Despite Concern Over Lost TV Revenue, Detroit City Council OKs Joe Louis Arena Lease
The Detroit City Council yesterday "narrowly approved a new Joe Louis Arena lease, clearing the way for a new Red Wings hockey venue north of downtown and marking the Joe for demolition once the team leaves, as early as the 2016-17 season," according to Joe Guillen of the DETROIT FREE PRESS. Council members "raised several concerns about the new deal, notably" a $5.2M payment from the Red Wings "to settle any potential litigation over the city’s claim to a portion of the team’s cable TV revenues." Council member Mary Sheffield, who voted against the lease, said that Detroit is "not getting enough." But the council ultimately "approved the deal by a 5-4 vote." Construction of the new $450M arena "could begin in May." The city’s lease with Olympia Entertainment, which handles the Red Wings’ business operations, is "retroactive to 2010 and runs through June 2015." From then on, Olympia "has five, one-year renewal options." The team will pay $1M a year "in rent and property taxes, in addition to other fees including $100,000 a year for security at Joe Louis events and insurance costs of about $350,000 annually." The council also "questioned whether the city could be left on the hook to pay up-front costs to demolish Joe Louis." A state economic development board has set aside $6M "for demolition, but the money is not guaranteed, and the state is to be reimbursed using tax increment revenues." The city must "submit an application for the funds within six months of the Wings’ departure from Joe Louis." The application must include a $24M investment "to redevelop the Joe Louis site" (DETROIT FREE PRESS, 4/1). A demolition "could occur as late" as '20 or '21 under the agreement (DETROIT NEWS, 4/1).