Ford Center renovations update

[Larry OKC]

It isn't about how many seat you have, it is the revenue they can generate. An arena could only have 1 seat if they could sell it for $10 million per game. A smaller venue increase demand, that in turn drive up the price. Of course, the exact opposite is true. If an arena is too large, it decrease demand, which in turn drives down the price. You only have to look at the Jacksonville Jaguars stadium to realize that. It seats 30,000 too many. The fact that the Ford Center sold out half its games indicates that there might be too many seats.

I AGREE

Was never suggesting we should build an arena with 30,000 too many seats. Determining seating capacity isn't an exact science, but the fact remains even without the NBA, we built the Ford Center too small. It's a good problem to have, but still a problem. We had no way of knowing it at the time (think the Ford seats 5,000 more than the old Myriad). This is evidenced by the numerous sold out concerts the Ford has had (the bread and butter, what has made the Ford self-sufficient). As others have pointed out, the NBA (41 days) isn't the only thing held there. That leaves 324 days where larger seating capacity could be utilized. Am sure that the new type of seats being added bring in more revenue than regular seats and they are going to need to if you are going to make up for the revenue loss of 960 seats (not the cheap loud city ones either). Not only do you have to make up for the revenue loss of net seats, but also the lost revenue in concessions and merchandise as well. This is where getting those avg 4,000 no shows is important. Am sure Bennett's people ran the numbers since nearly all of the improvements were either for the exclusive use of the team or to "maximize" "revenue streams" for the team. That also presumes that these more expensive seats will sell-out.

The fact the the Thunder only sold out half of the games for it's inaugural year was disappointing. The Mayor and Bennett rightfully thought demand was going to exceed supply, that demand for a permanent team should "skyrocket". And as I said, unless it was team hype, reportedly they could have sold 20,000+ in season tickets alone. The Thunder web site says they sold out of the capped 13,000 season tickets in 5 days. Last I read, after several weeks or even months, they still have season tickets available (this isn't a downer comment, it is still impressive, especially when compared to Seattle season ticket sales, about 1/10 of the Thunder's). They reportedly had a waiting list last season and now have dropped to under 13,000? Quick and dirty math would indicate a drop in demand by at least 7,000 (20,000 - 13,000 = 7,000). They also came darn close to capacity on the remaining games (think it was around 500 on average of being sell-out). Take away the number of seats that they did, and you are practically guaranteeing sell outs (but at a reduced capacity).

Compare that with the Hornets. The 1st year here was about the same as for the Thunder (sellouts and avg attendance). 2nd year, there was also a slight drop off (but they had announced they were going back to N.O. the next season). Sales were down some but not near as dramatic. (To be fair, there wasn't a waiting list for the Hornets that I am aware of, so they didn't have as far to fall).

Even if the supply/demand is just about right for the Thunder now (ignoring the 324 other days), where is the planning for growth? Is anyone suggesting that the Thunder will continue to be bottom dwellers and ticket sales will continue to decline? If that is the case, Bennett can use his opt out clause and move the team.

[Patrick]

Ahhh, I don't really think the Ford Center was built too small. It's pretty comparable in size and seating to other major league arenas around the country. Anywhere in the neighborhood of 18,000 to 20,000 seats is pretty much in the norm for major league sports arenas. If you want seating for larger concerts, than look at possibly building a larger football stadium, dome, or something of that nature.

[Larry OKC]

... Seattle's seating (I live there) is horrible by comparison to most NBA cities, so there is NO WAY they could ever make up the revenue. And the building could not be expanded again. So the only thing to do in Seattle was rebuild or build new. ...

Am curious, in other threads on other forums, Seattle posters indicated that watching a game in the Key was great...great sight lines etc. Is that what you are talking about?

Know I saw a clip of Stern praising the Key (at it's reopening) as a model NBA arena.

Concerning the expansion, while they may not have been able to add seats, I know I read that there was 3 different remodel proposals to prior owners (still offered to Bennett) and a remodel was OK with Stern (he even went to the Washington legislature to lobby for it)...then a remodel wasn't OK when Bennett decided it was a new arena or nothing (although a remodeled Ford was OK)...then OK with Stern again after the Sonics relocated.

Presume that the Key OK/not OK/OK remodel would have been along the same lines as the Ford remodel (the things that maximize team revenues).

[Larry OKC]

In the video, they state new seating is being installed, and talk about more room for each person. One of the big complaints about the Ford Center was the tight seating, so perhaps this is improving that and they're losing capacity as a result. Perhaps they decided it's better to have a thousand less fans in the building, if the ones who are there are happier. Don't know.

