In the world of sports, new stadiums and arenas are built when their predecessors become outdated or obsolete. This is not a new concept, especially to downtown Detroit, which has seen two new stadiums pop up in the last 13 years.
In a city with a strong sports tradition, you would think new, state of the art stadiums would be a welcome sight when the time came to build them. Ford Field and Comerica Park draw tens of thousands of people each time the Detroit Lions and Tigers play there, but at least in the case of Comerica Park, that came after a lot of complaining over the move from the corner of Michigan and Trumbull.
The Detroit Red Wings, on the other hand, have been playing at the Joe Louis Arena since moving from Olympia Stadium in 1979. Before the two stadiums I mentioned earlier were built, the Joe was the newest pro stadium to the city.
Fast forward 24 years and four Stanley Cups later – the Joe is far from falling apart, but it’s outdated and needs more seats. Enter Wings (and Tigers) owner Mike Ilitch and his company, Olympia Development of Michigan.
Ilitch wants a new arena for his hockey team. He has the land for it, but the concerns for many are financing and management.
According to articles from the Wall Street Journal, Detroit News and Detroit Free Press, the new arena would be owned by the Downtown Development Authority, but managed by Olympia Development, in much a similar way as the Joe is right now.
As far as the costs go, the project is reported to cost in the neighborhood of $650 million.
For a city which has its finances under the public and media microscope almost daily, one might have a hard time trying to justify $650 million to build and develop an arena which will only hold 18,000 instead of the roughly 20,000 current seats at the JLA.
First, according to all three articles, the majority of the financing will be coming in the form of bonds issued by the State of Michigan, to the tune of nearly $450 million.
“This isn’t a source of money that can be redirected to the city,” Brian Holdwick, executive vice president for the Detroit Economic Growth Project said of the state funds in an interview with the WSJ.
According to the same article, $283 million in bonds will be coming from the DDA.
I don’t see the DDA portion as a burden for the cash-strapped city. I see it as an investment.
In a city which boasts not only the Tigers and Lions, but theatres like the Fox, Fisher and Bonstell, as well as a robust music scene, I think any chance to add to it, whether it be a new sports stadium or concert venue, should be taken at all costs.
Spending $283 million on the arena now will allow the city to make that much and more for the next 35 years, which is the term of the proposed deal.
If you’re still having trouble justifying the investment, think of it this way. The Tigers and Lions each made the playoffs within ten years of their respective stadiums. The Red Wings have won four Stanley Cups since 1997, two of which came after Ford Field and Comerica Park were built.
In the case of the Lions, Ford Field was the stadium that brought the team back from the Pontiac Silverdome, ten minutes away from The Palace of Auburn Hills, where the Detroit Pistons still play today.
I think the focus of city officials and fans alike needs to be about bringing as many people to Detroit as possible.
When people come to games and concerts, they spend money on merchandise, food and drinks. I don’t know about you, but the last time I went to a Wings game, the $6 I spent on a slice of pizza (when I can get a whole pizza at one of Illitch’s other companies for $5) seemed a little high to me.
However, I looked around and saw hundreds of those being washed down by $9 beer or $6 pop and not only did I feel a little better about my purchase, but I concluded that it probably wouldn’t take 35 years to pay the new arena off, even if 2,000 fewer people are inside every game.
“The deal will get done,” Joseph Krist, a fixed-income analyst for UBS Financal Services said to the WSJ. “I would imagine investors will want to see how, if at all, the bankruptcy impacts the authority, both in terms of its ability to operate and whether it creates any hurdles.”
I think Krist is right. In a city like Detroit, major sports teams make major money for the city. I think the new arena for the Red Wings is just one more investment that needs to be made in order for the city to continue improving and drawing people inside.
Follow Al Willman on Twitter: @AlWillmanEcho.
