Red Wings Likely To Negotiate Shorter-Term Joe Louis Arena Lease
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Red Wings Looking To Renegotiate
Short-Term Lease For Joe Louis Arena |
Red Wings and Tigers Owner Mike Ilitch's Olympia Entertainment Friday announced that it will "forgo an option to automatically renew its lease at Joe Louis and Cobo arenas for an additional 20 years," and instead Ilitch and the city of Detroit "will likely negotiate a shorter-term lease," according to Brent Snavely of the DETROIT FREE PRESS. While the Red Wings' current lease at Joe Louis Arena "doesn't expire until June 30, 2010, the terms of the agreement required Olympia to notify the city of its intentions a year in advance." Snavely noted speculation "has run rampant for at least the past three years about whether the Red Wings would seek to renovate Joe Louis or build an arena elsewhere," but building an arena "would take at least two years and would be difficult to finance in the current economic and lending environment." Analysts have estimated that Joe Louis renovations "could cost as much as $180[M] and a new arena could cost more than" $300M (DETROIT FREE PRESS, 6/27). Ilitch Holdings VP/Corporate Communications Karen Cullen said that "once the lease expires, Cobo Arena will once again be managed by the city of Detroit, and Olympia Entertainment will no longer hold any more events in the 12,000-seat venue." Olympia "held about 20 major events at Cobo Arena each year" (DETROIT NEWS, 6/27). Wayne County (MI) Exec Robert Ficano said that he has been "approached by the Ilitches about financing a new arena, but declined to say any more about it." CRAIN'S DETROIT BUSINESS' Bill Shea reports speculation is that a "new hockey arena would be built on Ilitch-owned land in the Foxtown area or between Grand River and Cass south of I-75." But building a "publicly owned hockey arena and leasing it to the team carries political risks because it would require tax dollars in economically tough times" (CRAIN'S DETROIT BUSINESS, 6/29 issue).
TOUGH CLIMATE FOR NEW ARENA: In Detroit, Drew Sharp wrote the Red Wings "made the correct decision in not renewing their 30-year Joe Louis Arena lease," as Ilitch "knows he cannot squeeze any more revenue out of the Joe." But Detroit's "shrinking automotive footprint makes support for a new Wings arena more difficult because the city, county and state have far more pressing concerns than funneling public funds into a lavishly equipped money-printing machine" for Ilitch. The "downsized local economy also makes it difficult for four teams to flourish financially in four separate facilities," as there "isn't sufficient corporate backing to buy those premium seats and lease those luxury suites with a recalibrated General Motors and Chrysler and the loss of local satellite industries such as suppliers." Sharp: "The problem is that the only way the new, lower-scaled Detroit economy could support a new arena would be by snatching money from another team -- perhaps Ilitch's own Tigers at Comerica Park" (DETROIT FREE PRESS, 6/28).
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