New Downtown Arena

[PoliSciGuy]

I've asked this question before, but it's worth bringing up again.

Why are some opposed to building an arena for an NBA team but perfectly fine with building a convention center and a coliseum for the use of various industries and horse shows? Both are beneficial to for profit businesses, often owned by very wealthy folks, and both generate rental income and economic and reputational impact to the city. I'm not trying to troll here, I'm seriously asking why the different attitude for two seemingly similar public investments.

That’s an apples to oranges comparison. There’s not a long-standing tenant who will use those venues 40-50 nights a year at great profit to themselves and who will see the value of their business increase massively thanks to the huge expenditure of public money. If the city owned the Thunder then I would absolutely be on board with a new arena.

[BoulderSooner]

That’s an apples to oranges comparison. There’s not a long-standing tenant who will use those venues 40-50 nights a year at great profit to themselves and who will see the value of their business increase massively thanks to the huge expenditure of public money. If the city owned the Thunder then I would absolutely be on board with a new arena.

moving the team to a bigger city is what they could actually do to see the value of their business increase massively ..

[Laramie]

That’s an apples to oranges comparison. There’s not a long-standing tenant who will use those venues 40-50 nights a year at great profit to themselves and who will see the value of their business increase massively thanks to the huge expenditure of public money. If the city owned the Thunder then I would absolutely be on board with a new arena.

The City has built arenas before (Stockyards Coliseum, Municipal Auditorium, State Fair Arena, Great Arena in Myriad, Paycom Center) and they didn't own the team.

The concert circuit will be paying rent, the rodeo PBR circuit will be paying rent, just like the team will be paying rent; so what's the difference. . .

[PoliSciGuy]

The City has built arenas before (Stockyards Coliseum, Municipal Auditorium, State Fair Arena, Great Arena in Myriad, Paycom Center) and they didn't own the team.

The concert circuit will be paying rent, the rodeo PBR circuit will be paying rent, just like the team will be paying rent; so what's the difference. . .

Again, bad comparisons.
- The Stockyards were for a team that moved out in 1936, and professional sports have changed a bit since then
- The Civic Center music hall was built thanks to a massive investment of federal funds due to the New Deal if my memory serves me right, and who exactly is the Thunder comparison here? What multibillion dollar organization is camped there that would see their value increase with an updated Civic Center?
- Same question with the state fair arena - who is the multibillion dollar tenant there? Or are you referring to the hockey team from 60 years ago? Again, things have changed quite a bit in the last half century in terms of professional sports.
- And same question with the Myriad - who is the Thunder example in that comparison?

And for concerts and PBR circuit and everything else the venue gets a cut of the overall income generated. Per the last Thunder lease with the city, the Thunder get all ticket proceeds.

[Laramie]

Every individual, team, circuit are paying rent.

Many multimillionaire, billionaires singers use venues are paying rent.

Do we discriminate against those concert singers because they are multimillionaires & billionaires.

Would you tell Jay-Z , Rihanna to build his own arena.

[PoliSciGuy]

Every individual, team, circuit are paying rent.

Many multimillionaire singers use venues are paying rent.

Do we discriminate against those concert singers because they are multimillionaires.

You seem to be having a hard time with seeing how this is a flawed comparison.

Transitory tenants who come in for a weekend, split their ticket and drink proceeds with the city/venue, and then leave, and who don't see the value of their concert series fluctuate at all depending on getting a new venue, are very different from permanent renters who will see a massive and immediate boost to their value with a new arena, who will also pocket the vast majority of the revenue of their events at the arena (much moreso than concert or monster truck rally or rodeo or whatever). Asking those who are going to profit the most from a new arena to pitch in an actually significant amount seems pretty reasonable here.


e: \/\/\/ never said they were. Please don't put words in my mouth thanks.

[shai2022]

You seem to be having a hard time with seeing how this is a flawed comparison.

Transitory tenants who come in for a weekend, split their ticket and drink proceeds with the city/venue, and then leave, and who don't see the value of their concert series fluctuate at all depending on getting a new venue, are very different from permanent renters who will see a massive and immediate boost to their value with a new arena, who will also pocket the vast majority of the revenue of their events at the arena (much moreso than concert or monster truck rally or rodeo or whatever)

The Thunder won't be the only tenant??? 56 nights max. 58 with preseason. Give it up.

[Rover]

You seem to be having a hard time with seeing how this is a flawed comparison.

Transitory tenants who come in for a weekend, split their ticket and drink proceeds with the city/venue, and then leave, and who don't see the value of their concert series fluctuate at all depending on getting a new venue, are very different from permanent renters who will see a massive and immediate boost to their value with a new arena, who will also pocket the vast majority of the revenue of their events at the arena (much moreso than concert or monster truck rally or rodeo or whatever). Asking those who are going to profit the most from a new arena to pitch in an actually significant amount seems pretty reasonable here.


e: \/\/\/ never said they were. Please don't put words in my mouth thanks.

Clients with long term contracts almost always get benefits that one-offs don’t. That’s true in almost any business.

[BoulderSooner]

And for concerts and PBR circuit and everything else the venue gets a cut of the overall income generated. Per the last Thunder lease with the city, the Thunder get all ticket proceeds.

the thunder gets all ticket revenue from thunder tickets ... sure .. that makes sense .. they pay rent for every game plus operations cost ..

[April in the Plaza]

the thunder gets all ticket revenue from thunder tickets ... sure .. that makes sense .. they pay rent for every game plus operations cost ..

