OT: Plans Unveiled for Wings New Arena
According to Freep and Detroit News sources, Illitch Holdings met with the DDA this afternoon and a tentative deal has been reached for an 18,000 seat multi-purpose event center. The arena would be located kitty corner from Comerica Park.
It's still very early in the project, so no word yet on the future of JLA. Illitch Holdings hopes to get the deal finialized by the end of the year.
More here
Detroit dumped a boatload into Comerica Park and Ford Field 15 years ago, and money was never a problem in the city ever again.
Point taken, but considering they were built just before the recession, we should probably wait a bit longer to gauge the long-term economic impact on the surrounding area.
Comerica Park was built in 2000, eight years before the recession started. How long of a wait do we need? Granted, not long after it opened Kwame took office and pretty much wasted all the goodwill Dennis Archer had built up with the state and surrounding area - but there are no guarantees Detroit won't elect another guy like him in the future.
I'm in favor of a new arena, but I don't see why it requires public financing. I don't believe for a minute that Ilitch would build in the suburbs. That would go against everything he's done for decades.
Except it doesn't generate money for decades, it's NOT a net positive. Seattle is paying off $80M in bonds for the now destroyed Kingdome, for example.
Let the arena be built in the suburbs, it's not a net positive, it doesn't generate tons of revenue, and research after research backs this up. Stop subsidizing stadiums for people who are already billionaires.
Have you read the details? $450 mil for the arena, $200 mil for additional development (including renovation of 3 buildings, 150,000+ ft2 of new retail/office space, a hotel, parking structures/lots)... I think it's a bit presumptive to assume this is a net negative for Detroit soley because other cities have bad stadium/arena agreements.
They promised the same things when Ford Field was built. The only one that came to fruition was the office building, which wound up having no retail. Might be because no retail wanted to move there, but still, having the plan for all of those things aren't going to magically make it happen unless someone's willing to move their retail/hotel/restaurant in the space. There are no guarantees.
But basically what ShockFX is saying is that you can't assume an economic boom from stadium developments no matter what is built around it. For it to be a net gain, NEW spending would have to be created, which you cannot assume. Sports teams are essentially competitors with all other forms of entertainment, therefor when something new comes along, consumer spending shifts from one form of entertainment to the other (with no NEW spending).
+1 to you for hammering this point. The way local governments allow themselves to be fleeced by sports franchises is nauseating.
Not to mention that the revitalization of the area ultimately depends on getting people to live down there, and living next to three pro sports stadiums isn't necessarily that appealing for a lot of people.
150,000+ ft2 of new retail/office spaceIs there a demand for this retail and office space? It seems like Detroit's got way more of that than it needs at the moment.
And has all his other businesses around it, and he's going to undercut all that by moving his other team to the 'burbs? Not going to happen.
Here's an idea. Rather than catering to a super wealthy family, maybe they could take that $300... and tell I don't know, a few thousand middle class families: "We'll pay for 50% of a new house if you relocate to the city of Detroit." That's what will get you long term success... not a new arena every 20 years because the owners want more luxury boxes. And how exactly is the city going to MAKE more money off the Wings than they already are now? The arena is going to be smaller (fewer people going to the game... speaking of which, how much money do you spend outside of a hockey game anyways? $10 for parking and maybe $20 for a quick bite to eat? ooooooo get that chedda' Detroit).
For all of you comparing the money for this project with things like school funding, neighborhood development, etc., you should know that the proposal substantially calls for using DDA (Downtown Development Authority) funds, which are taken directly from taxes paid on downtown properties and are for use only in that footprint.
Put plainly, there are zero connections between this project and DPS, neighborhood redevelopment, abandoned building demolition outside the CBD, etc. The money that would be spent on this project would NEVER be used for those purposes, arena or no arena.
Are you sure about that?
“The primary public funding mechanism for the $450 million center is a continuation of a projected $12.8 million-per-year property tax capture authorized by the State Legislature in December,” according to a release from the DEGC. “The DDA is also expected to contribute an average of just over $2 million per year. Olympia Development is expected to contribute $11.5 million per year. All three of those commitments would be used to retire 30-year private activity bonds issued through the Michigan Strategic Fund.
It sounds like the DDA's contribution is relatively small. The property tax capture is the largest component. Is this what the State Legislature intended when it authorized it last year?
http://www.detroitnews.com/article/20130619/BIZ/306190075#ixzz2Wi5sbEU7
The $12.8M-per-year is also from the DDA:
Right now, the tax money would be an estimated $12.8 million annually from Detroit's Downtown Development Authority. The cash was money the DDA collected within its district originally to pay downDetroit Public Schools bond debt, which has since been retired.
