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August 15, 2011
Detroit turning profit on Red Wings lease, but not for much longer
There's a great, detailed article today by Bill Shea of Crain's Detroit on the finances of Joe Louis Arena, which concludes: The city is netting $2.6 million a year on the home of the Red Wings, including revenues from rent, ticket taxes, and a cut of concessions and suite sales.
Given that the arena was built in 1979 for only $30 million, that's a pretty excellent deal for the city of Detroit — which is, no doubt, one of the reasons Red Wings owner Mike Ilitch wants out of Joe Louis. Ilitch has actually already let the lease expire two years ago, but continues to operate under its terms while negotiating a new one.
(Incidentally, this should serve as a reminder to anyone who worries that teams will "have to move" once their current leases expire: No, they don't. The number of cities that have actually evicted teams is, while not exactly zero, pretty darn close to it on the major-league level.)
However, Crain's notes, "stipulations in the contract call for the city to immediately lose the ticket tax and in five years lose the surcharge on concessions and suites," so regardless of whether Ilitch gets a new arena, Detroit looks likely to see its arena revenues evaporate. Unless, of course, the city drives a hard bargain with Ilitch in negotiating a new lease — but as we've seen, that doesn't happen too often.
Illitch also owns the Detroit Tigers and, if I'm not mistaken, has at least a stake in the Motor City Casino, not to mention various other interests in the Detroit area. I can't recall Illitch ever threatening to move the Wings, either, come to think of it. I may have missed it, though.
That combined with the popularity of the Red Wings might make this a poor example of move threats (almost)always being empty.
Posted by Chris on August 15, 2011 03:32 PM
You missed it:
www.fieldofschemes.com/news/archives/2007/06/3187_red_wings_dilem.html
Posted by Neil deMause on August 15, 2011 03:41 PM
@chris: the threat of moving is not relocating per se, ( like to canada or cleveland . . .) but building a new stadium in downtown with 21st century amenities ( ie luxury suites, restaurants/bars) or oakland county ( ie an ice palace). ilitch would probably love a new state of the art rink located near his other properties (tiger stadium, fox theater, all the restaurants/bars in that area) . . .
Posted by drdean on August 15, 2011 04:01 PM
@chris: the threat of moving is not relocating per se, ( like to canada or cleveland . . .) but building a new stadium in downtown with 21st century amenities ( ie luxury suites, restaurants/bars) or oakland county ( ie an ice palace). ilitch would probably love a new state of the art rink located near his other properties (tiger stadium, fox theater, all the restaurants/bars in that area) . . .
The Ilitch clan has a grip on Detroit.The business they are involved with generates loads of money and they will not leave Detroit under any circumstances.
Posted by Jim Koper on August 15, 2011 04:02 PM
The Ilitch clan has a grip on Detroit.The business they are involved with generates loads of money and they will not leave Detroit under any circumstances.
Posted by Jim Koper on August 15, 2011 04:03 PM
The city better build a new arena for Detroit Red Wings, more preferable close to the Joe. 20,000 seat arena is reasonable.
Joe hold 18 thousand, some seats, plus some standing, adding to 20,066.
build a 20 thousand seat arena is not unreasonable plan, to keep the team in Detroit, for many years to come.
@Neil Ah, so I did miss it. Still, that doesn't look like much of a threat to me. To be fair, most people run screaming from Detroit when they find out they have to deal with the City Counsel, so I can't blame them for weighing their options. (little bit of exaggeration and opinion)
@drdean When I said move, I did mean out of the region, but I do see the proper range meant with the link Neil provided.
Posted by Chris on August 15, 2011 05:01 PM
@Chris-Marian Illitch (his wife) owns Motorcity Casino.
The Illitch's want to keep the arena in Detroit. Specifically on the north side of I75 (just north of Comerica park and the Fox Theatre. Right now they property is vacant and used for parking. The Illitch's already own the property but there are issues with parking there. i.e. It would be possible to have a Lion's game, Tiger game, Wings game, and two concerts (Fox and Fillmore) going on simultaneously.
They do have a plan B, which would be to build a new arena close to Motorcity, ideally across the lodge on Grand River. The problem with this is they don't own the property.
The city would like them to stay at JLA and remodel, or build a new arena at the same site. Unfortunately to do this, the Wings would have to play at least 1 season outside of Detroit (likely at the Palace).
Posted by John on August 15, 2011 05:31 PM
Hmmm. Not sure what to make of this post. The Crains article appears well researched with FOIA numbers and such. Based on that, the headline for this post could have just as easily been "Ilitch and Detroit create win-win stadium agreement. Everyone gets millions! Yea!"
But no, it's links to speculations based on links to other speculations. Oh, and a story about a minor league baseball team with 1,100 fans. I know speculation is half the fun of this site but, hmmm. Not sure what to make of this post.
Also worth mentioning is that he is not the owner of the Pistons/Palace/etc (Tom Gores got that prize) so the Auburn Hills rumors either permanent or temporary can probably kick the bucket.
Posted by Doug on August 15, 2011 08:52 PM
To be fair, it would have had to be "Bruce Norris and Detroit Create Win-Win Stadium Agreement in 1979," and that's not as good for SEO.
Posted by Neil deMause on August 15, 2011 09:01 PM
Yup! :)
Posted by Doug on August 16, 2011 07:33 AM
Mr.Ilitch wanted to purchase the Detroit pistons to go along with the tigers, red wings, and Little ceasers. He was hoping to build a brand new arena for the wings and pistons to share but the deal fell through and a guy in California who is from the flint area bought them and thankfully kept them here. I don't thin Ilitch would have done something to the city like move the redwings away.
Posted by Ben on August 21, 2011 10:38 AM