Just from a cost standpoint (unless they are rented?), think the new seating and more room they are talking about is in those loge ones. Don't think they are adjusting the rest of the arena (for example, can't really do anything about the space between rows). Unless they are putting in wider seats, the only thing they could do is adjust the space between seats (but aren't they permanently attached?). Good question though....

[Larry OKC]

Ahhh, I don't really think the Ford Center was built too small. It's pretty comparable in size and seating to other major league arenas around the country. Anywhere in the neighborhood of 18,000 to 20,000 seats is pretty much in the norm for major league sports arenas. If you want seating for larger concerts, than look at possibly building a larger football stadium, dome, or something of that nature.

I AGREE

IF the Ford was ONLY for the NBA, that would be fine, but you are ignoring the other events held there. We don't have a larger venue in OKC (and not in the list for MAPS 3). This is why I think we are flushing the balance of the $100M in improvements to the Ford, down the $3M remodeled bathroom's toilets. They will be coming back in a few years, insisting on a new arena (just as Bennett did in Seattle).

[bombermwc]

The arena was far from the only thing spoiling the deal in Seattle. It was the worst contract in the NBA regarding the team and the arena. And the support for the team had been wanning for 10 years...with ever decreasing attendance. Not to mention when the other 2 pro franchises in town get a new house, and you don't because the people say...nah, that just adds to the bad taste.

In another decade, yeah we'll probably be having to put together a new arena proposal. But maybe not. There are a lot of arenas out there that are 30 years old. OKC is in a unique position that we will have the land to do it already (Cox Center) and will just have to put it in the next Maps program of that time.

[betts]

They will be coming back in a few years, insisting on a new arena (just as Bennett did in Seattle).

It was probably wrong of me to insist that if MAPS 3 doesn't pass, there will not be another opportunity to get at least a few of the improvements in the current proposal. I don't have a crystal ball. Mea culpa. You don't have one either, so it's just as wrong to insist you know what's going to happen with the arena. If I could bet, I would agree with bombermwc. I think it will be AT LEAST ten years before there is even talk of another arena, IMO. And, like the convention center, it would probably take close to 20 years to get a second one finished. We're spending about half of what they're spending to build current arenas, so if ours is out of date in 20 years, I could live with that.

The problems with the arena in Seattle were about far more than size. Bennett insisting on a new arena was probably for several reasons. First of all, the contract between the city and the team made it almost impossible for them to make a profit, given the size of the arena and the lack of luxury boxes. Secondly, with the large investment in the team Bennett made, if the team WERE going to stay in Seattle, he needed a new arena with a decent contract to make the team attractive to another buyer, should OKC have the option to get a different team. His "sweet flip".

[Larry OKC]

The arena was far from the only thing spoiling the deal in Seattle. It was the worst contract in the NBA regarding the team and the arena. And the support for the team had been wanning for 10 years...with ever decreasing attendance. Not to mention when the other 2 pro franchises in town get a new house, and you don't because the people say...nah, that just adds to the bad taste. ...

The "worst contract in the NBA" was also touted by Commish Stern (and he approved it). Yes support for the NBA had been decreasing (partly due to the teams on-court performance). Which brings up the point, why did Bennett need a bigger arena when they couldn't fill the seats they had? The other two franchises did indeed get new arenas, but the Sonics got their's first and were back in about 8 years wanting improvements. Didn't the owners of those other Pro teams contribute to those "new houses"? (There are conflicting reports that Bennett's ownership would contribute to a NEW arena). Why was a Key remodel and new lease (3 offers were still on the table for Bennett) not OK with Bennett in Seattle but perfectly OK here (not an original thought, even Mr. Trammel with the Oklahoman asked that question). Why was a remodel of the Key OK with Stern (he even went to the Washington legislature to lobby for it), then not OK when Bennett bought the team, then suddenly OK again when the Sonics relocated?

Given the remarkably similar histories of the Key and the Ford and the people involved, think it will be shorter than 10 years before a new arena is asked for. The Mayor talked about a replacement arena just 4 years after the Ford opened. The age of the arena isn't the issue. I thought replacing a 5 year old arena (still "new" in my view) was absurd. After all we are talking about a building, not a computer. Then I found out the arena was built too small and we needed to be adding seats, not taking them out (even without the NBA).

No matter what the time frame ends up being, that isn't a problem for Bennett any more. He made sure of that in the lease with the City. For at least the next 15 years (expandable by the team, up to 30) the City is contractually obligated to keep making improvements to the Ford to "ENSURE THAT THE ARENA CONTINUES TO BE A FIRST-CLASS NBA ARENA" (similar language exists for the Practice Facility). With NO substantial means of paying for same. If there are structural limitations to achieving that end, the City will really have no choice but to build a new arena. IMO

How much is this going to end up costing? Based on projecting out what we know it has cost so far ($100 to $120M after 5 years) over the 15 to 30 year term of the lease....

