SBD/Issue 192/Facilities & Venues

Red Wings Face Deadline To Extend Lease Or Find New Arena

Red Wings Must Decide By Tuesday Whether
To Leave Joe Louis Arena Or Extend Lease
The Red Wings by Tuesday must decide "whether they'll leave Joe Louis Arena or extend by 20 years a lease that's helped make the team one of the richest in the league," according to David Josar of the DETROIT NEWS. Negotiations between city officials and Red Wings Owners the Ilitch family have been "ongoing for several years," but neither side will divulge details of the talks. Wayne County Exec Robert Ficano confirmed that the county, which had a "hand in putting together deals to build Ford Field and Comerica Park, has been approached about financing assistance," which could be an indication that the Ilitch family "may consider a new facility." Speculation about whether the Red Wings will move has "intensified recently as the Ilitch family has accumulated land behind their Fox Theatre they are using for parking lots." Josar notes the Red Wings "enjoy what is considered the best lease arrangement of any NHL team," as Olympia Entertainment leases Joe Louis Arena, Cobo Arena and an "adjacent parking structure for $475,000 a year, while the city tosses in free police protection, landscaping and snow removal." The lease, signed in '78, has been "criticized by several council members for being too generous to owners." Joe Louis Arena "does not have the revenue-generating features of the new 'mega-arenas,' but the sagging economy makes it difficult to secure financing for a new home for the Red Wings." DC-based facility planning firm Brailsford & Dunlavey Senior Project Manager Jason Thompson: "This really comes down to money -- where the team can get the most revenue and the best price." If the Red Wings extend their lease, the city of Detroit could "no longer tack on" up to a 10% surcharge on tickets to events at the arena that accounted for $3M in revenue last year. Also, the city would "no longer get a cut of concessions and suite rentals," while Olympia Entertainment would lose up to $1M annually in tax breaks (DETROIT NEWS, 6/24).

ALL ABOUT THE BENJAMINS: In Michigan, George James Malik writes the "bottom line remains a monetary one," as Joe Louis Arena "remains a bare-bones arena in comparison to modern, amenity-rich rinks." The problem here is that the "economic bottoming-out which Metro Detroit has experienced leaves a very, very uncertain financial forecast for the region." If the Red Wings built a new arena with "luxury options galore, does that make sense if Michigan loses a million or more residents over the next ten years?" (MLIVE.com, 6/24).

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