Agency that okayed Red Wings arena deal is run by a bunch of tax cheats, this all makes sense now

Now here’s a newspaper lede you don’t see every day:

The Downtown Development Authority board spending $250 million in taxes on Little Caesars Arena is dominated by tax delinquents with financial problems and in some cases criminal records, according to public records.

The DDA, you’ll recall, is the local quasi-public development corporation that spearheaded the push to spend $300 million in public money on a new Red Wings arena, plus another $34.5 million to move the Pistons in with them. It’s long been considered about as in the pocket of the local business establishment as you can get — its longtime director took a job with the Red Wings as soon as he’d left office — and now, according to the Detroit News, its board is a clown car full of clowns:

Seven of the 12 appointed DDA members have a history of financial issues, including more than $500,000 in state and federal tax debt, according to public records. Several blamed the problems on the Great Recession, an ordeal they say made them better public stewards and taught them how to avoid making new financial mistakes.

Yes, you read that right: The tax delinquents on Detroit’s development authority board say that this makes them uniquely qualified to plan the city’s economic future. And the city council president agrees with them:

Council President Pro Tem George Cushingberry Jr. said he doesn’t see the past financial troubles of some board members as an issue.

“It doesn’t mean that they aren’t capable of doing a good job,” said Cushingberry, who filed for bankruptcy in 2011 and lost a home to foreclosure. “In fact, we probably need a few people that have some tax issues so they can anticipate the possibilities.”

Not that making bad financial decisions should necessarily rule anyone out from public service, but maybe it might be a consideration for a job that requires making financial decisions for the city? What next, hiring a guy to run an agency that he not only wants to eliminate, but he can’t even remember the name of? Wait, what?

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.

Yep, Pistons owner is getting even more public money to move team to downtown Detroit

And we have the terms under which the Detroit Pistons will move from their 28-year-old arena in Auburn Hills to a zero-year-old arena in their namesake city, courtesy of MLive. With no further ado:

The Pistons will play all home games at the 20,000-seat Little Ceasars Arena starting with the 2017-18 season.

Right, we figured.

The team and Palace Sports & Entertainment will move its business operations, corporate headquarters, team practice and training facilities into a new practice facility, to be built north of the arena at a cost between $32 and $55 million.

That’s pricey. Who’s going to pay for that?

Detroit’s DDA has agreed to contribute $34.5 million in additional bond proceeds through refinancing to be used for redesign and construction to modify Little Caesars Arena from a hockey facility to jointly house an NHL and NBA team.

Apparently Steve Neavling was right to be suspicious when Detroit’s Downtown Development Authority scheduled a meeting for a half-hour before the Pistons announcement and wouldn’t tell anybody what it was. But is this real Detroit city money, or passthrough money that’s really coming out of state education funds, like most of the rest of the arena costs? Reply cloudy, ask again later.

No city of Detroit general fund dollars will be spent on the arena project, and any additional costs or cost overruns will be paid entirely by the Pistons, the Red Wings and associated companies.

Teams pay overruns, all the public money comes out of special segregated funds, not the precious “general fund,” blah blah. It’s still city (or state) dollars that could be used for something else otherwise.

The Pistons are responsible for all costs relating to the development, construction, operation and maintenance of the practice facility.

That’s good!

The location of the team’s practice facility may be owned by the DDA, subjection to a concession agreement with the Pistons.

That’s possibly bad, since it means the practice facility wouldn’t pay any property taxes! Unless the concession agreement involved making payments in lieu of taxes. Reply cloudy, etc.

The Pistons have agreed to a 10-point community benefits plan, including investing $2.5 million over six years for the construction, renovation and refurbishment of more than 60 basketball courts in Detroit, the employment of at least 51 percent of Detroit residents on the construction of the practice facility and provide 20,000 free tickets a year to Detroit youth and area residents.

Better than nothing, but for what the DDA is putting into this, they could have built 1,000 basketball courts.

So, wait, who’s paying for that practice arena again?

Wait, what?

Okay, phew. You know, this “rough draft of history” stuff was a lot easier before Twitter got people publishing their actual rough drafts.

Anyway, total public subsidies for the arena are now at $334.5 million at minimum, and possibly even higher than that. You can argue that it’s worth it to Detroit to throw this money at the arena in order to lure the Pistons across the border from Auburn Hills — the tax impact may not be as huge as team owners like to pretend, but it doesn’t have to be to repay just $34.5 million — or you could argue that the Red Wings are eliminating a competitor (the Palace at Auburn Hills will almost certainly be razed now) and the Pistons are getting a newer home, and they’re both owned by billionaires who clearly want to do this deal regardless, so why the hell can’t they pay for adding a basketball court instead of Detroit be giving up scarce tax revenue?

