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Michael Dunne: From KLCC Studios, this is Oregon on the Record. I'm Michael Dunne. While certainly not old, the Moda Center has held a litany of very significant events. It's seen its share of thrilling Portland Trail Blazers games, including most of Damian Lillard's career. But it's also hosted huge concerts for luminaries like Bruce Springsteen and political juggernauts like Bernie Sanders. As is the way for modern pro facilities, though, the main tenants of the center want a major facelift, and they're asking for hundreds of millions in public money to do it. Today on the show, you'll hear from our colleague at OPB to learn why the Moda Center needs massive renovations, who's going to pay the bill, and what might get pushed aside as municipalities figure out where the money comes from. It's a story of public financing for private business that some call corporate welfare for a billionaire. That's next on Oregon on the Record. Alex Zielinski covers Portland city politics for OPB. Alex, it's always great to talk to you. Thanks so much for spending some time with us.
Alex Zielinski: Yeah, great to be here.
Dunne: You've been doing a deep dive into all things Moda Center. Let's start with this, Alex: For people who haven't been following it, what's going on with the Moda Center? Why does it need to be refurbished? Who's asking, and who's paying? Give us the courtside version of what's happening there.
Zielinski: Sure. The Moda Center is a city-owned building. The city bought it from the Blazers a few years ago for $1 and leases it to a number of tenants, the biggest being the Trail Blazers. In March, lobbyists for the Blazers approached the state legislature and said, essentially, “We really need upgrades to this arena. It's aging, and it has a lot of basic maintenance needs, but we'd also love to see some flashier upgrades. We'd love to see something around $600 million in public funding go toward this arena as part of a new lease,” because right now they're under a short-term lease agreement that expires in 2030. The city is hoping to extend that lease to about 20 years, and as part of the negotiations, the Blazers want a new arena. So they went to the state, and the state said, “Sure, we'll give you about $365 million in state bonds if the Blazers agree to keep playing in Portland, and if the county and city of Portland also contribute to get to that roughly $600 million total.” That's kind of where things began. The city and county's leaders agreed at that point in March that they would hand over that money. The tricky part is that the city council and the county commission still had to approve it, and that's where we've seen some of the more heated conversations and debates over the last couple of weeks, as those elected bodies have had to hash out and agree to handing over that amount of money.
Dunne: Okay, so where do we sit today?
Zielinski: Yeah, so last week Multnomah County agreed to contribute $101 million to renovations, with some demands attached. Then yesterday, the city of Portland signed off on a $120 million contribution which, over the next 20 years if the lease is agreed to, will grow to a $275 million total. That's the starting point of negotiations: They agreed to the funding, then directed their negotiators on what they want to see in exchange for that money from the Blazers. As we start negotiating this lease over the next couple of months, they want to make sure they're getting some return on their investment. That's what passed at the city of Portland yesterday. It was called a term sheet, and it includes details like wanting to see $3 million in annual rent from the Blazers, some community benefits allowing use of the space for community events, and agreements that would let Moda Center staff unionize. City negotiators will now have to hash that out with the Blazers behind closed doors.
Dunne: Okay, I'm going to play the role of someone who doesn't follow sports and stadium financing, and I'm going to ask you a question that I imagine a lot of people would ask, something along the lines of: “Wait a second, I understand this is a city facility, but the Blazers are the biggest tenant. They're the reason, in many ways, the Moda Center exists, and they're a private business. Why don't they just pay for upgrading or building a new arena?”
Zielinski: That's a great question. I should also point out that in the time between the state legislature approving this money and Portland having to decide on it, the Blazers were bought by a new owner, a billionaire who has a lot of money and who owns another
Dunne: Franchise, another professional franchise on the East Coast, right?
Zielinski: Yeah, yeah. His name is Tom Dundon. He's not a Portlander, and he doesn't seem to care that much about Portland, which has definitely rubbed a lot of Portlanders, and Oregonians, the wrong way. He's really treating this as an investment. Sure, he has a lot of money. A lot of people were in the city council chamber yesterday with signs saying, “No bailouts for billionaires.” The argument is that the city shouldn't be handing over public money to a franchise backed by someone with that much money if he should be able to pay for renovations himself. But the argument from the Blazers and ownership is that the team has already poured a lot of money into this arena and into the city. The previous owner, Paul Allen, built the arena in the first place with his own money, and Blazers owners and leaders keep pointing to that as a huge investment. They're still kind of banking on that, and they also point to the property taxes and payouts ownership must make going forward. Tom Dundon, the new owner, has griped about how high taxes are in Portland and in Oregon, saying he's already paying enough through that and shouldn't have to pony up more money. So yeah, it's unusual. Before I covered this, I didn't know much about stadium deals either, and pulling back the curtain has been pretty revealing. This is actually the norm: You have these wealthy owners coming in and saying, “We need public money to renovate an arena,” and a lot of times that just happens.
