Taking Them At Their Word: Piecing Together OVG’s Strategy to Start KeyArena Work ASAP

You did not have to look very far or hard to feel the overwhelming sense of relief, excitement and genuine happiness following the decision by the Seattle City Council to unanimously approve a deal to let the Oak View Group rebuild KeyArena.

From the people who packed into city hall wearing hockey jerseys, to those online who participated in the storm of social media celebration — one thing is clear: the Emerald City is excited to end its decade without a major winter professional sports team.

On the city’s end of things, they helped get an arena deal done without using any taxpayer money — thanks to OVG’s plan to pay for the $700 million project. The Mayor and City Council may also be remembered as the leadership that (hopefully) helped bring the NHL and NBA to Seattle.

Amidst all the understandable joy, you might have missed the most interesting part of that day — at least to me.

It happened after the September 24th vote, in a hallway outside the council chambers, when OVG CEO Tim Leiweke spoke with reporters.

What Did He Say?

It all started with a simple and logical question about the next step in the process: When does construction start?
“We’d like to get in there as quickly as possible. But that will be — you know the one thing you’ve all heard from us since day one: never get ahead of the commissioners. We never got ahead of the commissioners, and we’re certainly not going to do this at the end of this. So we will look for the direction of the executive committee and the commissioner next week, as to a timeline that works for the NHL.” — Tim Leiweke, Monday Sept. 24th

Those remarks seem fine. OVG and its contractors understandably want to get to work ASAP, but they also have to weigh what the league and some of its owners said during that presentation on October 2nd. 

What piqued my curiosity is what Leiweke said in response to an immediate follow-up question about the construction. I’ve included the full exchange below.

Q: Does October vs. December matter in terms of construction?

Tim Leiweke: “Yes.”

Q: How so?

Tim Leiweke: “Uh, two months.” (laughs)

Q: Besides that.

Tim Leiweke: “We would… we… we need to be in as quickly as possible. But again — I understand there’s a lot going on within [Tod’s] world with his partners and the team owners. There’s a lot going on in our world on the arena front as to timeline and getting a guaranteed maximum price, and making sure that we have everything done that we have to get done with the city as part of the agreement. But there’s no reason that we can’t, hopefully, get a little bit of momentum next week and convince people that a November push-dirt, get in there and start working, works. Let’s not forget: [on October 5th], we have the final event at the old KeyArena. And from that point on it’s sitting there. So if we can get a little bit of momentum, get some confidence within the NHL, get some confidence in the partnership with the city, we would love to be in there sooner rather than later. Every day we get in there, that is a day sooner we get to open up that arena.”

We’ve already thoroughly outlined the difference between an October and December groundbreaking in terms of how realistic getting an arena built in each time frame is (based on how long it took to build every single arena in use at the NHL level for 2018-19).

Leiweke and his contractors likely are well aware of history, in addition to their own internal schedule & deadlines. And while every construction project is different, letting two months go by without any work beginning is never good news — particularly when you have a self-imposed goal of opening the arena in time for the 2020-21 hockey season. 

With that and our timeline exercises in mind, it makes perfect sense that Leiweke wants work to start the morning after that NBA preseason game (if he could).

What jumped out at me is the middle-third of what Leiweke said.

There’s a lot going on in our world on the arena front as to timeline and getting a guaranteed maximum price, and making sure that we have everything done that we have to get done with the city as part of the agreement. But there’s no reason that we can’t, hopefully, get a little bit of momentum next week and convince people that a November push-dirt, get in there and start working, works.”

The “guaranteed maximum price” of the construction project is one of the five “huge hurdles” Leiweke mentioned back in late July. OVG has to plan for any potential cost overruns or issues that may arise in the next two years of work. That’s not only trying to predict the future, but how much any bad events would hurt you. It’s no easy task

Yet to me, it’s the second sentence that’s most significant: “But there’s no reason that we can’t, hopefully, get a little bit of momentum next week and convince people that a November push-dirt, get in there and start working, works.”

“Next week” obviously was in reference to the Seattle Hockey Partners’ presentation to the NHL executive committee on October 2nd. Spoiler: it went well.

As for “hopefully get a little bit of momentum,” that, presumably, is in reference to positive feedback and/or an expansion recommendation from the committee to the full Board of Governors. It’s hard to beat the unanimous recommendation they received from the commissioner and group of 10 owners in attendance.

What’s interesting is the “convince people that a November, push-dirt, get in there and start working, works” aspect.

Who Needs Convincing?

It’s not the fans. More than 30,000 of them are already literally invested in this process.

The NHL Deputy Commissioner previously mentioned there are concerns that the arena construction has not started — but those comments came weeks before the city green-lighted the arena deal. The positive developments with the city helped calm some of those concerns (hence why Mayor Jenny Durkan was at the meeting).