[betts]

No matter what the time frame ends up being, that isn't a problem for Bennett any more. He made sure of that in the lease with the City. For at least the next 15 years (expandable by the team, up to 30) the City is contractually obligated to keep making improvements to the Ford to "ENSURE THAT THE ARENA CONTINUES TO BE A FIRST-CLASS NBA ARENA" (similar language exists for the Practice Facility). With NO substantial means of paying for same. If there are structural limitations to achieving that end, the City will really have no choice but to build a new arena. IMO

How much is this going to end up costing? Based on projecting out what we know it has cost so far ($100 to $120M after 5 years) over the 15 to 30 year term of the lease....

Shall we just wait and see what happens, rather than predicting doom and gloom? Even if it were to cost us an additional $100 million (which is by no means certain), it ultimately wouldn't have cost us more than the empty arena in Kansas City, would end up being several hundred million cheaper than the new Orlando arena and the American Airlines arena in Dallas, about $500 million cheaper than the new complex in NYC.

Meanwhile, having gone to see the Thunder play at the BOK Center last night, I will say that their exterior design is incredibly impressive. The Ford Center will never look that good, but our interior (ultimately) will be much nicer. They do have terrazzo floors while we still have concrete, but otherwise I think our design is warmer and more interesting. I also think our new sound system is better, and our new scoreboard is way better. The bathrooms at the Ford Center are a lot nicer as well.

[Larry OKC]

Shall we just wait and see what happens, rather than predicting doom and gloom? Even if it were to cost us an additional $100 million (which is by no means certain) ...

Certain? No, could be less and it could be much more (especially if you throw in the cost of a new arena, which I haven't). Regardless of the amount, the City is contractually required to do so. However, I am basing it on what has happened. History has this way of repeating itself (and Bennett has set it up to proceed exactly in that direction). It isn't just $100M more, it's more likely to be $100M every 5 years (again based on what has happened to date and the language in the lease). Do the math of that over the 15 to 30 year lease and see what you come up with. Then throw in all of the other multi-millions of $$$ the City literally gave away in the process.

If handeled correctly, the Naming Rights could have nearly paid for the renovations without costing the taxpayers another penny. Yet we literally gave those rights away to a renter.

Self-described "sophisticated" City leadership (the Mayor and the City Manager) said they approached the lease with a "break-even" philosophy. Instead of the City making $1M PROFIT (like we did the 1st year with the Hornets), the city is looking at maybe squeaking by with $150K a year.

Were you aware that AFTER game day expenses the City only gets $12,000 per game? $12K times 41 games = $492K a season divided into $100M in NBA improvements = 203.25 YEARS to "break-even". Then there is the Practice Facility, revised cost is $10M (down from $20M), so it will only take 100 YEARS to "break-even" on it.

Were you aware that while most NBA arenas have some level of public financing, that 5 have ZERO? The range of financing varies from Zero to 100% with it fairly evenly divided with those above and below the 50% mark.

I have reached the opinions based on the reported facts and I again will be happy to provide the quotes and articles that I have for any particular point for your consideration.

Do you have any supportable reasons why you don't think it will end up costing that much?

[metro]

Were you aware that AFTER game day expenses the City only gets $12,000 per game? $12K times 41 games = $492K a season divided into $100M in NBA improvements = 203.25 YEARS to "break-even". Then there is the Practice Facility, revised cost is $10M (down from $20M), so it will only take 100 YEARS to "break-even" on it.

You're logic is again flawed Larry. First off Ford Center improvements were paid in CASH but current tax. Most cities sell bonds or other commodities and pay it off over decades. Do a case study on Seattle. They are STILL paying on the arena they don't even have a permanent tenant for. They've been paying on it for over 15 years and have a couple years left still, until 2015 I believe. OKC voters CHOSE to tax themselves and pay for the arena improvements IN CASH UP FRONT, thus this "minute profit" you speak of is irrelevant as a "payback model". It is nothing but profit to the City, and honestly the City shouldn't be in the business world and expect to make anything off a business. You have to ground yourself in reality on how sports franchies work in the real world, not utopia. And $492,000 (your number) would go a long way in hiring additional cops and firefighters that you speak of that we're in dire need of. That'd hire probably at least 5 more of each, better than nothing! We're also not a large media market, and simply cannot generate the big price of naming rights, until we get more money in our local economy and a bigger market. This comes with time, and by things such as having the NBA. It becomes harder when all of our major corporations are already taxed out with nonprofit donations and are already the largest sponsors of the Thunder. Chicken and egg my friend, chicken and egg.

