  Genesyxx Member Username: Genesyxx Post Number: 752 Registered: 02-2004 |
...mainly because it's making a lot of good points about STAYING and not building a new stadium. Here's the article: David Josar / The Detroit News DETROIT -- Mike Ilitch and the Detroit Red Wings have two months to tell city leaders whether they will exercise their option to renew for 20 years the exclusive lease -- considered the best of any NHL team -- for Joe Louis Arena and Cobo Arena. The Aug. 16 deadline is expected to set in motion intense deal-making and negotiations that will involve the future of Cobo Arena, Joe Louis Arena -- the home of the Red Wings -- and how much money the state, city and taxpayers are willing to toss in to subsidize a new Detroit hockey arena. "They talk to us all the time," Mayor Kwame Kilpatrick said. "They're still trying to decide whether to stay and improve the (Joe Louis) facility or move." Ilitch, whose fortune started with a suburban pizza place in 1959, bought the Red Wings for $8 million in 1982. The team is now worth an estimated $258 million -- a value due in large part to the bargain-basement lease on the Joe. According to Forbes magazine, he is among America's richest citizens, worth $1.5 billion. The Ilitch family, through its Olympia Arenas company, rents Joe Louis Arena and Cobo Arena for $450,000 a year. Olympia Arenas manages and operates all concessions and has exclusive rights for other events there, such as wrestling shows and concerts. The lease expires in August 2008, and Olympia Arenas -- Mike Ilitch is president, his daughter, Denise, is vice president and his wife, Marian, is treasurer -- must notify the city this August whether it will opt out of renewing the deal, according to reports prepared for the Detroit City Council and the lease signed on Jan. 23, 1992. Over the past decade, companies controlled by the Ilitches have acquired nearly all of the land behind their Fox Theatre and Hockeytown Café, fueling speculation they will build a new home for the Wings and move the team to the Foxtown area on Woodward north of Grand Circus Park. No decision has been made, said Karen Cullen, a vice president for Ilitch Holdings, the company Mike and Marian Ilitch created to oversee their ventures, ranging from Little Caesars to the Detroit Tigers. "Over the past 25 years, we have worked hard to contribute to improving the city of Detroit," Cullen said. "As we finalize our decision on Joe Louis whether to renovate or to build a new arena, either way we see this as a great opportunity to make a positive impact." Some executives for Ilitch's companies are not sure city officials have the right deadline date. They note, for example, the team did not take occupancy for more than a year after the agreement was signed, a situation they suggest pushes the renewal date back. Either way, a showdown is expected this summer. Outside funding needed Professional sports arenas experts say while the Red Wings may have the land to build in a location that would give them a near-monopoly on the post- and pre-game entertainment dollars from hockey fans, the project would still be too costly without government assistance -- especially since the Ilitches pay bargain-basement rent for control of the Joe and Cobo. "They're going to look for help and probably considerable help" in building an arena for the Wings, said Marc Ganis, a consultant who helped engineer a new arena deal for the New Jersey Devils. One potential funding stream, Ganis speculated, is "tax increment financing," which taxes property owners in an area to build a facility, which the city or another government entity would own and the Wings would rent. Detroit entrepreneur and landlord Jerry Belanger, who this year opened the Park Bar one block behind the Fox Theatre, knows his bar would benefit if the Wings move nearby. "I should pay some of the cost because that's going to help me," he said. "But another business owner is going to benefit much more. That cost has to be shared fairly." He also said if the public is asked to contribute, it should be done so those who attend games are the ones paying. "I know there are a lot of little old ladies who don't like hockey and would probably have better use for their tax dollars than on a new arena," Belanger said. If the Ilitches owned the building, the property tax burden would be too great to make it profitable, Ganis said. The taxes on a $300 million building in Detroit would be $10 million a year. Another funding stream is naming