Officials gathered at a groundbreaking ceremony Thursday in the lobby of the Baltimore Arena to celebrate the beginning of more than $200 million worth of privately financed renovations to the city-owned arena.
Demolition is underway already at the aging facility. Condensation dripped from exposed I-beams. Crews could be heard operating machinery. Dust coated the hallway floors.
In exchange for the massive renovation on the 60-year-old structure, California-based Oak View Group will lease the 15,000-person capacity arena for the next 30 years. The arena is older than the current iteration of Madison Square Garden, which opened in 1968 and is the oldest NBA arena in the country.
“Some people can look at something and say ‘Why?,’ but we can dream of something that could be and say, ‘Why not?’” said Tim Leiweke, CEO of Oak View Group, paraphrasing Robert Kennedy. “We believe in the future.”
Oak View Group also announced a new equity investor Thursday: Pharrell Williams.
The musician joins basketball star and Maryland native Kevin Durant, whose firm Thirty Five Ventures also invested in the project.
“We got Kevin on the basketball side. I got Pharrell on the music side,” Leiweke said. “I’m telling you we are in for a hell of a ride with this building. And we couldn’t be more proud to represent this community.”
The Central Intercollegiate Athletic Association recently announced that its men’s and women’s basketball tournaments will stay in Baltimore for at least another two years, through 2025, meaning the arena needs to be ready by March.
Leiweke joked Thursday about the tight timeline.
“They asked me, ‘Do you want to stop the construction while you’re doing the presentation?’” Leiweke told the audience. “I said hell no. We got a schedule to hit. The mayor is gonna kill me. The CIAA is going to kill me, and so we are going to be ready for this thing. First quarter next year.”
Mayor Brandon Scott recalled coming to the arena as a child, going to monster truck shows and the circus with his father.
“Today’s groundbreaking will help cement our legacy as a great sports and entertainment city and landmark events destination for the Mid-Atlantic,” Scott told the audience. “This is a massive project and a huge win for the city. And I’m gonna say it again, that the taxpayers are not paying a dime for. I’ll say it again, zero taxpayer dollars in this project.”
The full financial agreement between the city and Oak View Group has not been released. The Baltimore Development Corp. has not responded to a public records request for the firm’s bid, but Leiweke called it “the simplest deal ever” on Thursday.
“We’re putting up all the money,” Leiweke said Thursday. “We pay for everything. We operate it. We take all the operating risk. We put up all the capital over the next 30 years, there is zero risk for the taxpayers in the city.”
Leiweke said Oak View Group will also pay the city $1.75 million annually, and that amount will rise with inflation. According to financial details presented to the city’s Board of Estimates in November, Baltimore will refund any city taxes generated above that annual payment, effectively capping the taxes paid by Oak View Group. If the arena hits a certain level of profitability, Oak View Group will have to pay a quarter of all “arena distributable cash” to the city, a so-called “landlord upside” agreement.
Oak View Group initially committed to a $150 million renovation of the arena, but Leiweke said a few unexpected discoveries in the arena and inflation raised that estimate to more than $200 million.
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The bid by Oak View Group beat out a bid by ASM Global, the arena’s most recent operator.
ASM Global’s losing bid offered a profit-sharing agreement as well as annual operating and lease payments of $10 million to the city, according to a February report by the Baltimore Business Journal. ASM Global’s planned $140 million renovation would have taken 18 months to complete, meaning it would not have been ready for the CIAA tournament, according to the report.
The Baltimore Arena could have a new name by then. It was known until February as Royal Farms Arena, and Leiweke told reporters that naming rights for the arena already is generating interest with both local and national companies. He declined to say how much it would cost to buy those naming rights.
According to the Baltimore Development Corp., SCI Architects of New York is the lead designer and Clark Construction Group of Bethesda is the general contractor for the project, which will create more than 500 construction jobs.
Leiweke said some of the project financing is coming from Black-owned banks and at least 30% of contractors and subcontractors will be minority-owned businesses.
Leiweke said his career started in Baltimore with the Baltimore Blast indoor soccer team when William Donald Schaefer was the mayor, and he’s excited to be back.
“This is a massive home run for the city,” Leiweke said.