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Does a new Red Wings arena make sense for Detroit? Maybe.

Put your thumbs up if you're $1.92 billion in debt

Thumbs up if you’re worth $2.7 Billion

There are the banners. There is the history. But there’s also the sticky, dimly lit concrete hallways. And the sliced seats with the deep yellow, asbestos-looking foam making a break for freedom.

By modern stadium standards, Joe Louis Arena, going on its 34th year of existence, is a dump. So when the news came out in early December that Mike Ilitch had plans for a new Red Wings arena as a part of a $650 million new arts and entertainment district, I, like most people who care about hockey, was pretty excited.

Then I read Patrick Hruby’s piece on ending sports welfare. It may have been the most influential piece of sports journalism in 2012. Read it. Read how taxpayer’s money, public funds, are being turned into private profit.

I’ll wait.

…..

I know it’s long. Just read it.

…..

Done? Good.

So, is it a good idea for Detroit to build this area? Well…

Ilitch is asking for $12.8 million a year for multiple years (how many? We don’t know) from the Downtown Development Authority. The money will come from school taxes.

While, I’m honestly not completely clear on who is paying the school tax, my interpretation is that the money comes from Detroit schools. Now, think about the demographics of who comes to hockey games. Hockey is a more upper-class, suburban sport. Most of the fans that make up “Hockeytown” don’t come from Detroit. They come from Bloomfield Hills and Grosse Point and Mount Clemens.

So the people who are paying the most for Ilitch’s new digs are the exact ones who more than likely don’t care about the Red Wings, and they’re paying with money that was originally slated to go back into Detroit Public Schools and its less-than-shimmering 2 out of 10 rating.

However, even if the $12.8 million is for 10 years, $128 million isn’t a bad investment for something that will be worth $650 million upon completion and is supposed to generate more jobs and economic activity.

The question, is will it do what it says?

The arena itself won’t. As the Detroit Economic Growth Corporation’s President and CEO George Jackson said himself, “Let’s face it, arena’s (sic) don’t exactly make money.” Where does most of the money from the stadium go on Red Wings game days? To a rich person named Mike Ilitch and rich players who take that money and go spend it on houses in the suburbs.

But the what arena would do is create a more jobs, right? Olympia executives estimated the arena would lead to a net increase of 440 jobs. That’s it.

You’re also losing about $450,000 in annual review right off the top. Joe Louis Arena is owned by the city. $450,000 is how much the Red Wings pay in rent each year. If Ilitch puts all the money he says he will into this new arena, he’s going to own it, and the only rent he’ll be paying is the rent he’ll pay himself.

Sure, Ilitch will still have to pay taxes on the land and the stadium, but even that won’t be as much as you think. See, technically the league that just lost half a season arguing up how to split the millions upon millions of dollars the league makes, is a non-profit entity. The NHL has 501(c)6 status. It gets the same tax breaks as your Home Builders association.

When it’s all completed, the arena itself may simply be an aspirational boost, which does make an impact. But for this whole thing to actually benefit the city, it comes down to two things: This “Arts and Entertainment District” and Mike Ilitch.

Unlike an open-air football stadium in a cold-weather city, the arena will house more than just that 10 games a year, two of which don’t count. It would be available for concerts, rodeos, monster truck rallies (who’s ready for GRAAAAAVE DIGGER?) and myriad of other events.

If the arena can bring in significantly more events  than Joe Louis Arena (remember, we’re not starting from zero) and it’s complemented by an Arts and Entertainment district that actually comes to fruition, the city may have something. Guests would stay in hotels in the city, not in Birmingham. People would flock to restaurants and bars in Detroit. Not Royal Oak. MLive says the new district would create 8,300 more jobs and generate $1.8 billion for the city.

While there’s no timeframe for when that $1.8 billion would come, the district should provide enough money to the city in the future to justify taking away from schools now. That’s even if Ilitch doesn’t pay what he says, which has been a recurring problem for his company, Olympia Entertainment.

Last month, it found itself in two separate semi-scandals. First he reportedly owed $1.5 million in property taxes. Then it came out that when the lease to Joe Louis Arena was first signed, it included a provision that 25 percent of the revenue from selling television rights would go to Detroit. Going on 33 years now, zero such transactions have occurred.

There is a good side to having Mike Ilitch at the base of all of this. He’s only doing what others have done. Despite what’s been listed above, he’s actually one of the better owners in sports.

Unlike many others, Ilitch actually cares about the city his teams are in. He has long said it’s his dream to revive downtown Detroit. He’s been charitable towards the city.

If Detroit’s going to succeed, the city has to put its in trust some enormously rich person. Ilitch isn’t a bad choice.

It’s just a whole lot of trust.

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One comment on “Does a new Red Wings arena make sense for Detroit? Maybe.

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