Detroit proposes $450m Red Wings arena, mostly paid for by taxpayers

And the campaign for a new Detroit Red Wings arena has been officially launched: As previously reported, it would cost $650 million and include a whole bunch of crap that isn’t actually a hockey arena (retail space, offices, housing, a hotel, a space elevator). And Detroit development chief George Jackson, who made yesterday’s announcement — it was technically of the Detroit Development Authority giving its go-ahead to the project — wants all approvals in place by the end of the year.

The arena development, which would cover a huge swath of land at the edge of downtown Detroit and adjacent to Red Wings owner Mike Ilitch’s Fox Theater and Comerica Park, would be paid for by bonds sold by the state Michigan Strategic Fund. Those bonds, in turn, would be paid off by:

  • Between $12.8 million and $15 million a year in property taxes collected by the DDA that would otherwise go to city schools — a TIF, in essence. That’s probably enough to pay off between $150 million and $200 million in bonds.
  • $64.5 million in other DDA revenues.
  • An annual “concession fee” of $11.5 million a year from Ilitch, enough to pay off maybe $150 million in construction costs, depending on the interest rate.
  • $200 million in additional spending by Ilitch on the non-arena stuff.

Tacking on the hotels and such to the deal allows Jackson (and Ilitch) to call this deal 56% private, though even the math-challenged should be able to see from the above that the public will end up putting in way more than half of the $450 million arena cost. And that’s before we even account for the hefty property tax break that Ilitch would be getting by putting the state’s name on the arena deed in place of his own.

The project still needs more official approvals, though presumably not from the Detroit city council, which has been barred from running the city’s own finances because the governor of Michigan doesn’t trust them to. (The governor of Michigan is very untrusting.) Which creates the slightly bizarre scenario of the state of Michigan forcing the city of Detroit to spend its tax money on a development project because it’s out of money for schools — but Detroit Free Press editorial page editor Stephen Henderson, for one, isn’t worried:

I’ve never fully bought into the idea of sports stadiums as economic development; the math never really seems to work out, and there are strong, legitimate arguments to make about whether tax dollars ought to go to these kinds of projects.

But as girders of momentum and builders on buzz and excitement? I think the case in downtown Detroit right now argues pretty strongly in favor of our sports venues.

“Girders of momentum.” Now there’s an image to envision stadium projects by — even if it does bring to mind this.

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11 comments on “Detroit proposes $450m Red Wings arena, mostly paid for by taxpayers

  1. You got to admit this is a unique situation, though. You wouldn’t stand for it if guests at your workplace starting playing with your ping pong table.


    “[The new arena is] part of a team’s recruiting tool, and the Joe doesn’t cut it.”

    “The Wings…keep attracting luminously talented players.”

    Neil – Is it too early to know how this would play out in bankruptcy court? Wouldn’t the creditors that Detroit defaulted on have a case that they should get this money?

  2. So you have a thoroughly bankrupt city, placed under “emergency management” by the state, paying a significant chunk of the cost of an arena so that the team’s owner can profit off of building other stuff around it.

    I dunno, but if I’m 83 and my family is worth $2.7B and my team is quite profitable, I just might decide to do a little something for the city and build the arena myself. Legacy, karma and that kind of stuff.

  3. I’m not even able to put into words what a cluster f—ck this all really is and Im ashamed to be witness to it =(

  4. Andy: Pretty sure the state lets the DDA siphon off money before it ever gets to the city. So, sorry, creditors, but you should have contracted with a municipality whose tax base wasn’t swiss cheese.

  5. The real shame in all of this is that both Detroit teams need new venues. By having 2 teams as opposed to just 1 throwing in private money, you can take care of a heckuva lot more than just 54% private dollars or whatever they are saying.

    When most of these boondoggle attempts take place, it’s usually just one team that is in need of the new stadium or arena and that makes financing tough. Gores and Ilitch should be ashamed of themselves for trying to fleece the public in a state that has a pretty high unemployment rate. Gores can keep the Palace for all the other non Piston events. With so many sporting events taking place at the new arena, he would get so much over flow at the Palace that he would in essence be making money from 2 arenas. Basketball operations downtown and then from the Palace as well.

  6. Keith: I thought that’s what signing Prince Fielder was all about???

    Open question: Are there enough desperately poor single mothers left in Detroit that can be thrown off public support to ‘raise’ the kind of money Illitch needs? How many human beings would Dick Clark’s company have to force into sub-minimum wage workfare annually to pay for this?

  7. @Trueblood, the Pistons do NOT need a new arena. Honestly, neither do the Red Wings, the arena just needs a little work.

  8. Sacramento is now spending money:

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