rights, which could be done for a new facility or Joe Louis Arena. Pepsi recently paid $68 million to have its name on the home of the Denver Nuggets and Colorado Avalanche. Council doesn't like deal So far, the Red Wings and their owners have remained quiet. The city isn't saying much, either. The city recently sold to Olympia Development, another of the Ilitch-run companies, two vacant, tax-reverted parcels behind the Fox for $200,000. Earlier this year, the city awarded Olympia development rights for the historic GAR building nearby. The Ilitches are known as hard negotiators. In the 1990s, Mike Ilitch threatened to move the Tigers unless the team got a new ballpark -- which it did, across Woodward Avenue from his Fox Theatre and Hockeytown Café. This time, Ilitch is in the driver's seat, thanks to the deal brokered in 1979 by Mayor Coleman Young that kept the team from moving to Pontiac. Ilitch will decide whether to extend the lease -- the city has no vote -- and if the pact is extended, it will become even more favorable for him and the Red Wings. Currently, the city imposes up to a 10 percent surcharge on tickets sold to events at Joe Louis and Cobo Arena; Detroit gets a cut of concessions and luxury suites. If the lease is extended, the city will lose the surcharge -- which brings in about $2.5 million a year -- and, in five years, its share of concession and suite revenue. Council fiscal analyst Irv Corley, in a February report to the council on the lease, said the contract is "strongly in favor" of the Ilitch companies. He called it "convoluted" and questioned whether the city was receiving its fair share of concession sales. The lease is much more lucrative than those of other teams. For example, the San Jose Sharks pay $1.6 million a year for the building and get a small percentage of ticket sales, but the team also chips in money for capital improvements and agreed to split with San Jose any profits from naming rights. Council members have been upset for several years about the lease arrangement, but their anger reached a new level in February, when the fiscal analyst, at their urging, probed the specifics of the arrangement between Detroit and the Ilitch-family controlled company. "This is clearly a sweetheart deal, and if they (the city law department) don't find a way to terminate this contract I'm going to turn it over to the FBI because this is ridiculous," Councilwoman Barbara-Rose Collins said. Councilwoman JoAnn Watson also criticized the deal. "I think we need to lift the cloud over the mysteries shrouding the Cobo Arena business," she said earlier this year. Councilwoman Sheila Cockrel said the agreement was necessary. "They were going to move. There was little else to do," she said. In 1975, the Detroit Lions moved from Tiger Stadium to the Pontiac Silverdome; the Pistons left Detroit for Auburn Hills in 1978. The following year, the lease was signed with the Wings. It's unclear how much the Red Wings are worth to the Detroit economy, but the pro hockey lockout in the 2004-05 hurt the city. Revenues from the ticket surcharge dipped from an average of $2.3 million a year to below $500,000. Bars, restaurants and parking lot operators also suffered. "Generally there is too much emphasis put on how much sport teams help a community," said Dana Johnson, an economist for Comerica Bank. "Whether or not the Red Wings are here, people have a finite amount of money they will spend on entertainment. The difference is with the Red Wings, people are spending money in downtown Detroit instead of other places in Detroit or the region." Neil DeMause is co-author of "Field of Schemes," which questions the public financing of public stadiums. "You're about to have a very profitable organization that is going to try to do whatever it takes to make even more money," he said. "Mike Ilitch is a very good businessman, and the city is going to do what they can do to please him." Basically, it's in the best position for businessmen like the Illitches to stick around, block out the city from some of the taxes it's getting, all the while saving an assload of money to pave over their newly-acquired lots behind the Fox, which if anybody knows, could easily turn into pavement city (see pic of Belle Isle w/ Grand Prix 'renovations'). Anyone else think they'll eventually screw the city and sign up on another lease? | ||
Thejesus Member Username: Thejesus Post Number: 1414 Registered: 06-2006 |