More news tomorrow morning, if the magic eight ball clears up.

Pistons to announce move to Red Wings arena; public money, fate of Auburn Hills arena unclear

For anyone wondering if the Detroit Pistons are really going to abandon their own arena in Auburn Hills and shack up with the Red Wings in downtown Detroit, looks like, yup, they sure are:

The Detroit Pistons will announce Tuesday that they’ll leave The Palace of Auburn Hills to join the Detroit Red Wings at Little Caesars Arena in downtown Detroit for the 2017-18 season, a source familiar with the negotiations told The Detroit News on Monday.

What all this means in terms of financial details between the Pistons and Red Wings owners, the fate of the Palace at Auburn Hills (razed for redevelopment? all-Disney-on-Ice schedule?), and whether any more public money will be involved, we have no clue as of yet — though Motor City Muckraker blogger Steve Neavling notes with alarm that Detroit’s Downtown Development Authority is going to be voting on something right before the Pistons announcement:

neavling_on_stadiumMore news later today, I guess. Though given the way these things go, don’t be too surprised if we get a lot of renderings and not much in the way of financial details until later.

Pistons owner says talks “serious” on moving to downtown Detroit in 2017

The Detroit Pistons are about to cut a deal to move into the Red Wings‘ new downtown arena when it opens next fall. Or not:

“Look, I think if we’re going to do it, it’s going to be soon,” [Pistons owner Tom] Gores said. “I’ve always, I think, been relatively transparent with (the media) and we’re getting close.

“We’re very close to a deal.”…

“Just so you guys are clear, we don’t have a deal. But we are talking serious,” he said.

Gores was then asked if a deal could be announced in the coming days. At that, the Pistons owner seemed to repress a slight grin.

“We’ll see, we’ll see,” he said.

The weird part here is that in moving downtown, Gores would be abandoning the Palace of Auburn Hills, which he himself owns. Gores has tried to sell the building to Oakland County for redevelopment, but the county balked at his $384 million asking price. So you’d have to think that Red Wings owner Mike Ilitch would have to offer a pretty sweet deal to make it Gores’s while, and Ilitch has little incentive to do so, so hmm. Maybe this is Gores trying to throw a scare into Oakland County that they could end up losing the Pistons and getting no new development in return — sort of a Blazing Saddles-style threat, but the only one he has available to him? Or maybe he genuinely thinks he can make more money by renting from Ilitch and redeveloping the Auburn Hills site himself than by running a separate arena and having to compete for concert acts. The only thing for sure: This trend of sports team owners giving press conferences while wearing t-shirts is spreading fast.


Red Wings almost ready to build new taxpayer-subsidized arena, are Pistons next in line?

The Detroit Historic District Commission is set to vote this afternoon on whether to allow Red Wings owner Mike Ilitch to demolish the historic (but long-vacant) Park Avenue Hotel to make way for his arena district construction project, which promises to draw to a close the city’s debates about sports arena construc — oh, come on now, seriously?

Pistons owner Tom Gores launched Project “Big Math,” a sweeping idea for change and economic growth for the city of Detroit and state of Michigan, when he hired agent Arn Tellem last week as vice chairman of Palace Sports and Entertainment.

One of Tellem’s first agenda items when he takes over Aug. 3 is to explore bringing the Pistons downtown from Auburn Hills. … The Pistons have two viable options. They can move into the new Red Wings arena, which is scheduled to open in 2017, and share it with Olympia Entertainment. There is also a Hail Mary option to tear down the half-built Wayne County Jail and build an arena in conjunction with Quicken Loans chairman Dan Gilbert.

This is still pretty much just at the rumor stage — and the Pistons say they have “no plans” to move from Auburn Hills, for what it’s worth — but still, there’s at least the chance that Detroit may end up talking about building not one but two downtown arenas. Not bad for a city that’s bankrupt. Or, looked at another way, not good.

