First Class

Near the end of today’s work session, City Council Vice President Olivia Clark asked Trail Blazers President Dewayne Hankins a simple question:

“Do you believe that the Moda Center is in first-class condition currently?”

“Yes,” Hankins said.

He then described a north entrance where fans now wait in the rain. It could be rebuilt as “a grand entrance for the arena, much like something you might see at the airport.”

But, he continued, the absence of such an entrance did not make the building deficient. “There’s not deferred maintenance in the building,” Hankins said. “We keep the building in great shape. We replace things as they need to be replaced.”

Another Blazers representative immediately reinforced the point: “Yes, we think the building is in first-class condition. Yes.”

The Blazers are asking the public to contribute $573 million toward renovating a building they say is already first class, already well maintained and carrying no deferred maintenance. That does not mean a renovation is unnecessary. A 30-year-old arena can be well maintained and still need new mechanical systems, better entrances, modern technology and improved fan amenities.

But it does change the question.

Portland is not being asked to rescue a crumbling building. It is being asked to modernize a functioning one—partly to make it more competitive, more comfortable but mainly to make it more profitable.

Before the City pays for that transformation, it is entitled to know what it is buying.

The Blazers did not provide that answer Thursday, continuously refusing to answer any questions until the City first resolved the very contract issue that could affect who should pay.

The 2024 arena lease requires Rip City Management to maintain the Moda Center, at its “sole cost and expense,” in first-class operating condition for a facility of its age.

The same lease temporarily prevents the City from enforcing that requirement. But it does not eliminate it. The document says the obligation “is and remains a continuing obligation,” suspends time-based legal defenses and makes the requirement fully applicable when the lease ends.

Hankins described that arrangement differently.

“We agreed to take the standard off the table,” he said, by suspending the City’s ability to pursue it.

But the parties did not take it off the table. They both deliberately preserved it, less than 2 years ago. Now the Blazers want the City to affirm that the arena “is and remains in first-class condition” even though the lease says the obligation “is and remains” alive.

The Blazers want the City to say the building “is and remains” compliant.

That could be worth real money.

If some proposed renovation work resulted from maintenance the operator was already required to perform, the first-class provision could affect who pays. If the work is instead modernization—a new club, premium seating, a grand entrance or new technology—the public debate is different.

The Blazers say they cannot disclose their information while the issue remains unresolved.

“Information shared during these negotiations can’t be unheard,” Hankins said. “It can’t be unseen, and eventually may be used in litigation against us.”

That concern is not frivolous. Today’s mayor and council cannot guarantee what future City officials might do when the lease ends.

But the ordinary way to protect sensitive information is through confidentiality, nonwaiver and limited-use agreements. The Blazers are asking for something more consequential: a City declaration that could weaken or eliminate the underlying claim.

The proposed order is therefore:

1. The City resolves the first-class issue.

2. The Blazers disclose their information.

3. Negotiations begin.

Portland should never agree to that. The correct order is the reverse. The City should receive the information under appropriate legal protections, determine what the claim is worth and negotiate any release as part of the complete deal.

Otherwise, Portland is being asked to settle before it is allowed to see the evidence.

Councilor Angelita Morillo asked what the public’s $573 million would actually build.

Hankins explained that the team once identified roughly $800 million in projects it “could do.” That became approximately $600 million in projects it “probably should do.”

But those ideas were developed under the previous ownership. The new owner, Tom Dundon, may want something different.

“Until we have the funds to pay those architects, we don’t have plans to show you,” Hankins said. “We have concepts.”

“So right now,” Morillo responded, “you have concepts of a plan.”

“We have concepts,” Hankins confirmed.

City officials later explained how the public number was assembled.

The NBA generally validated a renovation target of approximately $600 million. But the league never said Portland needed to provide exactly $573 million.

“Not that specific,” a Deputy City Administrator Donnie Oliveira said. “There was never a request from the NBA that that was the number we needed to hit.”

Instead, $573 million is the sum of the proposed public sources: $365 million from Oregon, $120 million from Portland and up to $88 million from Multnomah County.

As Deputy City Administrator Donnie Oliveira put it, $600 million became the target, and $573 million was the public partners “getting as close to that 600” as they could.

The number was not built from a current design. The available public money was assembled first. The project will be designed later.

The City’s own draft term sheet admits this. It describes the $573 million budget as “based upon information to be verified.” The exhibit where the renovation budget should be itemized is still blank.

This does not prove $573 million is too much. It proves no one has yet shown that it is the right amount.

The Blazers supported their case with several large numbers.

Hankins said the organization had invested nearly $1 billion in the arena, sustained more than $1 billion in losses and paid taxes “higher than any other team.”

None of those claims was documented during the meeting.

The original arena was predominantly privately financed, but not entirely. State records describe a project that was approximately 88 percent private and 12 percent City-funded, with additional public participation involving land and infrastructure.

The larger investment figure also appears to include decades of maintenance. That spending is real, but maintenance was also part of the operator’s contractual responsibility. It cannot automatically be treated as a voluntary contribution against future obligations.

The alleged $1 billion in losses is impossible to assess without knowing which companies, years and accounting methods are included. A sports franchise can report operating losses while its owners benefit enormously from appreciation in the team’s value. The recent multibillion-dollar sale of the Blazers does not disprove earlier losses. It shows that operating profit is only one part of the return from owning an NBA franchise.