Dunne: Yeah, indeed. If you're just joining us, we're talking with OPB Portland city politics reporter Alex Zielinski. So, was there... I don't want to use this word, but I can't think of anything else. I'll just go ahead and use it. Was there a direct or implied threat from the Blazers that if you don't come up with the money, they might take the team somewhere else?
Zielinski: Never direct, but very much suggested and hinted at. Earlier this year, I sifted through a batch of public records, emails between Blazers lobbyists and state and city leaders, where the lobbyists said things like, “In other cities, this is what happens: You pay up, or the team might go looking for a better deal in a better market.” It was a wink and a nudge, and it's pretty remarkable that it hasn't been stated publicly by anyone involved with the team. But the possibility alone has every elected official and Portlander a little frightened that Tom Dundon might go nuclear if this deal doesn't go exactly the way he wants and pick up and leave.
Dunne: And many Portlanders don't have to look far to see where that's happened before, just up Interstate 5 in Seattle, back in the early 2000s. A couple more questions: If everything goes according to plan on the money, does that create an ironclad, in-writing guarantee that for at least a certain period the Blazers are locked into the Moda Center and won't leave?
Zielinski: No, I mean, yes. There will be a contract if everything goes as planned, a lease that commits the team to playing basketball at the Moda Center for at least 20 years. Within that, I'm pretty sure there will be a clause saying that if the Blazers decide to leave in the middle of the lease, if they break the agreement, they'll face heavy litigation and fines and have to pay back the city, county and state for all the money put into the project. There will be some kind of clawback if that happens. But yes, essentially, the plan behind the 20-year lease is to keep the Blazers here.
Dunne: You've said where the big buckets of money are going to come from, but within those buckets, where is the city actually going to get the money? Where might they not be spending that money in order to renovate the Moda Center? Has that been sussed out?
Zielinski: Sure, and it hasn't. Right now, the city truly has no idea where it's going to find the $120 million to pay for even the first installment of costs, partly because the Blazers haven't given the city much information about what renovations they're hoping to see and put money toward. For Portland, there are all these different revenue sources, and the city needs to know the details of certain programs before it can commit money to them. For example, there's the Portland Clean Energy Fund, which goes toward projects that cut greenhouse gas emissions and support the climate. If the renovations include solar panels or other green energy or EV chargers, that could be paid for by that fund. But since the Blazers haven't shared much about what they want to do to the building, it's been hard for the city to even think about where the money could come from. Bottom line, it comes from the city's general fund, which has already seen huge shortfalls year after year, and that's not going to change anytime soon. The city's revenue, like a lot of cities across the state, hasn't been booming. That's one of the main concerns from a lot of councilors: “We don't know where this money is coming from, and we've had to close a ton of community centers and make a bunch of layoffs. Will we be making that tradeoff to invest in this building?” At the same time, this is a city-owned building, and it's really rare for both the state and county to say, “We're going to give you hundreds of millions of dollars to renovate a city-owned building.” It's a strange moment, with the city trying to balance the best way to spend, or save, money in the long term.
Dunne: We're going to take a break. I'm Michael Dunne, host of Oregon on the Record. When we come back, more of our conversation with Alex Zielinski of OPB about the expensive plan to renovate the Moda Center. And we're back. I'm Michael Dunne, and you're listening to Oregon on the Record. Let's get back to our conversation with Alex Zielinski of OPB about the expensive plan to renovate the Moda Center. I certainly heard what you said about the Blazers' rationale, about how they've done so much for the city, with the original owner, or the previous owner, buying the building, and so on. Have there been any studies, or at least data points, showing that because the Portland Trail Blazers play at the Moda Center, they're generating a certain amount of money for the city of Portland, an overall tremendous benefit for everyone?
Zielinski: The city has touted some numbers, and local economists have pointed to studies estimating, based on past years, how much money came in. The total economic activity from Blazers games, from ticket sales to parking to hotel rooms to jobs, is estimated at around $600 million a year, something like that. At the same time, there are so many caveats that it's hard to be specific. Councilors who are more skeptical of this deal say it's unreliable data. It's hard because of the comparisons, too. We can look at other cities where teams have left, like Seattle, and there haven't necessarily been devastating impacts on the economy there. But it's still apples and oranges. It's pretty hard to quantify this hypothetical.
Dunne: Sure, and we should bring this up: When Allen owned the team, the Blazers were literally the only game in town. Now the Moda Center has a lot more use. We shouldn't forget the Fire and the fact that we have a WNBA team, so that presents other opportunities for revenue generation, doesn't it?
