Red Wings promise to build “deconstructed” arena with public’s $300 million

The Detroit Red Wings issued renderings of their planned $450 million arena yesterday, and it’s … kind of interesting-looking, I guess?

Those buildings surrounding the arena are actually part of the arena, with the space between that and the arena structure proper being the concessions concourses. (Another rendering shows what appear to be glass roofs over the concourses, maybe?) The Red Wings are calling this a “deconstructed” design, and it’s something interesting to try, anyway, if only because it would make the arena a bit less monolithic from the outside. (Setting the arena floor 32 feet below ground level would help, too.)

It’s still not necessarily worth spending $300 million in public money and free land on, of course. But since that’s now water under the bridge, at least it’ll be nice if they can avoid a major public eyesore.

Detroit council approves deal to phase out Joe Louis arena, despite qualms

The Detroit city council approved the Red Wings‘ new lease on Joe Louis Arena yesterday, but only by a 5-4 margin, as some councilmembers raised concerns about the deal, which sets the stage for the old arena to be torn down once a new one is built. In particular:

  • Mary Sheffield voted against the lease because she felt the $5 million the city will be getting from Red Wings owner Mike Ilitch to pay off 30 years of back cable rights fees that he failed to share with the city at the time is insufficient.
  • Raquel Castañeda-López and Scott Benson voted against the lease because it contains a non-compete clause that prevents the city from selling tickets to any events at Joe Louis once the Red Wings leave. If the city isn’t able to redevelop the old arena site, warned Benson, “the building stays there and we’re not able to use it as an arena. There’s just so much risk there: It becomes a white elephant — blighted, damaged, vandalized.”

City COO Gary Brown, meanwhile, responded that Detroit needs to look forward, not backward: “We’re getting a brand-new stadium, and we can’t go back and undo the past. Let’s move forward and get the city moving again.” Yeah, the past — what’s it good for, anyway?

 

Red Wings lease deal includes Detroit writing off $65m in unpaid cable fees

Hey, remember that $70 million in delinquent cable rights fees that Detroit Red Wings owner Mike Ilitch owed to the city of Detroit, and which he and the city were going to work out as part of a new arena deal? The Detroit News reports that the haggling has been resolved, and it’s not to the city’s advantage:

The city would receive $5.17 million from the owners of the Detroit Red Wings to “put to rest” unpaid cable rights revenues that were estimated to be as high as $50 million to $80 million under a new lease for Joe Louis Arena, according to a City Council report.

The cable TV revenues language of the lease was “deemed to be largely unenforceable” based on negotiations between Emergency Manager Kevyn Orr’s legal team, Jones Day, and lawyers for Olympia Entertainment, according to the analysis prepared by the council’s policy staff.

Basically, Orr decided that it would take a big messy lawsuit to get anything more than $5.17 million out of Ilitch — made more difficult by a six-year statute of limitations on seeking damages, and the city hasn’t bothered to seek collecting any of this money since 1980 — and decided that it wasn’t worth it, even though the city is bankrupt and cutting pension payments by 26% and it’s Orr’s job to find money under any seat cushion he can. Plus, the Red Wings are in the midst of building a new stadium that Orr’s boss really really wants, so best to just make this whole thing go away, don’t you think?

Joe Louis Arena could become happy friendly green park space, suggests absolutely no one

Okay, so a little inside dirt on how the journalistic sausages get made: Fairly often, the way a news article comes to be is that some reporter notices a little tidbit of an item, thinks, “This could be a great story!” and then takes it to their editor, who greenlights it. Then the reporter starts researching, and, also fairly often, it turns out that there isn’t much to support the initial premise. But the article is already assigned, and the initial legwork is already done. So instead, they find a quote or two that marginally support a flashy headline, file it, and then hope nobody notices how flimsy the whole thing is.

Which brings us to this:

Detroit Red Wings’ Joe Louis Arena to go green? ‘Anything is possible,’ riverfront official says

DETROIT, MI — The Detroit Riverfront Conservancy, a non-profit organization that’s revitalized 5.5 miles of city waterway, could play a role in the future of Joe Louis Arena once the Detroit Red Wings move to a new home.