Hankins also described a “6 percent sales tax on every ticket sold” that went “anywhere but back into the Moda Center.”

That description is incorrect. It is a contractual arena user fee, not a general sales tax. It does not apply uniformly to every ticket, and under the bridge agreement City reimbursements from user-fee and parking revenue are connected to approved arena capital work and matching expenditures.

Fans help fund the building through the fee. But the money does not simply disappear into unrelated City spending.

The Blazers’ community contributions are substantial. Their foundation reports approximately $17 million in grants. Portland’s taxes and business climate are legitimate concerns. The team unquestionably provides economic, cultural and civic value.

None of those facts tells the Council what this renovation should cost taxpayers.

The Blazers’ economic study made an important improvement over typical stadium studies: it excluded billions of dollars in local spending that would probably occur elsewhere in the region if people did not attend games.

That is a more honest approach than counting every ticket and beer as new economic activity.

But the model compared Portland with the Blazers to Portland without the Blazers. It attempted to value the franchise’s presence, including national media money, visiting fans and outside spending.

That is not the same as evaluating this renovation package.

The question before the Council is not whether the Blazers have value. They plainly do. The question is whether $573 million is necessary, whether a smaller or differently structured package could retain the team, and how the resulting benefits should be divided.

National television revenue follows the franchise, not a remodeled entrance. Much of the renovation’s direct financial benefit would come through premium seating, sponsorships, clubs, suites and hospitality revenue retained by the operator.

The study may demonstrate that losing the Blazers would hurt Oregon. It does not demonstrate that the proposed public contribution is correctly priced.

The Blazers offered three descriptions of the negotiating process.

“We have been at the table this whole time,” Hankins said. The parties have had multiple conversations each week.

Later, he said, “We’ve never once negotiated deal points in those meetings.”

And when asked what happens next, he said that after resolving first class, the team would be happy to “start negotiations.”

Those statements describe plenty of contact but little substantive bargaining.

The Blazers called the City’s term sheet a “nonstarter” containing more than 20 material departures from the state legislation. Council members repeatedly asked for a list. The team did not provide one, saying it would do so at the “appropriate time.”

That made it impossible to evaluate the complaint.

The state law establishes minimum conditions for Oregon’s contribution. It does not prevent Portland from seeking stronger maintenance, audit, labor, payment, cost-overrun or nonrelocation protections.

Some of the City’s proposed terms may be excessive. Its annual $3 million tax-offset payment, escalating 5 percent each year, could become expensive. Labor-peace requirements, inspections and capital-planning rules all deserve negotiation.

But calling provisions “departures” is not an explanation. The City needs the list.

The same pattern appeared elsewhere. The Blazers said the public sector needs to provide the renovation contribution, then said they were “happy to talk” about private capital. They were “happy to negotiate” labor peace. They were open to discussing ongoing arena revenues. But none of those positions became a commitment.

Everything the City wants must wait for a complete negotiation. The first-class concession the team wants must come first.

Councilor Tiffany Koyama Lane asked why Portland had not sought information from alternative arena operators.

The administration answered that replacing the operator could take years and that the Moda Center is deeply intertwined with the Blazers.

Replacing the Blazers would indeed be extraordinarily difficult. But an RFI is not a replacement process. It is a way to gather information.

Portland ran such a process for its Portland’5 venues this year. It took two months.

An arena inquiry could help determine what an operator might charge, what revenue guarantees or private investment might be available, and what the building could earn under different scenarios. It would not reproduce the value of an NBA team. It would help Portland understand its alternatives.

The City’s decision not to test the market reflects an assumption that retaining the Blazers is the only acceptable outcome.

That may be where Portland ultimately lands. The team has economic value and an emotional importance that cannot be reduced to tax receipts.

But if losing the Blazers is treated as unthinkable, the City’s leverage disappears before negotiations begin.

This was not an argument against the Blazers or against renovating the Moda Center.

The team should stay. The arena should be modernized. A public contribution can be justified when the public receives a durable lease, strong nonrelocation protections, meaningful oversight and a fair share of the benefits.

But Thursday’s meeting did not establish that $573 million is the right contribution.

It established that:

• The Blazers consider the arena first class and say it has no deferred maintenance.

• The current renovation remains a collection of “concepts.”

• The NBA never requested $573 million.

• The public number was assembled before the current project was designed.

• The team has not identified a firm private contribution.

• The team has not provided its list of objections to the City’s term sheet.

• The team is withholding information until the City resolves a potentially valuable contractual issue.

The team called Portland the “best and most obvious choice” for the franchise. It did not threaten to move. The existing agreement also restricts relocation during its term.

That gives the parties time to negotiate correctly.

Portland should protect confidential information, obtain the scope and financial assumptions, independently separate maintenance from modernization, identify the team’s objections, test the City’s alternatives and price any release of the first-class provision inside the final agreement.

At the end of his presentation, Hankins urged Portland to do “big things, hard things, courageous things.”

The courageous choice is not necessarily saying no. It is refusing to confuse love of the team with acceptance of an unpriced deal.

The question is not whether Portland wants the Blazers.

It is whether Portland will learn what it is buying before it agrees to pay.

Quotations are drawn from the July 30 City Council work session and lightly cleaned for captioning disfluencies. Documents reviewed include the Arena Operating Lease, Exclusive Site Agreement, Development Agreement, City term sheet, facility-condition assessment and Senate Bill 1501.