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Michigan Monday: Putting the red in Red Wings

Posted by on February 17, 2014
The Joe Louis Arena...its days are numbered

The Joe Louis Arena…its days are numbered

The Detroit Red Wings are getting a new arena…and all of Michigan is paying for it. The Red Wings, owned by pizza mogul and billionaire Mike Ilitch (also owner of the Detroit Tigers), will be moving out of the Joe Louis Arena and into the new space by the time the 2016-17 hockey season rolls around. The new space will be located near the existing Ford Field (home of the Lions) and Comerica Park (home of the Ilitch owned Tigers) essentially creating a year-round draw for the area.

200px-Detroit_Red_Wings_logo.svg

Hmm. this logo kind of reminds me of something…

The city agreed to sell a 39 parcel portion of land to the Downtown Development Authority for $1, who will then turn around and lease it to Ilitch’s company “Olympia Development” for a period of 95 years (any bets on how long the Red Wings actually call this new arena home…because it won’t be 95 years). Additionally the city won’t collect any property taxes on the new arena. Finally, the new area is expected to cost $450 million of which Olympia will pay only 42 percent. The remainder of the costs cost, about $261 million, will come from the State of Michigan.

OH MAN…where to start on this one….

Detroit General Funds: While it is pointed out that the City of Detroit is not contributing any general fund dollars to this project (maybe because they don’t have any…), the City is also not collecting taxes on the new arena. So they really are contributing general fund dollars to the project.

Uneven playing fields for area businesses: The new arena is going to be the centerpiece of a $650 million, 45 block, mixed use development. So, there will be a $200 million investment in the surrounding area as well. This is good! The problem is, what about those nearby who didn’t get the same perks? Those who had to buy the land for a much higher price while also investing in renovations and upkeep. The assessed value of the land that Olympia Development is leasing from the Downtown Development Authority (who bought it for $1) purchased was right around $3 million. So, when dealing with project that is estimated at $650 million, the Ilitch family could not pony up $3 million? Come on!

Jobs: Yes, the new arena will create jobs. However, the majority of them will be temporary. While the facility will house about 450 more employees than the Joe Louis Arena did (about 650), the other 5,550 estimated new jobs will be temporary. Yes, they are jobs in an area that desperately needs them. But not all of those jobs will be generated at the same time and they will disappear once the area is completed. Think of it like building a house…but on a vastly larger scale. Only a handful of the same people work on it from start to finish. Most are called in for a small period of time and then when that phase is complete, their job is done. So, while the project should take two to three years to complete, most of those 5,550 construction jobs created will not be around that long.

Public financing: Mike Ilitch, and his wife Marian, are worth an estimated $3.2 billion (yup, with a B) yet the taxpayers of Michigan are financing almost 60 percent of the new area. That seems…backwards. Yes, the State will make some money through additional tourism dollars (i.e. taxes), but it’s not that much. It’s not as if people weren’t coming to see the Red Wings already…they are just going to midtown now instead of downtown. I understand the appeal of public financing for both parties involved. It’s all about the shiny new thing; everyone wants the shiny new thing. But is spending $260+ million on the shiny new thing better than say, spending it on education, healthcare, lower taxes, improving roads, etc, etc, etc?

The Joe: In 2016(ish) the new area will be built and everyone will be happy. Yay! Detroit has a state of the art facility for one of the best hockey franchises around. Good, great, yippee! But what about where they used to play? Oh, whoops. Yeah, that is being torn down (by the State…thanks everyone else for paying for those bulldozers btw). So, while the area the new area is going to occupy is currently an empty eyesore, the place where the old one currently is will then become an empty eyesore. Awesome work there. Kudos all around everyone.

I like Mike Ilitch, I really do. I think he has been a great owner for both the Red Wings and Tigers. I think he has shown a devotion to Michigan and Detroit. I think his pizzas are a pretty good deal too. But he had a chance to make a real statement here and whiffed. While some will applaud him for not demanding that the entire project be publicly funded, he really could have afforded to put more of the financial burden on himself/his company. This article is not meant to be an Ilitch-bashfest. This type of thing happens teams in every major sport in the United States. It is becoming more and more common and frankly, it needs to stop.

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  1. […] the phenomena is certainly not going to end – in Detroit or other large metro areas. Michigan taxpayers are on the hook for the demolition of the Joe Louis Arena when the NHL’s Red Wings get a new home. A new home […]