William Smith, the organization’s CFO, told MLive.com on Wednesday it hasn’t ruled out any options now that Red Wings owner Mike Ilitch has city approval for a new $650 million arena and entertainment district north of The Joe.

“That would be an enormous jump of what our purpose and mission is right now,” said Smith, when asked if the organization would be interested in buying the city-owned Joe for redevelopment. “But, you know, anything is possible, anything is possible.”

Okay, so what do we actually have here? There’s a non-profit conservancy in Detroit that works on creating public space along the riverfront, and Joe Louis Arena is on the riverfront, and Joe Louis Arena is set to be torn down once the Red Wings move to their new taxpayer-subsidized home a few blocks away, so … sure, that’ll bring in a few hits! Especially if we put “green” in the headline! Kids today are all into that “green” stuff, right?

I’d further point out the irony of lauding the possibility of clearing land for use as public space when the whole argument for the new arena is that it will take vacant land and develop it — but then I’d have to also point out the irony of talking up “greening” a former sports venue site when the city of Detroit is already fighting to preserve as little as possible of the Tiger Stadium ballfield as public space, and I just don’t have the energy. How about we just agree that Detroit’s new nickname should be “Irony City” and be done with it?

Okay, bankrupt Detroit paying for a hockey arena is nuts, but what can we do about it?

Hey, it must be “Let’s all boggle at bankrupt Detroit building an arena for the Red Wings” week: Yesterday’s Lansing State Journal article is followed up by an in-depth piece today at NextCity (you can read the whole thing for $1.99, or read an excerpt at Deadspin) on how “the Ilitch family—with its estimated $3.2 billion net worth—will get a new stadium, slated to open for the 2016-2017 season, built off the backs of taxpayers.” In a city, mind you, where police and firefighters may have their pensions cut to 16 cents on the dollar*.

All of this should be old news to readers of this site, though NextCity’s Bill Bradley does provide a nice precis. The more interesting bit (aside from the several quotes from yours truly, which is mostly going to be interesting if you’re related to me) comes in the section omitted from the Deadspin excerpt, where Bradley asks sports subsidy critics like former U.S. Rep. Dennis Kucinich (who held hearings on stadium subsidies back in 2007) and Seattle city councilmember Nick Licata (who testified at those hearings, as did I, and who was instrumental in passing Seattle’s Initiative 91 that requires that the city get a positive return on any sports venue investment) what the heck they think can be done about it. Kucinich first:

“Any time you’re talking about massive investment of public resources, it ought to be treated in the same way that a venture capitalist would treat it,” Kucinich said. “There’s no business in the world — no bank, no venture capital fund — that would give money to an entity without asking for anything in return. Negotiate a position in the same way that a venture capitalist would. You become a partner, not simply someone who is playing Santa Claus with taxpayer money.”

That’s certainly what Licata and the I-91 forces did, even if the math for “return on investment” turned out to be trickier than they had anticipated. And, it’s worth noting, even though the Sonics subsequently moved to Oklahoma City, Licata says he didn’t suffer any significant retribution at the ballot box from spurned basketball fans:

When he ran for reelection in 2009, the year after the Sonics had left for the heartland, his opponent, Jessie Israel, came out “aggressively” on the stadium issue. “[Israel] was younger than me, well connected, raised more money than I did and beat me up on that issue,” Licata said. “And I still won by a 14-point advantage. The folks who are strong advocates for professional sports teams are passionate and that passion translates into a lot of heat, but it doesn’t necessarily translate into a lot of votes.”

Still, the number of elected officials pushing a standard of “the public should get back something equal to what it puts in” remain few and far between, for reasons that I’ve covered elsewhere. (TL; DR version: Lobbyists!!!) And to change that is likely to require more organizing from both the local Licatas of the world and the Congressional Kuciniches — okay, you know what, hell with, I’m just going to quote myself:

Ending the scam that is stadium welfare very well may have to start with local leaders — like Licata in Seattle and [Frank] Rashid in Detroit — before there’s a better chance of real change in Washington.

