In looking at the 15-year history of Oklahoma City’s Chesapeake Energy Arena, there is no doubt the most pivotal moment for the venue happened just three years after opening.
When Hurricane Katrina caused New Orleans’ Louisiana Superdome and New Orleans Arena to shut down in 2005, the hunt was on to find a temporary home for the displaced National Basketball Association (NBA) Hornets.
Fortunately, SMG, which managed both the Superdome, now Mercedes-Benz Superdome, and New Orleans Arena, now the Smoothie King Center, had a solution.
“The immediate need was to have a place to play, and SMG had been managing Oklahoma City’s Ford Center for a number of years,” said Doug Thornton, SMG’s executive vice president of Stadiums & Arenas. “The building was big enough to handle an NBA team, so it was an easy decision to relocate the Hornets to Oklahoma City.”
It also helped that the 600,000-sq.-ft. Ford Center, now the Chesapeake Energy Arena or The Peake, was similar in both size and footprint to the New Orleans Arena.
OUTFITTING FOR A HOME TEAM
When the Hornets returned to their hometown after two seasons, the question of how to proceed with Oklahoma City’s venue, which had undergone improvements in the short term to accommodate NBA basketball, remained.
With a new venue built to NBA specifications immediately available, and an enthusiastic market in the waiting, it was a slam dunk for one lucky team.
That turned out to be the Seattle Supersonics, which was looking for a new home after their city turned down a request to build a $500-million arena complex.
Not only would the team, renamed the Oklahoma City Thunder, get a practically brand new home starting with their 2008-09 season, but the venue would be undergoing continuous updates during the off-season from 2008 to 2013 to the tune of another $180 million.
“One condition of the team’s relocation was passage of another dedicated sales tax that would make arena improvements, which would happen with or without a new team,” said Thomas Anderson, special projects manager for the City of Oklahoma City. “If we secured a team, the plan was to construct a new NBA practice facility.”
Voters approved the tax increase in 2008 by 64-percent majority, which allocated $94 million for a stand-alone sports facility and additional improvements, despite the recession.
“When the Thunder came to the arena, it had the benefit of that trial-and-error [with the Hornets],” said Brian Byrnes, senior vice president, sales and marketing, for the Oklahoma City Thunder. “Because the building had no debt, it was possible to be aggressive in investing in the facility to provide things that were important to us, whether that meant revenue-enhancing restaurants, premium amenities, digital media for advertising or guest experience enhancements.”
Although technically the Thunder is considered a building tenant, Byrnes said there is a sense of teamwork as well as ownership that overshadows the tenant relationship.
By all accounts, it has been a successful liaison. The Thunder qualified for its first playoffs in its second season in Oklahoma City, and won its first division title in the 2010–11 season and first Western Conference championship in the 2011–12 season.
“We just received a report from the NBA a few weeks ago and, according to their outside consultant, we were rated number one for total game experience in the entire league,” said Byrnes.
Further validation of the impact of the arena, renamed Chesapeake Energy Arena in a 12-year naming rights deal that began in July 2011, is how it has served as the main catalyst for the city’s economic development.
In the 15 years since it was built, restaurants, cultural investments and parking environments have sprouted up to support a downtown entertainment district that has raised the status of the community and its financial profile.
The estimated total direct spending in Oklahoma City attributed to events held in the arena over the last 15 years is in excess of $1.2 billion.
“Still, Oklahoma City is the second smallest market in the NBA, so we have to work a little harder to market the team and create revenue streams,” said Byrnes. “The building and SMG have understood this can’t just be a tenant relationship. When the team identifies opportunities for revenue enhancement, caters to our sponsorship or naming rights partner or if there’s an investment in adding new digital media technology to sell more ads, the building is working with us, and that’s to the team’s benefit.”
IN THE BEGINNING
Oklahoma City was ripe for a new venue when the facility was proposed as a primary component of the city’s Metropolitan Area Projects (MAPS) capital improvement program back in 1993 (see accompanying sidebar).
In 1999, SMG was brought on board to run the city’s existing convention center and adjacent 13,000-seat arena and was soon tapped to manage the new arena.
Funded through a dedicated sales tax, along with another part of a larger capital initiative, the $89.2-million arena opened on June 8, 2002.
Prior to securing an NBA team, the arena had a major impact on the community. From the get go, it attracted top performers, including the Eagles, Paul McCartney and Brittany Spears, which changed the dynamic of the city.
“Yet, even back then, one of the goals was to secure a major league sports tenant, either basketball or hockey, and we worked with SMG and consultants behind the scenes to accomplish this,” said Anderson. “When the opportunity to host the Hornets came about, it was a litmus test; we could’ve spent millions on marketing and feasibility studies, but having real life experience here for two years and the overwhelming success of the Hornets led to developments to secure our own NBA franchise.”
MAKING A MAJOR IMPACT
Not only is the Thunder playing to sold-out crowds for every game, but concert and event attendance also has been strong. Approximately 1.2 million people visit The Peake each year, and the arena hosts about 130 events each year, 22 of them concerts.
In terms of upgrades, the most recent building improvements include a grand entry with multistory atrium; a 75-foot-wide by 21-foot-tall exterior video display on the northern face; additional restaurants and lounges; a family fun zone; and team offices and expanded locker rooms.
“We have a Citizens Oversight Board that reviews how money is spent and also works closely with the team and SMG to identify priorities and revenue generation,” said Anderson. “The arena has a direct spending impact using DMAI (a calculator that measures the direct impact of events on businesses, employment, income and taxes) of $104 million, but it goes beyond dollars and cents; The Peake has brought the community and state together to rally around something really positive.”
It also has spurred much redevelopment in the city’s infrastructure even to this day, including a new park, improvements to the Oklahoma River, a new downtown trolley system and Bricktown Ballpark for the Triple -A Oklahoma City Dodgers. A new convention center also is planned for 2020.
“One of the things that attracted me here is that the city has a lot of momentum,” said Hugh Lombardi, who has been general manager of the arena and Cox Convention Center for about a year. “There are a lot of things happening in the city, and one survey found this has become one of the most popular places to move to.”
As the Chesapeake Energy Arena looks toward its next decade and a half, it can easily rest on its laurels for a while.
“The city invested in the arena,” said Thornton. “Having an NBA team in your facility gives us the cachet for hosting [the top] events and concerts, which is a big plus for everyone.”