Do they split concessions and merch sales with the city?

[BoulderSooner]

Do they split concessions and merch sales with the city?

concessions yes .. I don't think they share thunder merch .

thunder get less then 50% of concessions from general areas ..

thunder only get 10% of food from premium areas and 15% booze from premium areas ..

[jdross1982]

That’s an apples to oranges comparison. There’s not a long-standing tenant who will use those venues 40-50 nights a year at great profit to themselves and who will see the value of their business increase massively thanks to the huge expenditure of public money. If the city owned the Thunder then I would absolutely be on board with a new arena.

The increase is only realized if they sell. New arena or not, the value of the Team will continue to appreciate along with other NBA teams. Every other major league sport teams value increases with new stadiums or arenas. The ONLY time that matters is when they sell. Example: I buy a house at say 400k. Due to inflation and shortage of homes for sale the value spikes to 650k in two years after purchase. does that mean I get a check for 250k? no, I only see any value when I sell otherwise it is some number that doesn't mean a whole lot other than providing additional equity.

[Thunderbolt]

concessions yes .. I don't think they share thunder merch .

thunder get less then 50% of concessions from general areas ..

thunder only get 10% of food from premium areas and 15% booze from premium areas ..

I believe the arena operators (in Paycom Center's current situation, ASM) also gets a large chunk of percentages. I believe they are hired by the city.

[Anonymous.]

The increase is only realized if they sell. New arena or not, the value of the Team will continue to appreciate along with other NBA teams. Every other major league sport teams value increases with new stadiums or arenas. The ONLY time that matters is when they sell. Example: I buy a house at say 400k. Due to inflation and shortage of homes for sale the value spikes to 650k in two years after purchase. does that mean I get a check for 250k? no, I only see any value when I sell otherwise it is some number that doesn't mean a whole lot other than providing additional equity.

I encourage you to research how the wealthy avoid paying taxes. In short, owning an asset that has $X value means they can borrow money and put up $X for collateral. Without ever having to realize that capital gain.

The owners bought the team for $350MM in 2006 and it is now worth almost $2B. To some of the owners, it is likely their best investment they ever made.

[BoulderSooner]

I believe the arena operators (in Paycom Center's current situation, ASM) also gets a large chunk of percentages. I believe they are hired by the city.

I'm sure they do but i don't have their operating agreement with the city ...

[jdross1982]

I encourage you to research how the wealthy avoid paying taxes. In short, owning an asset that has $X value means they can borrow money and put up $X for collateral. Without ever having to realize that capital gain.

The owners bought the team for $350MM in 2006 and it is now worth almost $2B. To some of the owners, it is likely their best investment they ever made.

Fully aware of this. Once again, their increased value doesn't matter unless they sell. using equity for gains is done in business and personal.

[BDP]

Are there examples where it's common for a tenant to contribute to the construction of a building they do not own?

I know tenants often share in maintenance costs and common area improvements, but I've never personally encountered a situation where the tenant is participating in construction costs with zero equity in the property,

[BoulderSooner]

Are there examples where it's common for a tenant to contribute to the construction of a building they do not own?

I know tenants often share in maintenance costs and common area improvements, but I've never personally encountered a situation where the tenant is participating in construction costs with zero equity in the property,

several sports arenas ..

[Pete]

Are there examples where it's common for a tenant to contribute to the construction of a building they do not own?

It's very common, particularly with ground leases where a tenant merely has lease rights to the underlying property (20-30 years) and then they build with their own capital.

Also, remember there will be more on this site than just an arena. I could see the Thunder owners having a ground lease on some of the block as part of the entertainment options.

We also don't know if they may get a larger revenue share as part of their investment.

[BDP]

several sports arenas ..

I guess I meant other examples, but Pete pointed out the obvious.

[Teo9969]

Fully aware of this. Once again, their increased value doesn't matter unless they sell. using equity for gains is done in business and personal.

The increased valuation is directly tied to the increase in revenue/cash flow/profit. The owners are making money and substantially more money than they were in 2006.

[Anonymous.]

Fully aware of this. Once again, their increased value doesn't matter unless they sell. using equity for gains is done in business and personal.

Then what are you insinuating with this statement and the original one I quoted? Without a doubt personal wealth is being gained by getting a new arena for their team even without selling their share.

[BoulderSooner]

The increased valuation is directly tied to the increase in revenue/cash flow/profit. The owners are making money and substantially more money than they were in 2006.

no the value of the team or sports teams in general don't really have anything to do with profit ..

[BDP]

It's very common, particularly with ground leases where a tenant merely has lease rights to the underlying property (20-30 years) and then they build with their own capital.

Thanks. Don't know why that didn't come to mind immediately. lol

Also, remember there will be more on this site than just an arena. I could see the Thunder owners having a ground lease on some of the block as part of the entertainment options.

We also don't know if they may get a larger revenue share as part of their investment

Good points. If anything, the real "sweetheart" aspect of these deals isn't so much the building a city owned multi-use facility that will host a major league tenant a few weeks a year, as it is in the details of the agreement with that tenant.

But, as we all know, such deals with anchor tenants are common in all kinds of large developments.

[chssooner]

The increased valuation is directly tied to the increase in revenue/cash flow/profit. The owners are making money and substantially more money than they were in 2006.

Hmmm, only partly right. Some of it is revenue-based. But others, it is intangible. And with sports teams, more than most ventures, the intangible matters. You think the Redskins are worth $6 billion because of their cash flow? Or because of the brand, and the NFL brand.