Good news aside, both Leiwekes will have to get the league to buy their optimism that the new KeyArena will be finished by fall 2020.

But where did “November” come from?

Let’s go back to the final-third of that answer from Tim Leiweke.

“Let’s not forget: [on October 5th], we have the final event at the old KeyArena. And from that point on it’s sitting there. So if we can get a little bit of momentum, get some confidence within the NHL, get some confidence in the partnership with the city, we would love to be in there sooner rather than later. Every day we get in there, that is a day sooner we get to open up that arena.”

Aside from accurately pointing out that KeyArena will be lifeless after October 5th, Leiweke mentioned again this idea of getting the league to buy-in on Seattle.

But that doesn’t answer our “November” question.

OVG does not get control of KeyArena until October 15th.

The earliest a full league vote on Seattle expansion will happen is at the next Board of Governors meetings on December 3rd & 4th in Georgia.

So why did Tim mention November while discussing how important it was to get to work as early as possible?

That brings us to our third potential party that may need to be “convinced” — and we don’t need to look any further than the documents which Mayor Durkan signed a day later, on September 25th.

durkan signing
Photo courtesy: @NHLSeattle

The Key Clause For Arena Work

“Tenant shall not commence any demolition or construction activities on any portion of the Development Premises until satisfaction or waiver in writing by the City of all of the following conditions precedent.”

The agreement proceeds to list off 14 conditions that must be satisfied or waived by the city before any construction can begin. But in my eyes, no condition is bigger than this one:

The NHL Board of Governors shall have approved the application for and awarded the thirty-second (32nd) NHL expansion franchise to Seattle Hockey Partners LLC to be located in the City of Seattle, and delivered notice of same to the City, and Seattle Hockey Partners LLC and the NHL shall have executed the expansion franchise agreement.”

The existence of that condition is not new. Yet its specificity that the board — not the committee — shall “have approved the application for and awarded” an expansion team to Seattle sets it up as a potentially significant sticking point moving forward.

As we outlined above:

  • Tim Leiweke preached the importance of getting to work as early as possible
  • He also repeatedly discussed gaining momentum starting with the NHL executive committee in October
  • Yet the earliest the full Board of Governors will vote on Seattle expansion is in December
  • Which means KeyArena construction could not start until then — unless the city waives that condition.

So while it’s theoretically all up to the league at this point in the process, the city still has an important piece of bargaining left to face. And that’s not lost on the head of OVG, who seemed to hint at exploring that path when he was asked about it.

Q: Do you believe a positive recommendation from the executive committee will satisfy the city?

Tim Leiweke: (Laughs) “I’ve learned not to negotiate with the city through the media, and I won’t start now.”

Based on that response, and the prior evidence outlined above, it sure seems like OVG’s plan is to take the unanimous recommendation from the executive committee to the city in order to convince leadership to waive the condition that keeps work from starting until the NHL formally approves Seattle expansion.

Mayor Durkan was asked about the same possibility the day of the October 2nd executive committee meeting. Here’s what she had to say.

“You know the contract requires very specifics on what we have to do to go forward. And so we want a very clear sign that that happens, because the public has to know that the risk is on the ownership team.”

Adding further evidence to this idea is what Leiweke went on to say a couple of questions after that. (Yes, there is more.)

” … [I]t took just a little bit of dreaming, and obviously a huge commitment from our partners — David Bonderman, Jerry Bruckheimer and the local partners that are involved in this. This is an expensive city right now. Construction is at a peak. It not only takes a little bit of dreaming and imagination and entrepreneurial spirit, it takes some guts. And the gutsy part starts, hopefully soon here, in the next 30 to 60 days.”

That “30 to 60 days” part would put us (drumroll please) anywhere between September 25th and November 23rd — the day after Thanksgiving — based on when he made that comment.

If that timeline were to happen, OVG would need to follow along the path we outlined above: use the unanimous recommendation from the executive committee to convince the city to waive that ‘award Seattle the 32nd team before construction begins’ clause.

When asked about a waiver, a spokesperson for Mayor Durkan released the following statement on October 4th.

“The completed Development Agreement set forth that [OVG] could begin its pre-construction as early as October 2018 and begin demolition once all conditions set forth in the agreement are met, which include securing all necessary permits, securing noise ordinance variances, and showing proof of insurance, as well as the NHL awarding a franchise, among other conditions. It has always been assumed that this work would proceed while the parties await final approval of an NHL franchise, and that timeline is memorialized in the Development Agreement.

“Following Tuesday’s unanimous recommendation by the Executive Committee of the Board of Governors, the City will continue its work with [OVG] to begin necessary pre-construction activities as soon as possible. There is considerable preliminary work that needs to be done before demolition can begin, including utility terminations, environmental and geotechnical testing and remediation, mobilization, material and equipment stockpiling, and installation of fencing. That work can proceed before the NHL franchise is officially awarded. The conditions for demolition and construction were carefully negotiated to protect the City’s interests while still looking forward to an arena opening in October 2020.”