Zielinski: Yeah, definitely. And it's been interesting. The owners of the Fire have come out, and they aren't saying, “Give Tom Dundon a ton of money,” but more like, “This facility isn't really built for national franchises. We don't have the capacity, in our locker rooms, the media areas, the medical support. It's not built up to the standard.” It's an equity issue, too, because the women's team is kind of second to the Blazers in prioritizing who gets to use the space and who gets what. So they've brought that up as an issue: This building needs upgrades because it's being used a lot more than it used to be. At the same time, there are also a bunch of events that come through Portland and make the Moda Center their landing spot: monster truck rallies, rodeos, big shows, Taylor Swift...
Dunne: Has played there?
Zielinski: Well, I think she's passed on playing the Moda Center because it isn't as updated as it needs to be. That's kind of the rumor: Big acts often skip Portland because the arena doesn't have the upgraded AV and electronics that other venues have. So that's another argument for why it's important to invest in this arena.
Dunne: In your role covering Portland city politics, is there any analogy to another business, non-sports related, where the city has really extended itself to keep a particular business in town for fear of possibly losing it? I know Nike isn't in the city, but I could imagine if Nike's headquarters were physically located in Portland, would it get the same kind of cooperation?
Zielinski: That's an interesting question. There are certainly tax breaks that different cities have used, maybe Hillsboro and other places, to keep anchor companies in place. But I haven't heard of this happening, no comparison to another company like this in Portland, at least since I've been here.
Dunne: So, we've talked about where things stand now. What are some important dates or milestones where, if they're reached, everybody can say, “Yes, this is a done deal”? And if things go according to plan, how far out might we be looking at for renovations? I realize I've just asked three questions in one: It's not a complete teardown, right? Some of the actual building will remain and be renovated. We're not talking about tearing it down and starting from the ground up. Take those in whatever order you want.
Zielinski: Just looking ahead, to answer that last question first: No, these are renovations. We haven't seen the details from the Blazers, the architectural renderings of what they want changed, but this isn't starting from scratch. It's based on the bones of the arena that's currently there, which is why they argue it's less expensive than it could be. Negotiations are expected to start almost immediately, over the next three months. The city really wants to bring the deal, the first lease agreement, to the city council for a final vote in early December. They're hoping to get everything wrapped up by the end of the year to meet the state's deadlines for bonding; they have to go out for a bond in the spring and need to have their ducks in a row before that to get the money to pay for all this. So they're really hoping to wrap this up by the end of the year. Things might go sideways if that doesn't happen. The timeline is connected to construction: The hope from the state and others is to get construction finished before the 2030 Women's Final Four, which is going to be hosted at the Moda Center. They want everything finished by then, which is a pretty quick turnaround and would mean getting shovels in the ground by next summer. So getting this money flowing as soon as possible is the goal.
Dunne: Two last questions, and maybe they're ones you can't answer, but I'll ask them anyway. A lot of times when these happen, a team has to find an alternative location to play a season. Has anything like that been worked out? Construction will last this long, which means the Blazers might be playing the 2028 season somewhere else?
Zielinski: I haven't heard exactly what that means for the Blazers. I know it's going to affect where the Fire can play, because the idea is that construction would happen during the summer, which is when the Fire plays. My understanding is the plan would have them playing in the Veterans Memorial Coliseum, the old arena where the Blazers used to play. It's right next to the Moda Center and is still used for other events; it's just a smaller space.
Dunne: Last question: We call it the Moda Center for a reason; Moda Health bought the naming rights. Is that going to stay in place? Do they have a long-term naming rights agreement, or could it be open to another named sponsor after renovations?
Zielinski: That's a great question. I don't know about the lease or the longevity of that name. My understanding is that the city has inquired about getting naming rights through this lease negotiation, and the Blazers aren't interested in handing that over; they want to hang on to that agreement as it currently stands. I can't speak to the details of what that means for Moda right now. I know a lot of people want it to go back to the Rose Garden...
Dunne: But here we are. I think naming sponsors are here to stay. Alex, really appreciate this. It's obviously a big deal, certainly important for the city, but for the state in general, too. Alex Zielinski covers Portland city politics for OPB. Alex, thank you as always. Thanks so much.
Zielinski: Thank you.
Dunne: That's the show for today. All episodes of Oregon on the Record are available as a podcast at klcc.org. Tomorrow on the show, you'll hear from a New York Times reporter about his recent story, which shows that women are obtaining more and more jobs, but that in many cases those jobs have been so devalued that men don't want to do them anymore. I'm Michael Dunne, host of Oregon on the Record. Thanks for listening.
