Seattle selects influential investor OVG for KeyArena renovation

Rendering of Oak View Group's plans for KeyArena in Seattle.

SEATTLE — Seattle has taken a significant step forward in a long-running arena saga whose culmination could see either an NBA or NHL team playing in the city.

Mayor Ed Murray announced Wednesday that the city will begin negotiations with the Oak View Group on a proposal for a privately financed renovation of city-owned KeyArena, the former home of the Seattle SuperSonics. Plans for the remodel would bring the building up to standards that could attract an NHL or NBA franchise once completed.

While Seattle's history is as a basketball town, the completion of an arena could be the ticket for getting an NHL team into the market first. The NHL has not hidden its interest in Seattle, the No. 14 media market in the country and the only market in the Top 25 nationally that does not have an NBA or NHL team.

But the NHL has also grown frustrated by the starts and stops of an arena process that's seen more roadblocks than successes.

Oak View Group, led by industry leader Tim Leiweke, is the only remaining group from the proposal process that started earlier this year, making Murray's announcement anticlimactic. A competing bid from Seattle Partners — a group that included arena giant AEG — withdrew its proposal Sunday amid criticism of how the city handled the proposal process.

For most of the last month, OVG has seemed the likely group to win the bid for revamping the arena so it would be capable of hosting major pro sports again. OVG's proposal called for a $564 million overhaul that would be financed through a mix of revenue streams. OVG also has financial backing from Madison Square Garden Entertainment.

The decision to go with OVG is subject to both sides agreeing on details of the proposal and the finalized transaction must receive approval from the City Council. That may prove tougher than it sounds, as numerous community groups have expressed concerns about KeyArena becoming a year-round destination venue in a neighborhood that has seen a building boom with transportation shortcomings. There's also the question of how much influence Murray's decision will have since he is not running for re-election in November.

Seattle Partners proposed a $521 million remodel that required using $250 million of the city's bonding capacity to complete the financing, which was deemed a deal breaker after the city demanded the project be privately financed.

Still waiting across town is investor Chris Hansen and his hopes of building a privately financed arena in an area near Safeco Field but also near the city's maritime businesses that have strongly objected to another sports venue joining the neighborhood. Hansen's proposal only requires city approval of a street closure to move forward, but he has said he will not start construction until a franchise is acquired.

OVG plans to rebuild on the KeyArena site even without an anchor tenant guaranteed.

OVG was originally looking at a $400 million project before realizing the cost was significantly higher to make the remodel work on a limited footprint. They also called for an ambitious schedule that could have had a new arena ready by 2020-21. That timeline is now in question after KeyArena was unexpectedly selected to host early-round games for the NCAA men's basketball tournament in March 2019.