Thunder new home ‘aggressive’ target schedule

Image: Chesapeake Energy Arena, Urbanative, CC BY-SA 3.0

The City Council Members voted 7-2 recently to approve a development agreement with the National Basketball Association (NBA) team Oklahoma City Thunder (US) ownership for a new downtown arena.

‘THE OKLAHOMAN’ stated that the development agreement between the City and the PBC Sports and Entertainment LLC – the owners of the Thunder and the NBA-G League team Oklahoma City Blue teams – is modeled after an original 2008 development agreement, which was used to make improvements to the current Paycom Center arena in Oklahoma City, Oklahoma (US) where the Thunder team plays its home games.

The Oklahoma City Thunder is an American professional basketball team based in Oklahoma City (US). The Thunder competes in the National Basketball Association (NBA) as a member of the Northwest Division of the Western Conference. The team plays its home games at the Paycom Center.

Oklahoma City (US)-based the Professional Basketball Club, LLC is a group of Oklahoma City businessmen who represent a wide variety of local and national business interests. The PBC owns both the Oklahoma City Thunder of the NBA and the Oklahoma City Blue of the NBA Developmental League. The PBC purchased the NBA franchise in 2006.

The Oklahoma City Blue is an American professional basketball team based in Oklahoma City and are affiliated with the Oklahoma City Thunder. The Blue compete in the NBA G League as members of the Western Conference. The Blue play their home games at the Paycom Center, an arena shared with the Thunder.

The 18,203-capacity Paycom Center is an arena located in Downtown Oklahoma City, Oklahoma, United States. It opened in 2002 and since 2008 has served as the home venue for the National Basketball Association’s (NBA’s) Oklahoma City Thunder.

Commented Craig Freeman, City Manager, “Some changes that are there are just refreshing the document, but moving forward with the partnership that we’ve had before, the long partnership that we’ve had with the team. This does include approvals for the team similar to 2008 on the selection of the A&E (architectural and engineering) firm, the Construction Manager, the designs for the arena, but also on an Owner’s Representative.”

An Owner’s Representative (OR) is a person or company that represents the interests of a building or facility project’s owner throughout the project’s duration. They work as part of the project team, but under a separate contract with the owner, and report directly to them. The ORs can help companies and organizations that don’t have the capability to represent themselves, or enhance an existing in-house team.

‘THE OKLAHOMAN’ further stated that the new agreement aligns with a letter of intent approved by a City Council majority in September 2023. It lays out various details on how the upcoming arena will be funded, where it will be located and when it should be opened.

Ward 6’s JoBeth Hamon and Ward 7’s Nikki Nice voted against the agreement. Last year, the two Council Members had opposed the new arena construction proposal, citing a lack of transparency over negotiations and concerns over funding priorities.

But that December, the Oklahoma City voters overwhelmingly approved a 72-month, one-cent sales tax to fund construction of a new arena at a $900 million minimum cost.
 

OKC Thunder Arena Agreement

As per the new agreement, the City would first use $78 million reallocated from MAPS 4 that was originally meant to be spent on improving the Paycom Center. Then, the City would spend $50 million contributed by the Thunder ownership, before using a minimum of $772 million expected to be financed through the sales tax beginning on April 1^st, 2028. The surplus collections from the tax after construction and repayment of financing would then go toward long-term maintenance of the new facility.

The MAPS 4 is a debt-free public improvement program funded by a temporary penny sales tax that will raise a projected $1.1 billion over eight years.

There are no other revenue sources to fund the new arena, according to the agreement. Freeman emphasized that if the design process shows potential for cost overruns, the City would work to find alternative, less-expensive options to keep the project within budget.

Stated Freeman, “If we can’t get part of the project value-engineered within the budget, (Thunder owners) do have the ability to finance that part of the project, to be able to keep it moving forward. And then, after plans are completed, if the team makes any request at improvements that are over the project budget, the team agrees, if we can’t value engineer those into the project budget, that they would pay for those parts of the project.”

The agreement confirms the new arena site will be the former Cox Convention Center, which is currently the home for the Prairie Surf Studios (movie studio in Oklahoma). The City management had previously notified the film studio owners that their lease at the building would not be renewed after December 2025.

Freeman also said the City will work with the team on a “more aggressive” target schedule, outlining a possible completion of the arena as early as June 2028. The latest deadline in the agreement is June 2030, but City officials often have said they hope to complete the arena ahead of the 2029-2030 NBA season. The Thunder ownership retains the right to terminate the agreement if the City does not meet the 2030 deadline.

The team also can negotiate with the City to develop any unused property on the new arena site at market rate, with revenue from a ground lease to be used for its maintenance and improvements.
 

Who will maintain the new arena?

The City will own and maintain the new arena, which is expected to be at least 750,000 square feet. The agreement also includes a new parking garage onsite with at least 650 spaces. Additionally, about 1.4 acres of the new arena site is being reserved for a potential interCity transit hub in the future.

The agreement also details an ongoing collaborative process between the City and the team, with evaluations along the way to ensure the new arena is meeting the NBA standards as well as maximizing team revenues.

New York (US)-based the National Basketball Association (NBA) is a professional basketball league in North America composed of 30 teams. It is one of the major professional sports leagues in the United States and Canada and is considered the premier professional basketball league in the world.

The current agreement approved recently does not specify details of a community benefits package championed by the Ward 2 Councilperson James Cooper and patterned after a historic agreement from the NBA team Milwaukee Bucks. This package is meant to establish a workforce intermediary and apprenticeship opportunities for the low-income communities, secure living wages for employees at the arena and launch a study group into a labor peace agreement, among other provisions.

Nice expressed concern that language from the community benefits package was not directly mentioned in the development agreement. Cooper, who otherwise voted in favor of the agreement, also pointed out the importance of a workforce intermediary being used to help both the local construction workers and hospitality industry employees.

Freeman said the City would be working with construction management to better connect the project with apprenticeships – “I know the construction industry wants to encourage apprenticeships as well because they want to grow those various aspects of construction, and they have challenges with staffing as well. We’ve got to try to balance it with making sure that we’re building this within the budget that we have. We don’t want to do things that increase our budgetary costs on the project, but working with those Construction Managers to see what programs they have that they carry forward on what we can do to make sure we can incorporate that.”

City spokeswoman Kristy Yager said more agreements with the Thunder will be coming before the Council, noting that the community benefits package resolution that passed last year was more about operations of the building and not so much the construction of the facility.

“This was the first step,” Yager said.
 

Timing

• The Thunder will continue to play home games at the Paycom Center until the new arena opens;
• The agreement maintains the completion date of 2029 as outlined in the letter of intent but provides a path to a target completion date of June 2028, with a contractual obligation to open the new arena by June 2030; and
• The Thunder’s 25-year commitment to remain in Oklahoma City begins when they move into the new arena.

 

Arena Background

‘okc.gov’ stated that the Oklahoma City Thunder has called Oklahoma City home since 2008. In 2023, the initial term of the 2008 use license agreement expired. The team exercised an option to extend the agreement for three years to allow time to develop a plan for a new arena to keep the Thunder in Oklahoma City for 25 years after the new arena opens.

‘okc.gov’ further stated that in December 2023, the Oklahoma City voters overwhelmingly approved a penny sales tax to build a new, publicly-owned arena. The new arena will be the fourth downtown arena in City history constructed by the public.

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