[Larry OKC]

... Do a case study on Seattle. They are STILL paying on the arena they don't even have a permanent tenant for. They've been paying on it for over 15 years and have a couple years left still, until 2015 I believe.

Are you talking about Key Arena? If so, the amount agreed to in the settlement pays off the owed amount. Also, there is enough loophole language in the Ford tax Ordinance that could easily allow OKC taxpayers to paying for this too (along with team relocation expenses, which Bennett himself said OKC would be paying...later backtracked to say he was speaking hypothetically)

... honestly the City shouldn't be in the business world and expect to make anything off a business. ...

I agree, by the same token it shouldn't be doing what amounts to an up-front corporate bailout to a broken business model.

... $492,000 (your number) would go a long way in hiring additional cops and firefighters that you speak of that we're in dire need of. ...

Hmmm, think you have me confused with a couple of other posters on that one. I did find articles recently that supported what they said (that the City knows it is understaffed) and some articles that disputed what they said (that the Firefighters are not seeking a raise). I took neither side on the manpower issue.

... We're also not a large media market, and simply cannot generate the big price of naming rights, until we get more money in our local economy and a bigger market. ...

Fact: According to the NBA Database that used to be available on the Oklahoman's website, Memphis, a slightly SMALLER market got $90M in their 20 year Naming Rights deal. I don't have the numbers handy but in the Sonics' evidence presented at trial, their own consultants came up with a similar number. I was using a comparable City/Market. Never suggested we would get the top end of the scale (if I remember correctly, at the time I looked it up, it was in the $200M area).



P.S. I fully agree that a sales tax is better than some other funding methods (such as bonds which the City also uses extensively). The "break-even" I spoke of is how long it will take, not to pay for the improvements, but how long it will take for the taxpayers to see their money "returned" (in a figurative sense).

[mugofbeer]

Find a major city in the US that DOESN'T think its understaffed in the police and fire departments - especially with all the cutbacks most cities have to make due to the economy!

[Kerry]

I forgot what Larry's issue is. Seems he wants to go back and fight the Seattle move all over again.

[betts]

Memphis is home to Federal Express, which ranks 68th on the Fortune 500 list. Our highest ranking company is Devon, which ranks 221. Fed Ex, by the way, is just below Disney, and above Apple, McDonalds and Coca-Cola, to name a few. Devon is a wee bit involved in their new building, and I don't expect them to be sponsoring anyone for a couple of years. So, I don't think anyone is going to be raking in millions for naming rights until the economy improves, much less $90 million. Sonic, which is in the Fortune 1000 list, could possibly sponsor the arena, but I seriously doubt they'd be ponying up $90 million right now.

But again, every single thing you've predicted for the future is based on conjecture. Regardless of what the lease states, you have NO idea if Bennett et al are even going to ask for annual upgrades to bring the arena up to "NBA standards". What happened in Seattle is completely different. There, they weren't willing to travel a thousand miles to go to a basketball game unless they could do it in a beautiful, lucrative new arena. They weren't willing to lose money every year to have a team somewhere other than their home town. Give this up, wait and see what happens. If you're right, you can gloat. But, it's far too early to do so now. What has happened, has happened. The team is here, the Ford Center is being remodeled, the tax is being collected. You'll have as much luck changing the course of events if you go hold up a sign in front of the Ford Center all day every day, as rehashing what's already happened on this forum.

[Patrick]

Find a major city in the US that DOESN'T think its understaffed in the police and fire departments - especially with all the cutbacks most cities have to make due to the economy!

Exactly. Find me a government agency that isn't understaffed. I haven't found any.

[Larry OKC]

I forgot what Larry's issue is. Seems he wants to go back and fight the Seattle move all over again.

Understand what you are saying and it is easy to get sidetracked (either self-inflicted or by others). Often, I am responding to someone else’s post and correcting info when it is in error or contradicts what I have read on the subject (and can often quote/cite as being the case).

That was the case here as my 1st post was putting out the latest info on the reduction in seating capacity (a few prior posts had incorrect numbers). In fact, I wasn’t the one to first bring up Seattle/Key in this thread (Hot Rod did in the 1st post on page 5, responding to the latest info I posted concerning the confusion over how much seating capacity was going to be reduced. How we got to where we are now is the back and forth posts among a few members.

[oneforone]

I find it humorus that the taxpayers paid to have this place built and they have to buy expensive tickets to enjoy it.

