The Arena Plans Are In

April 30, 2017

Both AEG and OVG submitted their Key Arena proposals earlier in the month.  With each willing to build before a tenant is guaranteed, they take substantial risk.  And because of the returns their projects must generate for their proposals to operate profitability, that theoretically leads to less revenue and profit available for whomever may partner with them to own the team(s) in the building.

In the NFL, the recent proposal to keep the Raiders in Oakland, along with AEG’s Farmers Field project in Los Angeles a handful of years back, were frowned upon by the league because they didn’t want another party (the proposed stadium developers) standing between the ownership groups and the building revenues.  I haven’t heard either the NHL nor NBA voice such concerns outright for arenas, or these Seattle proposals, in their leagues.

But it stands to reason that future NHL or NBA ownership groups in a remodeled arena will not benefit from the full profitable potential of the building because AEG or OVG will have rights to certain revenue streams.  This may not matter to owners who just want to own a franchise.  And it might appeal to some owners who may not have the wherewithal to finance both an arena and team themselves.  Because of this, it’s quite possible that an ownership group operating out of a remodeled arena may not have as great a revenue potential as the Puget Sound market might suggest.  Whether that hampers the competitiveness of the team(s) may be determined by the willingness of the owners to reach into their own pockets on occasion.

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