A New Thunder-Dome

City officials and Thunder executives recently broached the subject of needing a new arena for the Thunder to call home. With a recently signed three-year extension with Paycom, the city now has begun the initial steps to plan for a broader public discussion. 

The business of basketball has a nexus in each city where an NBA team is located: the sports arena. And when Oklahoma City Mayor David Holt mentioned the possibility of a new arena in his State of the City address last summer, it initiated a deluge of commentary all over social and mainstream media.

Predictably, responses ran the spectrum from fully in favor to utterly opposed, with the occasional voice saying that the conversation is starved for facts. Questions abounded: Why do we need a new arena? Where will the new arena go? How much will it cost? What’s the timeline? Will MAPS funds slated for improvements to the Paycom Center be redirected? How much will ownership kick in? How will this impact infrastructure improvements like drainage, mass transit and street maintenance? 

Since the conversation just began, a lack of specificity exists when answering most of these questions, but on two important issues, the Thunder has answers.

“A new arena is absolutely paramount,” said Brian Byrnes, Thunder senior vice president of sales and marketing. “The competitive set for the Thunder today in the modern NBA is that this arena will have to perform at a much higher level to attract the talent, to create the fan experience, to create revenue structure, and to create the opportunities that allow this team to be the very best version of itself … That includes everything from security and infrastructure to fan experience and technology to creature comforts – better seats, better restaurants, bigger scoreboards, and all the things that make the game experience so vital.”

The Ford Center – as it was known then – opened in 2002, and its primary purpose was a venue for entertainment events like concerts and minor league sports, as it served as a minor league hockey arena. No matter its original use, it certainly wasn’t designed to host an NBA franchise. But the window of imagination opened when the Hornets arrived as Hurricane Katrina refugees in 2005. The city was supportive, and conversations about Oklahoma City having its team followed soon after. 

As to a location for the potential new arena, Byrnes said the Thunder must stay downtown.

“I think we’re very committed to the downtown core area,” Byrnes said. “It’s about being in the heart of the city, centrally located. It’s also about taking full advantage of the resources throughout downtown that come from being at the crossroads of America. There is a reason why it works in this construct today – the ancillary benefits of being connected to all other infrastructure and influences that downtown provides.”

Mayor David Holt echoes the downtown emphasis, calling it “a line in the sand.” Holt said he admits it’s difficult to discuss specifics without getting into details, and since those are scant currently, the one he said he’s most willing to discuss is location.

“Beyond the question of downtown, there is more site-specific speculation, but if you play that out, it’s not hard to figure out where the good sites are,” Holt said, “but that’s getting ahead of things. Location is a second-level decision. Before that, we have to formally decide what we’re doing.”

One of those ‘good sites’ mentioned by more than one city official, including Ward 6 Councilwoman JoBeth Hamon, who referenced a conversation she had with City Manager Craig Freeman in which he mentioned “the former Cox Center,” now Prairie Surf Media. Holt called it a “reasonable option,” noting that it’s adjacent to the current facility, and that its current use as a film studio is an interim arrangement.

Matt Payne, co-founder and operating partner of Prairie Surf, said he is aware the retrofitted film studio could become a possible preferred site of a new arena.

“We are aware our facility could be considered for the proposed site of a new Paycom Arena for the Thunder,” Payne said. “We know it might become the preferred site. Our arrangement was never for the former convention center to be permanent. In two years, we have established a new business and proved film production can be a robust new industry sector in Oklahoma. We are fans of the Thunder and enjoy an excellent working relationship with them. We also are working with the City. We have a positive outlook, knowing we will have options in the next few years to create a dynamic next chapter for our business.”

With the general preferred location mostly decided, two big questions remain: How much will it cost? And what are the sources of funding?

Depending on the market (size, resources, labor costs, local taxes, etc.), new arenas are running just under one billion dollars, with a few small markets making it work for $500 million to $700 million, Hold said. He addressed the cost issue and funding sources by acknowledging the approximate price of new arenas around the country, and then said, “It is not irrational to look at our past and assume similar methods would be used again.” 

Questions of actual economic impact are hard to quantify according to Thunder executives, even as Forbes puts the team’s valuation at $1.87 billion (see The Business of Basketball, pg. 39) – a number that gives a clue about the team’s overall worth but not its overall impact.

Hamon said she is trying to get those numbers before deciding on a position.

“My initial reaction is to be opposed to it,” she said, “but I recognize there are things I don’t know. Generally, my feeling is that sports franchises hold cities hostage in the very same way large corporations do. There is a larger question here: Where do we want to spend our public dollars? Is this the best use of a limited pool of revenue? We have many unmet infrastructure needs as a city, and we can’t keep deferring, especially for an arena designed for entertainment. We need the private sector to invest. Ownership should be investing if they believe in their product. Isn’t that how capitalism works?”

An upcoming bond issue is designed to address the infrastructure issue, Holt said, noting that the city has been in a cycle of voting on bond issues roughly every decade, including 2007 and 2017. The next bond issue is likely to come up for a vote slightly earlier, Holt said, maybe as early as 2025.

“Can the arena be in a bond issue?” Holt asked. “That’s a little too speculative. Our last bond issue was just under a billion dollars, so given the price of an arena and our infrastructure needs, that’s not a likely source. Some of this comes down to getting too deep in a conversation before the other issues are decided. We just got a three-year extension on the Paycom Center, so the clock isn’t ticking on us having everything worked out quickly. The Thunder and the City would like to have a plan in place well before the end of that three-year extension though.”

As to private sector funding, Holt said the city’s market size has a huge impact on private sector funding available.

“I’ve heard a lot of talk about Philadelphia building their new arena with private funding,” he said, “but Philadelphia is the sixth largest market in the country. The other five markets above them already have NBA franchises. They can’t move, or they’d have to move down. Oklahoma City does not have that same market size. We are very near the bottom of NBA cities and potential NBA cities, so we’re competing as a small market team. No one is going to give us a pass on that. Shai Gilgeous-Alexander doesn’t get to ask the refs for a 10-point spot because OKC is a smaller market team, nor do we get to ask to not have to compete against larger markets who might want an NBA franchise in their city.”

The timeline of any new arena is relatively fluid but it’s also fixed within a general set of parameters: Holt said the arena opened nine years after the vote to approve its construction, and the convention center was 12 years after the vote. Given the reality that the team and the city would like a plan in place before the end of the three-year extension, OKC wouldn’t see anything like a ground-breaking for another five to seven years or so after that, assuming voters approve the plan.

Arenas for NBA franchises are multipurpose facilities that can modify internal components to offer concerts, rodeos, collegiate tournaments, graduation ceremonies and other large-scale events, serving as a community center of sorts. For Byrnes, the discussion around a new arena is a pivot point for who and what Oklahoma City wants to be.

“It’s not just about basketball,” Byrnes said. “It’s also about the modern entertainment industry, the touring artists who are doing things at a high level. We are competing against Kansas City, Tulsa, Denver and other markets who are very competitive. We have to continue to mature and create better resources to attract artists and shows. So, this conversation gives us a great opportunity to think about the question of what OKC’s future looks like … To do this right is to be thoughtful, and be strategic, and to bring in a variety of influencers who can help shape this discussion.”

Courtesy of Oklahoma City Thunder.

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