PORTLAND, Ore. — From the outside, it appears the Portland Trail Blazers are on the verge of accepting a substantial, publicly funded arena renovation package in exchange for a long-term commitment to the city of Portland.
But in reality, the process has just begun.
And that process is no longer a simple transaction between the team and the public. What was once viewed largely as a clean-cut deal — the public pays for renovating the Moda Center in exchange for a 20-year-lease — has become more layered.
The Blazers and new owner Tom Dundon are asking for more than just money for the arena. They want better financial terms on the next lease.
The city and county, meanwhile, are asking for protections and guardrails on their investment, while also establishing a guarantee the lease will provide a reliable income stream to offset the strain on an already stretched-thin budget.
So, while the framework for funding more than $586 million has been passed through three levels of government — the state of Oregon ($365 million), the city of Portland ($120 million) and Multnomah County ($101.6 million) — the terms have not been agreed to with the city and county.
Ahead are four months of negotiations leading to a Dec. 17 Portland city council vote. Topics like taxes, unions, security and clawbacks will be among the key points to be debated. If the two sides agree to terms, the Blazers will be secured in Portland through the 2049-2050 season.
If the two sides do not agree, the $365 million committed by the Oregon state legislature in Senate Bill 1501 will expire on Dec. 31, putting the future of the Blazers in limbo as the current lease expires on Oct. 11, 2030.
Here are some of the key issues and questions as the negotiations begin:
What does each side want, and why?
The Blazers contend they are losing money, in large part because they have an unfavorable arena deal. The city receives a 6 percent tax on each ticket sold and a 6 percent tax on each parking fee collected on game days. The team would like to be taxed less to run a more sustainable business.
In addition, the team says the city’s term sheet includes 20 departures from SB 1501 that, according to team president Dewayne Hankins, “adds hundreds of millions of dollars in extra costs that we hadn’t discussed … creating further team deficit. No team would sign a lease that would keep this business in the red for 20 more years.’’
A potential ask from the Blazers could be including an operating subsidy clause to help offset their costs.
The Blazers also want the city to provide increased security and allow the team to have input on traffic flow on game nights.
The biggest request from the city to the Blazers is a $3 million annual fee that ostensibly would offset property tax. The fee would escalate by 5 percent every year, with proceeds shared between the city, county and Portland Public Schools. The city also made a last-minute addition to its term sheet, as reported by Oregon Live, asking the Blazers to pay $2 million in annual rent. The Blazers previously did not pay rent.
The city would also like the team to adopt public-transportation plans on game nights, allowing fans to get free rides to the Moda Center by presenting their game ticket, similar to what the Timbers (MLS) and Thorns (NWSL) have used.
The city also wants the team to sign a labor-harmony agreement that assures union workers for everything from the construction during renovation to concession sales. The city is stressing not only the quantity of jobs, but the quality of jobs.
As one Blazers official noted, “All these asks cost us money.”
Meanwhile, some members of the city council believe the city is the one getting ripped off. Last week, the council voted down 11 amendments to the term sheet, including efforts to limit the city’s contribution to $120 million and secure rent (the $2 million rent clause was added five days later). Before the votes, councilor Angelita Morillo went as far as suggesting some on the council had been influenced by outside forces.
“Right now, it does feel like some of us are being extorted by the NBA on this,’’ Morillo said in the Aug. 6 session.
Councilor Mitch Green added this in his weekly newsletter to District 4 constituents: “The term sheet as unamended is a very bad deal for Portland. Historically bad. We’ll go down in history as setting the standard on how to work over a city. Portland deserved so much better than this.’’
New Blazers owner Tom Dundon wants public funding to pay for a large part of Moda Center renovations. (Jenny Kane / AP)
What is wrong with the Moda Center?
If you went to a Blazers game at the Moda Center, you probably wouldn’t notice anything terribly lacking. The team recently paid for upgraded scoreboards ($10 million), widened the bowl seating ($20 million) and installed a new roof ($4 million).
It’s the behind-the-scenes areas — and the guts — of the building that need improvement. The loading dock — where supplies are delivered and where team and tour buses load and offload — needs to be wider and more easily accessible. The sound stages for concerts need upgrading. Both sides concede Portland has been bypassed by major concerts because the arena isn’t compatible. Also, the visiting locker room is by far the smallest in the NBA, and, with the arrival of the WNBA and in anticipation of the 2030 NCAA Women’s Final Four, dedicated women’s locker rooms are needed. Those are among the essentials that need upgrading.
The Blazers have concepts for three enhancements to improve the fan experience: an atrium entrance on the north end that will improve the flow of foot traffic entering and exiting the arena; increasing the arena kitchens from one to three so each floor of the building can produce its own food; and eliminating a section of seats in the 300 level to create a bar/club gathering area.
City and county officials are flummoxed that the Blazers have not provided plans or renderings of their wish list, forcing the council to vote on what councilor Sameer Kanal called a “trust me bro,’’ concept.
What’s next?
A Joint Authority will be established in the early fall to negotiate with the Trail Blazers. The concept for the Joint Authority — which is not yet finalized — is to have three representatives from the state, three from the city and one from the county.
If the sides come to an agreement in December and the renovation begins, the Joint Authority will have direct oversight of the project and will be the centralized depository and disbursement mechanism for the public funds, including how and when the money is spent.
After the renovation is done, the Joint Authority will shift to an oversight role over the ongoing capital expenses and maintenance of the Moda Center.
Who is Dan Barrett, and why is he important to this deal?
Barrett is the president of CAA Icon, one of the nation’s leading firms that help owners execute stadium deals. He is not only a friend of Dundon — having helped Dundon secure a $300 million renovation of the Lenovo Center in Raleigh, N.C., the home of Dundon’s other professional sports team: the NHL champion Carolina Hurricanes —Barrett was also employed by the Blazers to help with the Moda Center renovation project and spent months working with city and state officials. But in May, he was among the company-wide layoffs that were announced after Dundon took over March 31. City executives were stunned by his sudden absence, which they say stunted progress in talks.
Both team and city officials said there have been rumblings that Barrett could be brought back to help get the project over the finish line, but a Blazers spokesperson said Tuesday he was unaware of any such plans. Still, it’s worth keeping an eye on; if Barrett does return, it will show an increased seriousness by the Blazers to get a deal done.
Are there any positive signs?
A few.
For starters, the Blazers in the last week have engaged more with the city, deputy city administrator Donnie Oliveira said. That included informing the city they would bring a lead architect from Populous to their meeting last Friday. That the Blazers were sharing information and responding to emails was viewed as progress.
And for as much as the county and city have balked and squawked about the financials of the deal, they both signed off on a non-binding agreement to release the money. So, there is a will from the city and county to make this deal happen.
The question now is, do the Blazers want a deal?
Their behavior over the past four months has been described by city officials as confusing and non-cooperative. If the team was eager to accept the public funding and sign a deal, it had a funny way of showing it. How the Blazers respond in these coming months will reveal much about their intentions.
The city and county, meanwhile, have to bank on the fact that they are the Blazers’ best option. The Blazers have never said they want to relocate, likely because this new ownership group knows relocation is expensive, time-consuming and often fraught with many of the same hurdles they are facing in Portland. If there has been a defining trait of this ownership group, it has been how frugally they operate.
It has set the stage for what figures to be a contentious four-month battle to secure what each side believes it deserves. The most likely outcome is that neither side gets their way, which is often the sign of a good deal.