So from the Mayor’s perspective: OVG can do all of the preparation for construction (get permits, noise ordinance tweaks, turn off the gas/plumbing, etc.) after they get the keys on October 15th. But they cannot actually do any demolition work “before the NHL franchise is officially awarded.”

That sets us up for a December 4th or 5th (at the earliest) groundbreaking date for a 2020 unveiling — a construction timeline which we outlined previously.

Okay, This Is Starting To Worry Me

So are they nervous? Do the Leiwekes still believe 2020 is doable? After all, we do know that OVG has a ‘Plan B’ and ‘Plan C’ in place.

Both Tod and Tim addressed it on different days. We’ll start with Tod’s comments from his Tuesday radio appearance.

“Well, we’ve got an organization to build. So we’ve got to construct the building, and to do it in the timeline we’ve set forward is ambitious, but we’re totally committed to it. We are [still shooting for 2020]. That’s really our goal. You know, God willing and the creeks don’t rise, I think we have a really good chance to pull that off.” — Tod Leiweke to KJR, Tuesday Oct. 25th

Here’s what Tim said the day before.

Q: Are you concerned then about making the 2 year deadline that you’ve set for yourself on this?

Tim Leiweke: “Well, look — this is the most aggressive construction market today in North America. And so there’s a lot that has to go right. We’re very realistic that there may be some bumps in the road, and some things that we don’t control that could happen to us that would push this to a year beyond where we’d like to play. But if we sat down right now and we became afraid of that, it wouldn’t happen. And so we plow straight ahead. We’re dedicated to trying to get this ready for October-November 2020, and that’s what we’re going to talk to the executive committee about next week.”

No, that is not a typo. He really did say “trying to get this ready for October-November 2020.”

What’s not clear is if this was just a slip of the tongue, or Tim Leiweke admitting there’s a possibility that the new version of KeyArena is not ready in time for the start of the 2020-21 NHL season.

I reached out to the NHL Seattle office to clarify that sentence on Monday, October 1st (along with a list of other assorted questions).  A spokesperson acknowledged they received my questions, and they passed them up the food chain.

As of this writing, they have not responded. Yet as you are likely aware of, it’s kind of a busy week there. So we should give them time to respond before jumping to any conclusions about that “October-November 2020” comment. I’ll update this accordingly if or when that happens.

Also in that answer from Tim Leiweke: he mentioned those potential “bumps in the road” that could throw off their diligently laid plans for October 2020.

He also correctly points out that they, essentially, can’t worry about ‘The Boogyman’ of potential problems until they actually become real. Otherwise nothing will get done. So they’re just going to keep pushing ahead.

So What Can We Take Away?

  1. Tim Leiweke & OVG want to get into the arena the first possible second they can to make fall 2020 happen — preferably by late November
  2. Per the agreement they signed with the city, work can’t happen until the NHL formally grants Seattle a team
  3. The earliest that vote will happen is December 3rd & 4th
  4. A spokesperson for Mayor Durkan says demolition work can’t begin until the NHL franchise is awarded
  5. History tells us breaking ground in December and finishing an NHL arena less than 1 year and 10 months later is not very common (only 3 or 4 times, depending on exact opening date)
  6. They only way to start before December is if the city waives that “award expansion” clause
  7. The best evidence OVG & NHL Seattle could use to try to convince the city to waive it is the unanimously positive recommendation from the executive committee
  8. When asked about that exact scenario, Tim Leiweke said he doesn’t negotiate publicly with the city

When you lay out the various bread crumbs like that, it all certainly makes sense.

What could throw that trail off entirely is the possibility the league tells NHL Seattle that they won’t vote on expansion until work has started at KeyArena. Then you get a ‘chicken or the egg’ situation between the league and the city. No bueno.

Based on the comments from NHL Commissioner Bettman in the wake of the October 2nd meeting, both sides want a 2020 debut to happen — but the league is willing to push it to 2021 if need be.

We’ll gain a lot more clarity in the weeks to come before the next Board of Governors meetings.

Both Tim and Tod Leiweke, as well as their partners, have said their goal is to bring the NHL (and hopefully NBA) to Seattle.  There are plenty of reasons to cue up Kool and The Gang after the last few weeks because of their work.

They have the process on the goal line. It’s a nudge from getting all the way across.

They’ve kept their pledge so far to thousands of people in the Pacific Northwest.

So we should take them at their word. They’ve given us no reason not to.

As always: if you have any questions or feedback: leave a comment, send me an email at the address on the bottom of the page or hit me up on Twitter (@ScottMalone91).

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