OK, I stand corrected. Still, we are talking about taking property taxes - even if obtained in an atypical manner - and using them to build a sports arena. How is it that the city can come up with these funds but can't come up with funds to replace broken streetlights? if the city/state had the political will it could use those funds for purposes other than to build an arena to line Ilitch's pockets. It took a special law to allow them to be used for this purpose.
In any event, the question is whether or not this is an efficient use of public funds. Which particular account the funds technically exist in is irrelevant. If the city can completely restructure its debt and give creditors a massive haircut, there's no reason they can't shift some money around.
The Palace will be the oldest professional stadium in Detroit (ok, I know the Palace is no where near Detroit, but you get the idea!!).
It won't be if the Piston's move back downtown and share the new arena... it's always a possibility.
The Pistons are not moving back downtown for a very long time.
Why would Tom Gores want his franchise to leave an arena he owns (the Palace) for one he doesn't?
and isn't against the idea of moving downtown. Would he need to own the downtown arena, or would he be fine leasing from Illitch? I guess that's another question.
http://www.detroitbadboys.com/videos/2012/10/31/3583620/tom-gores-detroit-pistons-downtown
They have a perfectly fine arena. Why the hell would he PAY to rent an arena or buy land from Illitch or someone else when he already owns an excellent facility??
It's not going to happen. It makes zero financial sense for him to leave his own building.
This thread would be a lot more useful without the armchair economic developers who make an immediate, kneejerk connection between this project and Detroit's current financial situation.
I don't see how you can.
If 10,000 seats were to be added to Michigan Stadium and student tuition were to be raised slightly to cover a portion of the costs, this thread would be howling with opinions. Why should this situation differ?
Normally, I'd agree. But the "new reality" we're constantly being told we need to accept when it comes to funding education, police, etc. doesn't seem to apply to the Detroit Red Wings.
Useful for what? To keep our heads in the sand about the absolute dire situation Detroit is in? Go build your $300 million stadium while half the city crumbles, give America another laugh at Detroit's expense. The city and state governments (and the people who continue to vote these yo-yos into office) have brought this upon themselves. If this goes through, Detroit better not get any damned sympathy from 60 Minutes and the national news who so love to exalt the "glories of future Detroit".
Why doesn't the city first address the fact that 47% of Detroit residents are functionally illiterate? http://www.huffingtonpost.com/2011/05/07/detroit-illiteracy-nearly-half-education_n_858307.html THAT IS 3RD WORLD COUNTRY SHIT RIGHT THERE.
Please please please name it Domino's Arena. That would be the sweetest poetry.
Wasn't that what they called those old Discovery Zone-type Little Caesar's pizza joint/playground/arcade combinations in the late 80s-early 90s?
....courtesy of Crain's Detroit Business (LINK).
Here's the projected improvement in team revenue:
"A new arena, which would replace the aging Joe Louis Arena, could generate $5 million to $8 million annually in additional team revenue, sports industry insiders have told Crain's."
According to the photo in this article, the area is bracketed by Woodward Avenue, Cass Avenue and Temple, which is just north of I-75, right near the Masonic and Cass Tech. You would definitely have a nice view from Comerica.
Some of the other items in the memorandum are interesting - it's supposedly a concession agreement, with the Wings' fee being $11.5 million annually. The DDA will pay a $62 million fee for tax capture if Olympia pays for another $200 million on additional projects.
This is how a public-private partnership should work here. SF is agreeing to a long term lease of publically owned land, but the team is bearing all the risk past that.
The new arena would not require any money from the city's general fund or new taxes, Lee and team officials said. "At the end of the day, our investment group is financially responsible for building this," Lacob said. "And it will be done." The team will have to overcome a number of hurdles, however, before its waterfront arena hosts an NBA game. For starters, there is the sad state of Piers 30-32, which despite its plural name is actually one dock. The Warriors believe it will cost as much as $100 million to make the pier capable of supporting a massive arena. The Warriors are proposing to put up all the costs in exchange for a long-term lease to the site. The team hopes to recoup the money eventually in the form of rent credits from the port or other givebacks, and from having sole access to the arena's revenue stream.
I quickly drew up a sketch of the entire area they are trying to redevelop as well as where the arena would be located.
Cass Tech is right in the middle of that block FYI
Which block is "that" block?
That also includes the prime parking location for both Tigers and Lions games.
I understand the sentiment behind the "Detroit needs funds spent elsewhere" and "stadiums don't make money" arguments. Detroit is in a very sad state - heartbreaking, really.