“I think it has to be both at once,” deMause said. “Congress isn’t going to act until there’s a major public groundswell, which needs to happen locally because organizing takes place around this stuff on a local level. At the same time, local officials are always going to be at the mercy of teams threatening to move — even if only to the county across town with the elected officials dumb enough to fall for their scam — until there’s some federal restriction on companies playing off localities against each other.”

Things aren’t exactly going great on either of those fronts, but hey, there’s a first time for everything. Drops of water turn a mill.

*UPDATE: Or 94 cents on the dollar, or somewhere in between. See comments.

Detroit to get diddly-squat in revenues from new Red Wings arena

This isn’t exactly news since it’s been reported for almost three years now, but it’s still rather bracing to see an article headlined: “Ilitches to get all revenues from new Red Wings arena.” As the Lansing State Journal (UPDATE: reprinted from the Detroit Free Press, it turns out) goes on to spell out:

Under a new deal hashed out between representatives of the team’s owners, Mike and Marian Ilitch, and state and local development authorities, the Red Wings will no longer have to share 10 percent of ticket proceeds, 7 percent of suite sales, 10 percent of food and beverage concessions, 5 percent of souvenir sales and other revenue from parking. All of that money — estimated to be about $7 million annually — would belong to the Ilitches’ Olympia Development of Michigan when the team moves north of downtown into a proposed $450-million arena.

Now, that $7 million a year wouldn’t necessarily continue even if Detroit didn’t build a new arena — they’d have to agree on a new lease with the Red Wings owners for Joe Louis Arena, and I’m guessing the Ilitches would balk at continuing to share revenues with the city as it did in its old lease. (Detroit could always then say, “Fine, go play on the Detroit River,” but that’s another debate.) Still, it’s nice to see a newspaper recognizing that a proper analysis of an arena deal includes not just the public-private split of the costs (less than half public, according to the Ilitches; about two-thirds public, according to actually counting), but the split of the revenues as well, which here amounts to two halves Ilitch, no halves public.

Most of the cost is being paid by the state of Michigan — or, more to the point, with city money that the state won’t let it use for anything else — so if you want to take a really rosy view, you can say that this is a way for the state to finally invest in Detroit instead of just telling the city what it’s not allowed to spend on. Though here “invest in Detroit” really just means “give a bunch of tax money to a local developer.” But, same difference, right?

Detroit approves free land for Red Wings arena after owner promises to hire locals, if he feels like it

As expected, the Detroit city council rubber-stamped the transfer of several blocks of downtown land to Detroit Red Wings owner Mike Ilitch for $1 yesterday — or rather, the transfer of the land to the Detroit Downtown Development Authority, which will lease it to Ilitch for 95 years, because you wouldn’t expect a guy to own his land and have to pay property taxes on it, seriously, right? The council approved the plan 6-3, notwithstanding that Ilitch didn’t agree to anything in writing guaranteeing that jobs would go to locals, as some councilmembers wanted, and the city didn’t succeed in getting more than that dollar (I hope it has lots of 1′s in its serial number, at least) for its land, as other councilmembers had been insisting.

Yesterday’s agreement came two months after the council put off a vote in order to increase its “leverage,” which has Detroit’s Metro Times wondering what kind of leverage they exerted, exactly:

But if that was the point — to meditate on what Olympia Development CEO Tom Wilson glibly called a “once-in-a-generation” deal — some left City Hall Tuesday puzzled after the council approved the transfer of city-owned land to the Downtown Development Authority at the cost of $1. City Council President Brenda Jones, Councilman James Tate and Councilwoman Raquel Castaneda-Lopez voted against the swap…

Councilwoman Saunteel Jenkins says the original proposal offered no job guarantees for Detroit residents or the creation of a neighborhood advisory council. So, the pre-construction job guarantees now in writing were an improvement, she says.

