Red Wings could seek state ownership of arena, tax break that comes with

One thing I hate about these crazy-busy news week: I inevitably leave something out. Like, for example, Bill Shea’s excellent article in Sunday’s Crain’s Detroit Business revealing that Detroit Red Wings owner Mike Ilitch is exploring having the state be the owner of his planned $650 million hockey-arena-plus-other-stuff development:

The suggestion to possibly use the Michigan Strategic Fund as the venue’s owner was discussed in a November meeting between state economic development executives and representatives of the Ilitch family, according to copies of emails obtained from the Michigan Economic Development Corp. by Crain’s through a Freedom of Information Act request.

The Michigan Strategic Fund may be familiar to readers of the book Field of Schemes, as the state-controlled agency that former Michigan Gov. John Engler used to funnel $55 million in state money to the Detroit Tigers for their new stadium in the late ’90s. (The fund didn’t actually have $55 million in it, so Engler augmented it with money from a state casino gambling fee that was actually controlled by the legislature, leading to the famous state supreme court ruling that while Engler wasn’t technically allowed to do this, they’d let him get away with it just this once.) That’s the Detroit Tigers that are owned by Mike Ilitch, so the man clearly known his government slush funds.

As I note in Shea’s article — see, this has been one of those weeks where I don’t even find time to cite article that I’m quoted in — the main benefit of state ownership to Ilitch would be that he’d presumably be freed from paying property taxes on the project, which could amount to a rather large subsidy. Add in the $150 million or so (actually probably more like “or so,” since the $12.8 million a year approved in December should go farther than that at current interest rates) in public funds that Ilitch already has his eye on, plus any other public moneys that could later be added, and we could easily be looking at half or more of this arena project being paid for by taxpayers.

Of course, it’s important to remember that this is just a proposal, and could be rejected by the state. (Though the state hasn’t exactly shown itself eager to drive a hard bargain with Ilitch.) In any case, it certainly shows us Ilitch’s thinking: Piece together as many obscure subsidies as you can, in order to leave yourself with as little to pay out of your own pocket as possible. It’s how he got Comerica Park built for the Tigers, so why mess with success?

One comment on “Red Wings could seek state ownership of arena, tax break that comes with

  1. I still say that both the Pistons and Red Wings need new buildings. The Palace is the oldest building in the NBA besides renovated MSG and is basically outside the Detroit metro area.

    JLA needs to be replaced asap.

    I don’t like public subsidies either. I also realize that this arena proposal is for the Red Wings and the Pistons aren’t really part of it.

    What I would prefer to see is both the Pistons and Wings work on this together and then we’d see less public money go towards the project. With most arena and stadium issues, it’s usually a single franchise jonesing for public dough and that’s why it’s so hard for them to bridge the gap with the politicians. With two ownership groups putting their money where their mouth is, it should be a lot easier. Piston owner Gores could then swoop up on all the overflow events that won’t be held at the new arena since there will be so many sporting events at the new building. He’d essentially be making money from 2 buildings instead of just one.