But it seems a bit short-sighted to be attacking this project out-of-hand in light of a few factors. First, cities need attractions and landmarks. If Detroit wants to attract any visitors, it needs some good venues in its city limits.
Second (and related to the first), how do you measure whether it's cash-positive? Some colleagues of mine refuse to live in a city that does not have good professional sports facilities, and plenty of folks feel the same way. Good arenas enhance a city's reputation and image, and Detroit definitely needs an image makeover. And who says that every civic project needs to be cash-positive to be justified?
Third, healthy cynicism may be warranted toward Detroit in general, but it seems unfair to immediately question Mike Ilitch and his motives. The man has put a shit-ton of money into Detroit, when he could very well have packed up his riches and moved to the suburbs (or relocated out of Michigan). His prior projects have enhanced the city - look at The Fox district, in addition to Comerica. He's been a leading light in a city without too many of those.
There are lots of ways to measure the value of a new arena. I'm inclined to have some faith that Ilitch is not holding the city up for personal gain. That's not been his history, and I am grateful for all he's done for a crumbling, but in many ways wonderful, city.
I think the skepticism here is grounded in three points:
1) Joe Louis Arena is not that old and still a functional venue for pro hockey. It's not crumbling to pieces like Tiger Stadium was, nor is it out of the way like the Silverdome. Nor does it have trouble drawing fans.
2) If the Wings don't get this arena, they'll presumably just stay at the Joe - there is no particular reason to believe they'd move out of the city. Moreover, the proposed site is only a mile away from their current location.
3) The Pistons seem unlikely to move downtown.
The third one is pivotal. If Ilitch could get the Pistons to sign on, then that changes things a lot because then the city would reap a visible benefit - just from the NBA regular season alone there'd be another 41 nights of a substantial visitor presence downtown. But I don't see why the Pistons would bother, given that their ownership also owns the Palace, so it has a vested interest in seeing that arena prosper.
If they can build the arena with private funds, sure, but I question the use of public money here. The city really can't afford that right now.
and rental agreements go, the Red Wings current deal with Detroit is terrible. The facility is probably one of the worst 3 or 4 in the NHL, all things being relative. You are correct there is nothing physically wrong with the building, just the lack of modern ammenities and more importantly close to the ice $uites which can generate huge revenue.
The Wings had a 30 year lease which ran out in 2009, they've been year to year with Detroit since and in 2008 made very public the idea that they would need a new arena with a more favorable rental agreement or they would consider moving to the suburbs or even The Palace.
Blow hard leverage or not, the City of Detroit can not let the Wings simply walk to the 'burbs
Hey, I understand why Ilitch wants a new arena. I know the Joe isn't that great at generating revenue. But it's harder to come up with a convincing argument for the fans. The new arena will have fewer seats, which will be further away from the action (to accommodate more suites) and tickets will cost more money than they do now. That's the reality of any new pro stadium.
These facts are also true of Comerica Park and Ford Field. But there, there were legitimate reasons for fans to buy in. I loved Tiger Stadium but it was falling apart. The Silverdome is a piece of garbage and is not in a convenient location for a lot of fans. But what's the knock on the Joe for the average fan? It's still in pretty good shape and it's already downtown.
If the main argument for public financing here is that the Wings might move to the suburbs, I'm not sold. Exactly which suburbs are itching to spend $300 million of taxpayer money on an arena? Not to mention that it would make no sense for Ilitch, who's invested a ton downtown, to pack up and leave. If he wants a new building, fine, but he's got to find a more creative way to pay for it.
I tend to agree with EM above -- without concerts and sporting events, there's not much drawing people downtown Detroit. As to the points above, I would say that it's not just about creating a new hockey arena. The Joe may be still functional for hockey, but the complex (including the parking lots, walkways, etc.) is a huge eyesore and blocks a lot of the waterfront space that could be put to use for a lot of other purposes, including an expanded convention center that would bring in more visitors. Plus, the new development looks (at least from the initial plans) to involve a lot more than just building a stand-alone arena. Having seen what new developments like this can do in other cities (Verizon Center area in DC; Coors field area here in Denver; etc.), I'm excited to see what it might turn into. Nothing is guaranteed obviously, but at least there's news of new development in Detroit, which is a positive, I think.
I would heartily disagree with your points 1 and 2.
We can agree to disagree on point #1 - I think the atmosphere in a new arena (which will have fewer seats in a much larger interior space) is going to be a lot worse than it currently is at the Joe, but whatever.
But what's your disagreement on #2? Where are the Wings going to go if this deal falls through? What suburb wants to spend $300M on an arena?