prospective owners from other larger cities know that if they buy and move from OKC they can immediately improve their net worth by 1to 4 BILLION dollars. Whereas it is worth maybe $1.75 Billion here in OKC, it would be worth anywhere from $3-$6 Billion in a larger metropolis. This is why other owners can afford to pay more than the Thunder owners, not that they are more generous. Investment in the team, media rights, merchandise, real estate, etc. is all worth more in bigger cities. I don’t know why that is so hard to understand. How much do you expect the current owners to turn down to be “loyal”? A Billion?$ 2 Billion?

Excellent points about the franchise being in a larger market and the 'value' it could accumulate.

[Urbanized]

Also, along with what Rover says, if an arena is built, the lease is set long-term, and if the team goes on a championship run (a distinct possibility as currently configured), the team’s value IN OKC will jump exponentially, making it an amazing time for some long-time owners to cash out. A win-win-win.

We all need to remember that - in the end - this is a business deal.

[BoulderSooner]

If it’s true that ownership would immediately sell based on a single no vote of an the extremely one-sided deal, then this ownership group really are despicable people with no interest in the OKC community. They’re just here for corporate welfare to enrich themselves.

I say this as someone who probably would vote yes. But your claims—and I trust your judgment—have made me lose all respect for the owners.

i think it is likely the owners are going to sell the team either way .. do we want it to stay in OKC for the next 30 years or do we want the new owner to move it .. (which is what will happen without an arena)

[Rover]

Also, along with what Rover says, if an arena is built, the lease is set long-term, and if the team goes on a championship run (a distinct possibility as currently configured), the team’s value IN OKC will jump exponentially, making it an amazing time for some long-time owners to cash out. A win-win-win.

We all need to remember that this is in the end a business deal.

IF OKC continues to grow at a good to great pace, after the 30 year commitment, OKC should be one of the heavyweight cities and THEN should be able to demand a much higher contribution rate on the inevitable next deal. We are trying to prove that we justify the faith in our future worth, not that we have already arrived.

[BoulderSooner]

IF OKC continues to grow at a good to great pace, after the 30 year commitment, OKC should be one of the heavyweight cities and THEN should be able to demand a much higher contribution rate on the inevitable next deal. We are trying to prove that we justify the faith in our future worth, not that we have already arrived.

the higher contribution rate would come with different lease terms then OKC has .. that is why it is not higher now ..

they only comparable leases are orlando (which ownership contributed 10%) and memphis ownership 0.00%

[SouthOKC]

i think it is likely the owners are going to sell the team either way .. do we want it to stay in OKC for the next 30 years or do we want the new owner to move it .. (which is what will happen without an arena)

Why are they likely to sell?

Kaiser is now listed 2nd on the ownership site. So it’s probably safe to assume he has the 2nd highest amount of ownership. This was at the 2014 valuation price not the original purchase price.

When Clay Bennett and his group purchased the team from Howard Schulz for $350M they were losing money. Based on recent numbers the team is profitable. With franchises appreciating and outpacing other investments it would be tough to sell unless forced.

I feel like the majority of wealthy individuals prefer to use their assets as collateral for loans allowing them to lower their tax burden. If you sell the team they would experience a one time capital gains event and potentially lose 23.5% of their gains.

[dankrutka]

Beating your head against the wall, trying repeatedly to convince a marginal market to keep their only big league franchise in town, all for a pay cut vs potential value? And potentially losing money while they grovel for a few years, with no guarantees? I wouldn’t do that, either. Would you?

This is not at all representative of what's happened. Grovel?!? The ownership group has made almost no effort to even communicate to the OKC community or offer even a marginally decent deal. I think this vote would have been a slam dunk and the public criticism muted if the ownership even tried at all. Instead this feels like a backroom deal of selfish rich guys.

As I've said, I'd probably vote for it because I agree the risk isn't worth losing the Thunder, but if this is the sentiment of the ownership group then they aren't community members, they're community grifters.

We all need to remember that - in the end - this is a business deal.

That is becoming clearer, but that's a choice. Owners of teams have historically prioritized their communities over sheer profits. Did the owners think OKC was more profitable than other cities when the team was moved? What's changed? It's disappointing if a single failed vote over a backroom deal that benefitted them led to immediately selling.

[PhiAlpha]

I do think this could’ve been handled better by both the team and the city so far. Really think it would’ve been smarter to let this season play out, which hopefully will be our first true playoff run with this group and use that momentum to roll into the vote in December of 2024…but what do I know. We are much more aware of this stuff here and care more than the majority of OKC so maybe they’re planning to make a joint campaign in November and early December.

[TheTravellers]

I thought that this might've been asked, but don't remember it being answered, may have missed it...

Even though OKC itself can't produce any renderings, it would seem very strange for the Thunder org themselves to not have any renderings or plans drawn up at this point, it's almost certain they do and it's not just a few sketches on napkins. Why can't/won't they share those?

[Teo9969]

IF OKC continues to grow at a good to great pace, after the 30 year commitment, OKC should be one of the heavyweight cities and THEN should be able to demand a much higher contribution rate on the inevitable next deal. We are trying to prove that we justify the faith in our future worth, not that we have already arrived.

I think this is a fine line of reasoning. It's based on a foundation I don't share, but I don't think you (or Urbanized, or Boulder, etc) are building poor arguments.

OKC is a better city with the Thunder, but it's still a great city without them. Thriving dining scene, multiple universities in the metro, improving infrastructure, improving music scene, etc etc. I don't think we've arrived but I don't think a professional sports team is our only ticket to arrival.