Detroit arena could cost $500m, require public money

As expected, the news that Mike Ilitch has the lead in buying the Detroit Pistons has led to a full-on media frenzy. Among the highlights:

  • A new downtown arena to host both the Pistons and Ilitch’s Red Wings would cost $500 million or more, sports consultant Marc Ganis tells the Detroit News. Ganis added, “It’s next to impossible to do that without some taxpayer help.”
  • Detroit Free Press sports columnist Michael Rosenberg writes that the whole reason Ilitch wants the Pistons and their Auburn Hills arena is to have a threat to move the Pistons to the suburbs, in order to be able to squeeze Detroit for money for a new arena. Detroit Mayor Dave Bing nonetheless declared himself “elated” at the prospect of Ilitch owning the Pistons, which either means he doesn’t think he’s really going to be blackmailed for a new arena, or he’s looking forward to it.
  • Getting a third pro sports team to play downtown could bolster Detroit’s image as an “urban adult entertainment destination,” says University of Michigan professor Christopher Leinberger, who notes that the city already “boasts the third largest walkable concentration of casinos in the country, behind only Las Vegas and Atlantic City,” and “has the nation’s third largest number of live theater seats, trailing only New York City and Houston.” (Houston?) Not to mention the other “adult entertainment” options available across the bridge in Windsor.

The virtues of making Detroit into the next Las Vegas aside, the arena battle looks like it has the potential to get really ugly really fast if Ilitch wins his bid. I’ll make sure I don’t have any other plans for November…

Ilitch opens 30-day window to buy Pistons, arena

And away we go: Crain’s Detroit is reporting that Detroit Pistons owner Karen Davidson has opened negotiations to sell the team to Detroit Red Wings and Tigers owner Mike Ilitch. The Detroit Free Press says the two sides have agreed to an exclusive 30-day bargaining period, after which the sale could be reopened to other bidders.

Assuming the two sides work out a deal — and that’s not at all certain, as Crain’s previously estimated there’s about a $100 million gap between what Davidson wants and what she’s likely to be offered — then it will almost certainly launch a long battle over whether to build a new downtown arena for the Red Wings and Pistons, and who’d pay for it. Already, Detroit city council president Charles Pugh declared his town open for subsidy business:

Asked whether a tax incentive would be included in a pitch to bring the Pistons downtown, Council President Charles Pugh said, “I am open to whatever we have to do in the scope of the law.

“This could be the tipping point for our city. We need hope.”

On the other hand, council president pro tem Gary Brown said, “It’s going to be difficult to do this stadium with public dollars. There is no appetite for tax relief, even for this.” Still, it’s probably best not to put anything past Ilitch, given that this is the kind of fight he’s won before.

Today in Pistons-to-Ilitch rumors

There’s very little solid information, but today’s Crain’s Detroit Business is just jam-packed with speculation on the potential sale of the Detroit Pistons to Tigers and Red Wings owner Mike Ilitch:

  • Crain’s Bill Shea reports that Pistons owner Karen Davidson is seeking $500 million for the team and the Palace of Auburn Hills arena, but cites industry experts as saying she likely won’t get more than $400 million, especially if she wants to conclude a sale fast.
  • Shea also has a list of the rumored bidders, including Magic Johnson and an unnamed group from Dubai.

Finally, and most noteworthy for our purposes here, University of Michigan sports economist Rod Fort tells Shea that he expects Ilitch has a financing plan for both the purchase and construction of a new downtown arena. He also expects it will include public subsidies:

“It would behoove the Ilitches, if they obtain the Palace, to already be talking to Detroit city government on the subsidy that’s going to be (sought),” he said.

A facility for both the Red Wings and Pistons is believed to be what the Ilitches want, a venue that is expected to cost about $300 million or more.

“If that’s the ultimate goal, we should expect the Ilitches to behave as others have in the past in that situation, which is to suggest to city and possibly state government that a subsidy is needed to make this happen,” Fort said.

Fort believes Detroit can be creative enough to help finance a new arena, through a special assessment like the tourist tax, or something else.

“It’s not a place without resources,” he said.

Of course, all Fort is really saying is “Ilitch will probably ask for a subsidy, because they all do.” But on a slow news day, speculation is all we’ve got.

Ilitch throws hat in ring to buy Pistons

Other shoe: dropped.

Sports and pizza boss Michael Ilitch said today he wants to buy the Detroit Pistons and move the team to a new arena in downtown Detroit.

The Ilitch family already owns the Detroit Tigers and the Detroit Red Wings.

The Ilitch bid is for the entire Palace Sports & Entertainment organization, not just for the basketball team itself. If successful, that means that the Ilitches would also own the Palace of Auburn Hills arena, the DTE Energy Music Theatre and other aspects of the Palace network.

You’ll recall that the big question about this plan, which was originally floated about a month ago, was whether giving monopoly control over sports and concerts in the Detroit area would really generate enough money to pay for a new Detroit arena. Still nothing on that in today’s coverage, though enough column-inches were spilled on it that there was room for worries that Bud Selig might thing Ilitch doesn’t love him anymore.