""This is clearly a sweetheart deal, and if they (the city law department) don't find a way to terminate this contract I'm going to turn it over to the FBI because this is ridiculous," Councilwoman Barbara-Rose Collins said."" Oh brother... Seriously, I don't understand why you guys elect these people...are these really the best Detroit has to offer? Many of you on this forum seem far more intelligent and reasonable than the typical DCC member.. | ||
Goat Member Username: Goat Post Number: 9489 Registered: 10-2003 |
More reasonable yes, more intelligent???? | ||
El_jimbo Member Username: El_jimbo Post Number: 228 Registered: 12-2006 |
After all the hidden wheeling and dealing, there is no way that stadium doesn't get built behind the Fox. | ||
Emu_steve Member Username: Emu_steve Post Number: 345 Registered: 11-2006 |
I too read the article and thought, "the devil is in the details." It seems that Ilitch would need to be virtually a fool (but a rich man can afford to be a fool if he wants) to build a new hockey arena unless he gets some big time help, concessions, etc. IF Ilitch does build a new arena he is my "Detroiter of the Year (or decade)" for doing so. No rational businessman would walk away from The Joe. | ||
Johnlodge Member Username: Johnlodge Post Number: 641 Registered: 10-2003 |
"This is clearly a sweetheart deal, and if they (the city law department) don't find a way to terminate this contract I'm going to turn it over to the FBI because this is ridiculous," Councilwoman Barbara-Rose Collins said. Yeah, I can't help quoting this part either. I mean, really. Councilwoman JoAnn Watson also criticized the deal. "I think we need to lift the cloud over the mysteries shrouding the Cobo Arena business," she said earlier this year. Mysteries? Your colleague Sheila seems to know the score: Councilwoman Sheila Cockrel said the agreement was necessary. "They were going to move. There was little else to do," she said. | ||
Verifiable Member Username: Verifiable Post Number: 53 Registered: 05-2007 |
All this was in the original deal and people are just now figuring it out? Ilitch said in September 2006 that he would announce a decision in 30 days ... it's been 8 months. Clearly someone thrown a wrench in his plans. | ||
Verifiable Member Username: Verifiable Post Number: 54 Registered: 05-2007 |
also from the News article: "The city recently sold to Olympia Development, another of the Ilitch-run companies, two vacant, tax-reverted parcels behind the Fox for $200,000. Earlier this year, the city awarded Olympia development rights for the historic GAR building nearby." Had done all this previous research on Foxtown parcels(http://maps.live.com/default.a spx?v=2&cp=42.332281~-83.05608 3&style=h&lvl=14&tilt=-90&dir= 0&alt=-1000&scene=5649368&cid= 6A9CE98C8240620F!213&encType=1) and can't figure out what the two parcels (tax sales) for $200,000 could possibly be. Any clues? | ||
Verifiable Member Username: Verifiable Post Number: 57 Registered: 05-2007 |
clues? Did he finally get the Alibri property? | ||
3rdworldcity Member Username: 3rdworldcity Post Number: 710 Registered: 01-2005 |
What does the JLA rent have to do with it? If they gave it to him rent free it would still be a bad deal in view of the amount of profit he could make with a Palace-like arena where he controls the bulk of the parking and owns several restaurants w/i walking distance. Those nitwits on the Council can't see the forest for the trees. Unless the Council has another tenant for JLA or have concrete plans for tearing it down for a Cobo expansiom, they should be PAYING ILITCH to stay. (What will an abandoned JLA cost the City every year for insurance, guard service, keeping it boarded up etc) (Message edited by 3rdworldcity on June 18, 2007) | ||
Jrich2425 Member Username: Jrich2425 Post Number: 9 Registered: 03-2007 |
While I would love to see a new arena, staying at Joe Louis is NOT a bad thing. The Red Wings bring life to an otherwise very dull part of town. Imagine that area without the Wings there. Along with that, imagine ANOTHER empty building. At least until the Cobo expansion happens which could be a long way down the road, if ever. | ||
Gistok Member Username: Gistok Post Number: 4579 Registered: 08-2004 |
I agree 3WC. Hell if he were smart, he would put it as far away from a People Mover stop as possible (to prevent folks from parking elsewhere). But what would be good for Ilitch isn't necessarily good for the rest of downtown. Verifiable, I doubt it's the Alibri property. 3WC said that the Alibri family is pretty well to do, so they aren't going to lose their property (3 parcels) for unpaid back taxes, especially after they got it back from the stadium authority (after litigation) for something like $1.8 million they repaid to get it back around the turn of the millenium. | ||
