KeyArena financing plan appears far ahead of Sodo group

Oak View Group already has detailed for the city exactly who would pay for what and how.

Inside sports business

A group pitching a new $600 million arena for the city’s Sodo District released proof of its potential funding last week with a “letter of support” from J.P. Morgan investment bank.

The letter to the group, led by entrepreneur Chris Hansen, is similar to a letter from Goldman Sachs produced by the Oak View Group as part of its $564 million proposal to renovate KeyArena. But there are differences between the letters that demonstrate why Hansen faces a struggle convincing the Seattle City Council to go with his plan over the KeyArena venture.

Missing from Hansen’s letter was any monetary amount J.P. Morgan might lend his group. The OVG letter, meanwhile, states that Goldman Sachs could lend $150 million to $200 million and then additional monies once teams are acquired.

That’s hardly surprising, given OVG plans an “on spec” build ahead of landing teams. The Hansen proposal, meanwhile, is predicated largely on getting teams first, completing the project’s financing and then starting to build.

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Let’s be clear on one thing: Neither bank is guaranteeing anyone money. The letters are akin to a “preapproval” statement you or I might receive from a mortgage lender ahead of shopping for a home.

Those typically state how much mortgage we’d qualify for, based on statements we’ve made about our financial capacity and intentions.

In this case, Hansen’s group and OVG laid out plans for J.P. Morgan and Goldman Sachs. And they’ve received some preliminary support, provided their pledges stand up to increased scrutiny later.

But OVG already has detailed for the city exactly who would pay for what and how: anticipating $197 million in Goldman Sachs financing, $50 million in federal historic landmark tax credits and $40 million in diverted city…

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