AEG Drops Out of KeyArena Project, Ceding Project to Leiweke
Tim Leiweke of the Oak View Group has defeated his former company AEG in their first major battle.
On Sunday, AEG Facilities President Bob Newman and the Seattle Partners coalition he was leading officially threw in the towel in its bid for Seattle's KeyArena. He essentially ceded the building AEG had operated for a decade over to Leiweke's Seattle Coliseum coalition, which now includes Live Nation, Azoff MSG Entertainment, Populous, ICON and Pearl Jam, whose manager Kelly Curtis has joined the group’s advisory board.
The move is a major win for Leiweke, who was CEO of AEG for nearly a decade before a public fallout with owner Phil Anschutz forced him out of the company.
In a letter addressed to Seattle Mayor Ed Murray, Newman said AEG opted to pull its proposal due to "significant factors through the bidding process have eroded our confidence in the ultimate execution of this project, no matter which group is selected."
"We fear the city is driving toward an unrealistic financing structure, and we believe the city has failed to conduct a sufficiently thorough, objective and transparent process to properly evaluate the respective strengths and weaknesses of the two proposals," Newman wrote. He went on to criticize Seattle officials for a "lack of active engagement," and "the city’s decision to withhold critical financial portions of Oak View Group’s proposal from the public, while releasing the financial details of our proposal" -- which, he said, "raises serious questions about the integrity of the decision-making process and the ability of the public to make a fair and equitable comparison."
The letter came as a surprise to Murray and the city council — as recently as May 19, Newman published a letter praising Seattle for "executing a thoughtful public process," telling city leaders, "engaging with teams from the city and the public has strengthened our proposal and crystallized our approach."
So what changed? One issue was financing. AEG's Seattle Partners called for $250 million in public bond funding, while OVG's project purported to be completely privately financed. The bonds AEG proposed the city borrow were fully collateralized by AEG, but sources tell Billboard there was always a concern that AEG's financial projections regarding were too optimistic and might not pan out.
Another source tells Billboard that a recent Seattle visit by AEG CEO Dan Beckerman did not go well. Beckerman held a series of public meetings in which he questioned OVG's ability to finance the project and circulated a ten-page brochure comparing the two proposals. That apparently angered city ,leaders who thought Beckerman was trying to discredit OVG's proposal.
Shortly after AEG announced it was dropping out of the project Sunday, Murray issued his own statement, calling Newman's decision "unfortunate" and calling out Newman for praising the process in the past.
"We hope to continue our current relationship with AEG and look forward to addressing our path forward on KeyArena, as well as our commitment to engage the community, in the coming days," Murray wrote.
Leiweke also spoke out, reiterating that "our project is 100 percent privately financed and built with 100 percent private proceeds."
"Our chief objective is this: provide the best financial deal for the city, an exemplary public-private partnership, and build Seattle a showcase venue for professional sports, music, and entertainment,” Leiweke continued. "While we are still engaged in the RFP process, we have no further comment. We look forward to the mayor’s decision.”