Gistok Member Username: Gistok Post Number: 4580 Registered: 08-2004 |
Jrich2425, welcome to the forum! Unfortunately, there is no nightlife (no bars, no restaurants, no retail) around JLA. So anyone who wants to party afterwards either has to get on the People Mover or take a car, or walk to the commercial district quite a ways northeast of there. | ||
Paulmcall Member Username: Paulmcall Post Number: 187 Registered: 05-2004 |
They'll be rioting in the streets if the city or state caves in and gives the Wings money for a new arena. I love hockey and root for the Red Wings but I'll be damned if I'll give them more than the price of admission for the team. Big Mike is raking it in, let him pay for a new rink. | ||
_sj_ Member Username: _sj_ Post Number: 1898 Registered: 12-2003 |
Why the City and State have ponied up more money in the past in worse financial times. | ||
3rdworldcity Member Username: 3rdworldcity Post Number: 711 Registered: 01-2005 |
The unpaid taxes on the Alibri parcels are in litigation. Taxes were increased based on the amount the City paid to the Alibris for the land in lieu of condemnation. The Alibris have asserted that the price paid by the city to acquire the land, identical to what they paid to get it back, was inflated based on the proposed used of the site for a stadium. I guarantee you it's not Alibri's land. Besides, if it were Alibri's land, the City could not have sold it for $200,000 based on much higher comps in the area recently. It wouldn't hurt to determine the identity of the parcels to determine if the City got FMV. | ||
Charlottepaul Member Username: Charlottepaul Post Number: 1138 Registered: 10-2006 |
Was there ever an idea to remodel/build a new arena at the existing site? I guess the drawback there would be that the city would have to front the money for it to stay where it is at since the Ilitch's don't pay for maintenance. Anyways, I gotta second the love for the Detroit City Council too; anything they don't like is a matter for the FBI to handle. LOL: Quote form the Detroit News article: "'This is clearly a sweetheart deal, and if they (the city law department) don't find a way to terminate this contract I'm going to turn it over to the FBI because this is ridiculous,' Councilwoman Barbara-Rose Collins said." | ||
Jerome81 Member Username: Jerome81 Post Number: 1495 Registered: 11-2003 |
The JLA area in general is just one huge clusterfXct in general. The road grid is all screwed up. People come in on the Lodge, drive 10 feet on city streets to the garage, go to the game, jump back on the lodge. What kind of spinoff business is that? Beyond that, even if there WERE places to go down there, people wouldn't do it anyway. It is too difficult to work through your maze of cattle-tubes and parking and freeways to get anywhere. It isn't like Comerica where you can walk down a nice street to go to some fun. And whose idea was it to put a convention center downtown on the river? With the JLA, Cobo Arena, Ford auditorium, RenCen all right there too. That riverfront could have been a park-like gem for Detroit, and they blew it. Instead you get 10 blocks of non-freeway Jefferson before it dives into the lodge or 375. At least on E Jefferson the street can continue, W Jefferson you HAVE to get onto the freeway. Walking down the river w of the ren cen and you're welcomed by big, mostly empty buildings with tunnels and awnings for all the cars to pick up and drop off. I say blow up the whole damn mess. How hard would it have been to put that whole thing 10 blocks away from the river? Preserve a nice street grid, and actually make walking a pleasure? JLA should go. But the deal does sound sweet.... For Detroit's sake though, it should be gone. | ||
Charlottepaul Member Username: Charlottepaul Post Number: 1144 Registered: 10-2006 |
"And whose idea was it to put a convention center downtown on the river? With the JLA, Cobo Arena, Ford auditorium, RenCen all right there too. That riverfront could have been a park-like gem for Detroit, and they blew it. Instead you get 10 blocks of non-freeway Jefferson before it dives into the lodge or 375. At least on E Jefferson the street can continue, W Jefferson you HAVE to get onto the freeway." Yeah, that was the classic 1950/60s thing to do... |