That is like buying your teenager a car and they charge you gas money everytime you ride in it.

I wonder if the new Central Park will be the same way. Will they charge each person for walking/driving through?

[Larry OKC]

... But again, every single thing you've predicted for the future is based on conjecture. ...

Sorry, but my "conjecture" is firmly based on the facts (the remarkably similar histories of the Key and the Ford, the fact that Bennett is involved and the terms of the lease).

Now, if you have a different set of facts that would lead to a different "conjecture", please post. I am reasonable and willing to listen.

Why do you think Bennett had those terms written into the lease if he didn't plan on using them?

The continual upgrade provision was written into the lease because as the judge in the trial asked, if any such provisions were in the Key lease. They were not.

[Patrick]

I find it humorus that the taxpayers paid to have this place built and they have to buy expensive tickets to enjoy it.

That is like buying your teenager a car and they charge you gas money everytime you ride in it.

I wonder if the new Central Park will be the same way. Will they charge each person for walking/driving through?

How is it any different from any other sports facility in the country? Or the Civic Center? Or a convention center?

And no, the Central Park will be free like any other park in the city.

[Kerry]

I find it humorus that the taxpayers paid to have this place built and they have to buy expensive tickets to enjoy it.

That is like buying your teenager a car and they charge you gas money everytime you ride in it.

I wonder if the new Central Park will be the same way. Will they charge each person for walking/driving through?

I am sure you can go into the Ford Center anytime you want. However, if there is a private organization that has something on display (basketball game, concert, hockey game) then you will need to pay to see that.

I do know what you mean though - I have the same concern about state and national parks. They were made by God, existed long before the federal or state government existed (and will be around long after they are gone) but if we want to see it we have to pay. Whatever expenses that went into facilites was already paid for by tax dollars.

[betts]

Sorry, but my "conjecture" is firmly based on the facts (the remarkably similar histories of the Key and the Ford, the fact that Bennett is involved and the terms of the lease).

Now, if you have a different set of facts that would lead to a different "conjecture", please post. I am reasonable and willing to listen.

Why do you think Bennett had those terms written into the lease if he didn't plan on using them?

The continual upgrade provision was written into the lease because as the judge in the trial asked, if any such provisions were in the Key lease. They were not.

Conjecture: "reasoning that involves the formation of conclusions from incomplete evidence." We could also call your reasoning a hypothesis. A hypothesis remains a hypothesis until it is proven. My hypothesis is that we won't be asked for a new arena for 10 to 15 years, and it won't be built for 20, and that we won't be asked to add $20 million a year for the next 5 years, at which time Bennett won't ask for a new arena. My hypothesis bases its suppositions on the fact that the Key is a completely different arena, Bennett had nothing to do with the Key lease, and the Key was sited in a city considerably farther away from its owners than the Ford Center. Let's see whose hypothesis ends up being proven. In the meantime, let's quit talking about it.

[Oil Capital]

Sorry, but my "conjecture" is firmly based on the facts (the remarkably similar histories of the Key and the Ford, the fact that Bennett is involved and the terms of the lease).

Now, if you have a different set of facts that would lead to a different "conjecture", please post. I am reasonable and willing to listen.

Why do you think Bennett had those terms written into the lease if he didn't plan on using them?

The continual upgrade provision was written into the lease because as the judge in the trial asked, if any such provisions were in the Key lease. They were not.

What are the "remarkable similarities" of the Key and the Ford?

[proud2Bsooner]

I find it humorus that the taxpayers paid to have this place built and they have to buy expensive tickets to enjoy it.

That is like buying your teenager a car and they charge you gas money everytime you ride in it.

I wonder if the new Central Park will be the same way. Will they charge each person for walking/driving through?

I almost saw your point. But we paid for the opportunity that the upgraded arena gives. The NBA gets attention, and perhaps it will draw a large firm to add a site here or relocate here. It livens things up in general. Obviously tickets are expensive, but it's what we pay to be in the game. Just because you helped fund it doesn't mean you have a right to free entry. You helped fund the opportunity for a brighter future (cheesy sounding as it is) that includes NBA games, concerts and attractions (all of which can be costly to attend).

[megax11]

I find it humorus that the taxpayers paid to have this place built and they have to buy expensive tickets to enjoy it.

That is like buying your teenager a car and they charge you gas money everytime you ride in it.

I wonder if the new Central Park will be the same way. Will they charge each person for walking/driving through?

I wouldn't say that... Last year I spent 30 bucks on 2 tickets to the home opener...

This year I spent 60, for the home opener, and the Lakers, 3 tickets to each game.

10 bucks a pop isn't bad in the least.

I don't mind sitting in loud city.