Oklahoma City Council has approved a development agreement that is set to lead to the construction of a new $900m (£708m/€831m) arena for NBA franchise the Oklahoma City Thunder.
The agreement between the City and PBC Sports and Entertainment (PBCS&E), owners of the Thunder, was backed by a vote of 7-2 at a Council meeting held yesterday (Tuesday). This came after voters approved funding for the new arena in December.
The development agreement is based on the original 2008 development agreement, which was used to improve the current Paycom Center arena and build the practice facility used by the Thunder. It also aligns with the Letter of Intent approved by City Council in September.
The development agreement covers major elements of the process of designing and constructing the new arena. In terms of funding, Oklahoma City has agreed to spend a minimum of $900m on the new facility. This will see $78m allocated from MAPS 4 funding, PBCS&E contribute $50m and a minimum of $772m raised from the 72-month, one-cent special sales tax approved by voters in December.
Any surplus revenue from the one-cent special sales tax after the arena’s construction and repayment of financing costs will be allocated to capital improvements and maintenance of the new venue.
The agreement acknowledges that there are no other sources of revenue to fund the new arena, and so provides that if the costs appear to exceed available budgeted funds, the parties will work together to value engineer the project. PBCS&E can privately fund portions of the project to avoid removing them through value engineering.
The City-owned former site of the Cox Convention Center has been identified as the destination for the new arena, which will be owned, operated and maintained by the City. Approximately 1.4 acres of the site will be reserved for a potential future intercity transit hub, while PBCS&E can negotiate with the City for a ground lease to develop any unused property on the site at market rate.
The City and PBCS&E will work together to select the arena’s project consultant, engineer, architect, design and other aspects of construction of a facility that will be at least 750,000 square feet in size.
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.
Paycom Center is the smallest in the NBA by square footage, has the second-smallest capital investment of all NBA arenas, and at nearly 22 years old, it is increasingly within range of the oldest arenas in the entire NBA.
The City had argued that Paycom Center is not capable of securing a long-term lease with an NBA team. Meanwhile, it pointed to the fact there are US markets larger than Oklahoma City that don’t have an NBA team, some of which already have or are planning an NBA-ready arena.
The Thunder has called Oklahoma City home since relocating from Seattle in 2008. The City signed a 15-year lease agreement with the Thunder, and in 2022 the team activated a further three-year option, ensuring its future at Paycom Center until at least 2026 and granting the City further time to develop a new arena plan.
The Thunder’s 25-year commitment to remain in Oklahoma City will begin when they move into the new facility, which will be the fourth downtown arena in city history constructed by the public.
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