Details matter in arena and stadium agreements.
While I voted against the agreement for a SODO arena, when it was under discussion I focused on details in the agreement, seeking to avoid some of the most problematic provisions included in stadium and arena deals around the country.
In researching deals around the country, one such provision I found is a requirement to maintain a facility in first-class condition. Trends in arenas and stadiums change regularly, and it’s not always possible to know what direction they’ll go. An arena that’s first-class today might be far from it 10 years from now.
For example, a few weeks ago a VP from the NFL was quoted in an LA Times article saying that new NFL football stadiums could soon more like NBA arenas:
“What if a new stadium we built wasn’t 70,000, but it was 40,000 seats with 20,000 standing room? But the standing room was in a bar-type environment with three sides of screens, and one side where you see the field. Completely connected.”
I was reminded of the first-class provision by a recent report I saw about a stadium deal in St. Louis with the St. Louis Rams of the NFL, for a $280 million domed stadium that opened in 1995.
The St. Louis football stadium agreement calls for the facility to be maintained as a “first-tier” facility, at public expense. The agreement defines “first-tier” as being in the top 25% of NFL football stadiums, and allows the Rams to break their lease in 2015 if it is not maintained in “first-tier” condition.
The “first-tier” matter went to arbitration, with the Rams proposing a $700 million upgrade, and St. Louis offering a $120 million upgrade.
The arbitrators ruled in favor of the Rams, saying in their ruling that the St Louis proposal did not meet first-tier status because it would be too small, had inadequate views from suites, insufficient leg room in premium seats, and lacked “openness, light and air”. They noted that 17 of 22 stadiums built since 1995 have been open air; 4 of the other 5 have retractable roofs, and the other one “admits light copiously through expansive windows” in the stadium.
So one reason the stadium doesn’t meet “first-tier” standards is because of how stadiums have been built since then—something no one could have foreseen.
While the St. Louis situation could eventually be resolved in any number of ways, it shows the danger of a first-tier provision–if funding responsibility falls on the public side.
I wanted to be sure we avoided a similar provision in any Seattle SODO arena deal that could come back to bite us, and spoke with city lawyers and staff about this.
And the SODO arena agreement is different: it requires Hansen to make improvements to maintain the facility as a “first-class arena.” So the SODO arena agreement requires the private party to maintain the facility in first-class condition—not the public.
While this is just one detail among many in the MOU, it’s an important one.