How Mike Ilitch scored a new Red Wings arena
Hockeytown's Caesar gets a sweet deal. But what's in it for Detroit?
Published: May 6, 2014
Downtown Detroit is bustling with activity. Baseball fans across the region have flooded into town, packing portable grills, beer coolers, and happy faces. The Detroit Tigers are set to play the Kansas City Royals in the team’s home opener before a sold-out crowd at Comerica Park. After the winter that metro Detroit just went through, it’s a beautiful day for baseball.
Down the road, inside the Coleman A. Young Municipal Center, Detroit City Council President Brenda Jones calmly acknowledges the festivities while calling a special council meeting to order. “It’s Opening Day,” she says, before adding, “It’s going to be a great day.”
A Detroit resident in the audience shouts at Jones. “It’s not gonna be a great day if you’re going to give away Joe Louis Arena!”
Though downtown may have been in a celebratory mood, Detroit City Council had an important task at hand. It was about to decide the fate of the Joe, a city-funded facility the Detroit Red Wings have called their home since 1979.
The irony that the decision coincided with Opening Day appeared lost on the room: It happened to be the last day before an agreement to construct a new hockey arena for Tigers owner Mike Ilitch’s other sports franchise, the Red Wings, would expire.
It was tense inside council chambers. City officials were on-site to lay out the proposal blow-by-blow. If councilmembers didn’t approve the proposal to demolish the Joe that day, and agree to a retroactive lease for the arena that City Council legislative analysts said would generate less revenue for Detroit’s coffers, the deal to construct a new Red Wings home could be — well, at best — delayed. Under state law, Detroit Emergency Manager Kevyn Orr could use his unprecedented powers to ensure the deal keeps moving forward. He had already been on record in support of the project. This meeting was, to some degree, a technicality.
Nonetheless, city and state officials indicated to councilmembers that time was of the essence. If passed, it was implied, the new Red Wings arena would give the city an opportunity to experience more of what’s happening out there. Think of the people, the business patrons, the image of a Detroit with three professional sports stadiums — alongside Ford Field and Comerica Park — on top of a thriving theater district.
The resident continues to shout at Jones: “This is an ongoing effort to destroy the heritage of the City of Detroit!”
For some, this is the note Ilitch has struck. While the 84-year-old owner of the Tigers and Red Wings has received enormous praise for his decision to construct a $450 million new hockey arena near downtown — with the intention of drawing a significant amount of adjacent investment in the lower Cass Corridor, an area with scant economic activity — that’s just how some see it.
The deal before Council that day left a sour taste for other reasons too: The demolition of the Joe would be financed by $6 million in bonds from the state of Michigan (see: public tax dollars).
And even though City Council could’ve laid down and forced Orr to flex his powers, the proposed lease and demolition agreement passed in a narrow 5-4 vote.
By ditching the Joe Louis Arena for a 21st-century state-of-the-art facility, Ilitch reps have said the Red Wings will be able to remain competitive in the National Hockey League. It’ll bring additional jobs to the city, they said. And, if all goes according to plan, it will fill out a blighted part of Detroit, bridging the currently thriving downtown and Midtown districts.
That opportunity will cost taxpayers more than $260 million, about 58 percent of the arena’s total cost.
Critics of such subsidies see things differently.
At a time when the city of Detroit was on the cusp of bankruptcy, state lawmakers swiftly passed a bill that, by and large, will help grow the net worth of Olympia Development of Michigan, the Ilitches' real estate arm, for years to come. It was simply another handout to support a billionaire’s cause, they said.
When legislation was introduced to a state Senate committee that would supplement construction costs of the new arena, lawmakers took just over a half-hour to consider the bill and and approve it. It received much less scrutiny and fanfare than a $350 million pledge to shore up bankrupt Detroit’s pension funds.
Project backers are quick to point out that the new arena doesn’t use a single dollar from the city’s general fund. By building on the momentum in downtown and Midtown, they contend, the city only stands to benefit from the new arena.
But what’s typically left out of their dialogue is that new stadiums historically boost the value of a sports franchise and increase the wealth of the team owner. And in some instances, publicly subsidized arenas have delivered questionable economic benefits to the city.
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