Pistons, Red Wings still not telling anyone how they plan to split their arena boodle

You know what I could really use this morning? A good article to read. Here’s a good article, from Sunday by Bill Shea of Crain’s Detroit. What makes it good: It’s that rare article about an important lack of information, which nonetheless informs readers about what the issues are, and why it’s important to know what certain parties are refusing to divulge:

The long-speculated on deal to relocate the Detroit Pistons from Oakland County to the Red Wings’ new downtown arena that will open in September was formally announced Nov. 22. What hasn’t been disclosed are any details about the upcoming financial relationship between the clubs.

Neither team is willing to discuss terms of the deal — which apparently still is being finalized — and a spokesman for Detroit’s Downtown Development Authority that owns the new arena said the Pistons-Red Wings contract has not yet been shared with the city. Terms of the deal between the teams do not have to be provided to the city or DDA.

There are plenty of ways to structure the deal, reports Shea, including Red Wings owner Mike Ilitch paying the Pistons to play in his arena but then keeping basketball club seat and suite revenue in exchange (as the Boston Bruins do with the Celtics). And what form it takes could have as much with trying to play revenue-sharing arbitrage with the NBA and NHL rules as with plain old sports bookkeeping.

And if you’re wondering why you should care how the Pistons and Red Wings owners divvy up their private revenue — the $334.5 million in public cash in the deal will remain the same regardless — this is not only likely to help determine the future fate of the Pistons’ old arena in Auburn Hills and how the two teams approach monopoly control of a region’s arena market, but should tell us a lot about what teams can get out of new arenas and why they want them. Other than the $334.5 million, obviously — it’s pretty clear why they want that.

4 comments on “Pistons, Red Wings still not telling anyone how they plan to split their arena boodle

  1. There is some speculation going about, but the teams themselves are keeping mum on the subject. One thing that does NOT make sense is Tom Gores and the Pistons walking away from the Palace to become a tenant, and a second level tenant at that, in downtown. After all, if you own a house, does it really make sense to leave it empty so you can sub-lease an apartment in a tonier section of town, and not even bother to rent it out?

    There’s a number of theories that have been aired recently, some of them related to the health of Mike Ilitch. He’s not doing well, and neither his wife nor eldest son Chris (CEO of Ilitch Holdings) have the same love of the sports teams that Mr. I does. To the contrary, they love money, and money only: Marian Ilitch owns one of the three casinos in town (separate from Ilitch Holdings by law), and Chris is reportedly determined to get the Tigers below the luxury tax threshold this year, no small feat considering they’re at least $28M above the line.

    Speculation says that when Mr. I passes away, they’ll put the Tigers, and maybe even the Wings, up for sale (the body may not even be cold when that happens; one report has Chris Ilitch hiring out the eulogy that he is to deliver… for his own father). I could easily see the Ilitches sell the whole sports and concert business to Gores and his Palace Sports and Entertainment who, in addition to the Palace, already control the largest outdoor concert venues in the area.

  2. @PaulS

    That could very well be true. In that case, it would make sense for Gores to jump in now.

    As for why Gores would come downtown in the event that the Ilitch family wants to actually keep the Wings, I think it all comes down to how much value the land is worth in Auburn Hills. I’m betting that Gores wanted to stay at the Palace until he found out how much he could get for the arena and the land it sits on and then had a change of heart. The possibility of controlling Little Caesars Arena as well as a top flight NHL franchise just made it all the more of a good deal if that is actually the case.

    As for the Tigers, I could see them being sold to Dan Gilbert.

    • Dan Gilbert can’t not be a candidate to buy the Tigers no more can Marian Illitch be a co-owner. He owns casinos which is the reason why Mike Illitch is the sole owner of the Tigers.

      • I didn’t realize that. I wonder if there is some sort of swap in the works. Give me the Tigers and I give you casinos and other assets that are of equal value to the Tigers.