[Dob Hooligan]

I think this is a fine line of reasoning. It's based on a foundation I don't share, but I don't think you (or Urbanized, or Boulder, etc) are building poor arguments.

OKC is a better city with the Thunder, but it's still a great city without them. Thriving dining scene, multiple universities in the metro, improving infrastructure, improving music scene, etc etc. I don't think we've arrived but I don't think a professional sports team is our only ticket to arrival.

A "Big 4" sports team is still the biggest ticket to arrival. Nothing else is close for the overall reach across all social and economic platforms. Nothing. Not the symphony, the church, the zoo, nightlife etc.

[PhiAlpha]

I think this is a fine line of reasoning. It's based on a foundation I don't share, but I don't think you (or Urbanized, or Boulder, etc) are building poor arguments.

OKC is a better city with the Thunder, but it's still a great city without them. Thriving dining scene, multiple universities in the metro, improving infrastructure, improving music scene, etc etc. I don't think we've arrived but I don't think a professional sports team is our only ticket to arrival.

Yeah I’m sorry but while OKC is becoming a great city with all the things you mentioned, losing a professional sports team and being knocked out of that fraternity of cities would be a bigger setback from a national perception standpoint than anything that has happened since the Penn Square Bank failure (or the bombing though I think our response to it probably improved OKC’s national perception). At that point you have nothing, at least from the perspective of outsiders, that differentiates us from Omaha or Tulsa. All of the other things you mention are great and contribute to our national perception but other cities without professional sports have thriving dining scenes, multiple universities, better infrastructure, nice things that the city has built, and good music scenes. To recruit talent, employers, etc…you need more major differentiators..not fewer.

[April in the Plaza]

I thought that this might've been asked, but don't remember it being answered, may have missed it...

Even though OKC itself can't produce any renderings, it would seem very strange for the Thunder org themselves to not have any renderings or plans drawn up at this point, it's almost certain they do and it's not just a few sketches on napkins. Why can't/won't they share those?

I think, if they are in possession of decent renderings and disclose them, they will lose a fair amount of their leverage vis-a-vis the December 12 Vote.

Particularly if they are fairly nice renderings.

[Urbanized]

I thought that this might've been asked, but don't remember it being answered, may have missed it...

Even though OKC itself can't produce any renderings, it would seem very strange for the Thunder org themselves to not have any renderings or plans drawn up at this point, it's almost certain they do and it's not just a few sketches on napkins. Why can't/won't they share those?

After a conversation the other evening with someone very close to the arena effort on the City's side, I'm 100% convinced the Thunder does NOT have drawings. Reasons why:

1. The expense of the drawings for this CITY-OWNED building will 100% fall upon the City, or more specifically upon the project budget. Those funds yet don't exist, because the project is not yet approved by voters..
2. Drawings will cost millions. Spending a bunch of money to have drawings done for a project that they are only SPECULATING will be passed would be foolhardy for the Thunder, and basically illegal for the City.
3. The actual project site has yet to be determined. Really. The space available on the site will drive many design decisions.
4. While there are surely finish levels, plus certain features and interior configurations clearly desired by parties involved, believe it or not those parties would like to see what a qualified A&E firm comes up with, after everything is decided and after there are funds in place to pay for the full design treatment. Why paint the real project into a corner by doing preliminary design work for a tiny fraction of the final design cost?
5. Last but not least, if the Thunder engaged with a firm now to design some sort of "mood board" type of rendering, said firm would be disqualified from submitting a proposal for the real project, once it's approved and funded. No qualified firm hoping to bid on this work would get within a mile of JUST doing a conceptual rendering. They want the actual job, which by itself will represent millions of dollars in income to whoever is selected.

When this project is passed, design work will take many months if not a year or more. And it will be done by a qualified, selected A&E firm using full funding and best practices; not an artist making pretty pictures for campaign ads.

[PhiAlpha]

I’m extremely confused by the obsession with renderings, without a site officially selected that will likely look nothing like what is actually built, at this stage of the game. I guess it would give them something tangible to help sell the idea. But man, the obsession with it here seems a little pointless.

Tell us what will be included in the project, all the specs they plan to use in the new arena design and why that is so much better than Paycom and important for the city, the Thunder and all of us that will use it. Design it when the site is officially selected.

[Urbanized]

^^^^^^^
This.

[TheTravellers]

Thanks Urbanized, all good info and I completely forgot about point #5 being brought up recently...

As far as the renderings "obsession", very few people will buy a car or a house or a washer/dryer or damn near anything without seeing what it will look like first (at least a somewhat general idea). Humans are very visual animals, and most probably don't want to spend time and effort trying to understand via words what the arena will look like, they want it spoon-fed to them via pretty pictures (or at least a general idea). Enough of you work for companies that have higher-ups that just want charts or pictures or graphs or one-paragraph "executive summaries" instead of having to read pages and figure it out themselves, so you know the analogy...

[Urbanized]

A "Big 4" sports team is still the biggest ticket to arrival. Nothing else is close for the overall reach across all social and economic platforms. Nothing. Not the symphony, the church, the zoo, nightlife etc.

This is one of the best (and most economical) explanations I've seen here for something I've been struggling to put into words.

[Urbanized]

Thanks Urbanized, all good info and I completely forgot about point #5 being brought up recently...

You're welcome. There are a lot of moving parts, and it feels like I'm obligated to pass on any clarifying info if I have it. It's an important decision for our city.