“Is this a perfect agreement? Absolutely not,” Jenkins says. “… We didn’t reach perfection, but I think we did work very hard.

“It’s much better than what we had originally.”

According to city records, Olympia and the DDA say 51 percent of the jobs hired for the arena’s construction will be for Detroiters. But without a community-benefits agreement in place, that’ll be difficult to monitor, Grunow says.

And, City Council staff noted Tuesday, there’s no job guarantees for Detroit residents post-construction.

Leverage, people! It works better when you’re willing to walk away.

Free city land raises public cost of Red Wings arena to more than $300m

The Detroit city council is voting today on whether to sell a large swath of vacant downtown land to Red Wings owner Mike Ilitch for $1 as part of his arena plan, and the Detroit Free Press has tried to figure out how much that land is actually worth on the open market. Not tried too hard, mind you, but tried to the extent that it’s figured out:

  • Ilitch has spent almost $50 million buying up private parcels for his arena-plus-other-development project.
  • One owner of a three-quarter-acre lot with a one-story building on it got a whopping $20.4 million.
  • The official assessed value of the publicly owned portion, which is supposed to represent half the market value, is $2.9 million.

From what I can tell from the not-very-clear map accompanying the Freep article, the size of the publicly owned parcels is a little bigger than the size of the parcels that Ilitch has already bought, which would give us an estimated market price of somewhere north of $50 million. If we add that to the $266 million in arena costs already being covered by taxpayers, that’s … let’s call it “more than $300 million” in public subsidies for this project. If it’s approved at today’s council meeting, that is. The session starts at 10 am ET, and you should be able to watch here.

Red Wings arena vote set for Tuesday, council prez wants local-jobs guarantee

The transfer of land for a new Detroit Red Wings arena, aka the only thing about the project the Detroit city council gets to vote on since their purse strings are now controlled by the state, will be voted on at a council meeting on Tuesday, after clearing the three-person planning and economic development committee yesterday. And council president Brenda Jones says her line in the sand is clear: She wants a guarantee that Detroit residents will receive jobs at the arena.

“We can look at a history forever, but at the end of the day if something is not in writing, and you know as well as I know, it means absolutely nothing,” she said. “That’s my concern. I’ve had that concern all along, and I still have that concern.”

Getting that promise in writing is definitely important — the Detroit Free Press article on this notes that Jones said “In the past, companies have claimed to be based in the city when they only have a phone set up there and their headquarters are elsewhere” — but it’s a relatively small concession for the Red Wings to make if they have to, especially considering it’s likely to be a relatively small number of jobs. Given that a few months ago the council was making noise about insisting that the city actually get a fair price for its land, at this rate the price of approval could come down to coupons for 50% off of Red Wings dog collars.

Detroit group calls for community benefits deal on Red Wings arena

The Detroit community group Corridors Alliance is demanding that any public funding of a new Red Wings arena should include a community benefits agreement to guarantee that jobs go to local residents and protect local homeowners from being displaced:

“We want to hold the development to a higher standard,” [the alliance's Francis] Grunow said. “As time has gone on, there’s been more and more public money included in these projects.”

That’s all well and good, and a CBA would indeed provide some teeth for requiring that the Red Wings actually live up to their promise to hire Detroit residents for the majority of jobs created. The problem with even well-written CBAs, of course (i.e., not this one), is that 51% of the jobs created by an arena project is still not a whole heck of a lot of jobs, especially not once the actual construction is completed.

If the argument for the arena project is that it will help the local economy, then requiring local hiring seems like a no-brainer, but it won’t change the fact that Detroit could create a heck of a lot more jobs for its $261.5 million if it spent it on just about anything else. Which isn’t getting discussed now, mind you — and the state of Michigan has effectively ruled out considering it — but so long as community groups focus on getting a cut of the meager spoils and not the overall policy behind sports subsidies, it’s easy for team owners to buy off opposition by promising to hire the right people.