Ilitch’s arena deal takes a one-two punch from media outlets

March 3, 2014
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(Source: Wikimedia Commons)

(Source: Wikimedia Commons)

We’ve given a considerable amount of attention as of late to pizza mogul Mike Ilitch’s proposed Detroit Red Wings arena near downtown, as well as the proposed $200 million in spin-off development that no one seems to know much about.

Within the past couple of days, a few stories on the plum deal registered on our radar. First, Bill Bradley of Next City has a colorful piece on stadium subsidies — 58 percent of the new Wings arena will be publicly financed — with the main focus on Ilitch’s deal. Bradley’s piece is supported by an endless stream of critics and studies that show these deals tend to benefit the sports team owner, rather than the city the stadium is located in. The snarky sports news outlet Deadspin excerpted the piece this morning:

The Wings have played at Joe Louis Arena, on the Detroit River, since 1979. What it lacks in modern amenities—a comically large jumbotron, cup holders, abundant restrooms, hand railings—it makes up for in charm. The Joe is a dump, diehard fans will tell you, but it’s our dump.

Now the storied franchise is headed due north, where it will set up shop between the downtown core and rapidly developing Midtown neighborhood in a roughly 45-block footprint unimaginatively billed as the “arena and entertainment district.” The total price tag, including additional private investments in retail and housing, is an estimated $650 million, $284.5 million of which will come in the form of public investment.

No money will come directly from the city’s general fund—something advocates of the deal are quick to point out—but instead the bulk of public funding will come by way of tax increment financing (TIF). Taxes captured in the 615-acre Downtown Development Authority (DDA) district will be poured into the project. The Michigan Strategic Fund, a state economic development agency, will issue 30-year tax-exempt bonds backed by three revenue streams: The aforementioned TIF capture, various other tax revenues from the DDA and Olympia Development, the Ilitch’s $2 billion enterprise.

The Detroit Free Press’ Sunday package had a couple of stories focused on the deal. First, staff reporters Joe Guillen and JC Reindl examined the finances of the deal, a topic discussed at length for years in previous reports. The upshot? Ilitch keeps all the revenue generated from the new arena. Not bad!

Stephen Henderson, Freep editorial page editor, took a jab at the structure of the deal’s benefits for Detroiters. The contractual benefits? Zilch!

The city’s development arms and the state will spend $261 million to build a new downtown hockey arena for the Detroit Red Wings, whose billionaire owner will chip in about $189 million of the cost.

But it’s also true that the deal doesn’t include any agreement for community benefits — so no guaranteed jobs for Detroiters, only “targets” that may or may not be met; no spinoff investment by the Ilitch family into programs or brick-and-mortar into struggling neighborhoods.

[snip]

That makes it difficult to imagine how affordable housing agreements might be included in upcoming residential projects around the city’s core, or how benefits to public schools might be siphoned out of high-end commercial developments.

The stadium will bring people and some economic activity (how much is debatable, according to many studies) to an area that doesn’t have them now, but there’s no guarantee it will do anything more.

If you have a few minutes to come up for air today, all of these are worth a read. If you’re interested in Bradley’s entire piece, it’s lodged behind a paywall at Next City for $1.99.

  • Derek Dimitriov

    The City has invested zero dollars in this project, but will reap all of the benefits of having a new state of the art entertainment facility that will attract people to Detroit, who will eat, stay, play, and spend money.