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Volume 24 No. 156


The Ilitch family yesterday unveiled plans for a new Red Wings arena and surrounding entertainment district in downtown Detroit, including "as many as 2,000 new residential units, dozens of shops, walkable European-style streets and perhaps the nation’s most innovative multipurpose arena," according to John Gallagher of the DETROIT FREE PRESS. The "large-scale development, overseen by the Ilitches’ Olympia Development, will be integrated with the planned M-1 Rail line, Comerica Park, Ford Field, the Fox Theatre, MotorCity Casino Hotel, the Detroit Opera House and other attractions." The arena "will be built in a 'deconstructed' fashion with the souvenir shops, team offices, restaurants, ticket offices and similar spaces being built outside the arena but linked by a glass-topped interior street that will serve as a year-round venue for events." Ilitch Holdings President & CEO Christopher Ilitch said, "Our vision is to build out a sports and entertainment district that is world-class and rivals anything in the country, perhaps the world." Gallagher reported the still-unnamed arena and a big portion of the entertainment district "will be built at the same time." The Ilitches "decided to do it all at once: A large part of the infrastructure and construction associated with the retail and residential projects will rise out of the ground along with the arena -- and be ready" by '17. The arena and various buildings and residential projects will "be built on what are now mostly vacant lots." The plans "also call for five new district neighborhoods, offering housing." Some parts of the new neighborhoods will "be built by the Ilitches and others by private developers" (DETROIT FREE PRESS, 7/20). In Detroit, Bill Shea reports companies "involved in the Ilitch family's arena district project" include Michigan-based Barton Malow Co., Detroit-based White Construction, Indianapolis-based Hunt Construction Group, K.C.-based 360 Architecture and New York-based Street-Works (CRAIN'S DETROIT BUSINESS, 7/21 issue).

NOT YOUR AVERAGE JOE: Christopher Ilitch said that the arena will "seat about 20,000, rather than the 18,500 previously disclosed." He added that the construction cost "may exceed the previously disclosed" $450M estimate, and if it does, the family "will pay for it." CRAIN'S DETROIT BUSINESS' Shea reports ground will be broken on the development this fall "with light demolition and other preparatory work getting underway." Heavy earth-moving will "begin in March with the goal of having the arena open" by summer '17. The arena's lighted roof "will be capable of showing images." Olympia and Red Wings team offices will be "connected to the arena, as will apartments, restaurants, retail, parking garages and other to-be-decided development." Concessions will be "under a glass-covered ceiling around the venue, and a special emphasis in restaurant planning is a push for up-and-coming local chefs, including minority chefs." The designers are "attempting to keep the loud and intimate atmosphere of city-owned Joe Louis Arena." Ilitch said of the arena design, "We’re in love with the detached structure concept." He called the design "revolutionary." He added that it "may influence arena design in the future." Ilitch said that it is "too early to discuss whether naming rights to the arena will be sold or not." Olympia under its agreement with the Detroit Downtown Development Authority can "sell the naming rights to the building, and keep all revenue from any such deal." Ilitch said that his family is "now promising to spend 'tens of millions' more for infrastructure improvements" in the district "to create mixed-use neighborhoods" (CRAIN'S DETROIT BUSINESS, 7/21 issue).

DOLLARS & SENSE: In Detroit, Louis Aguilar reports of the $650M district project, about $367M, or 56%, of the entire project would "come from private investment." About $283M, or 44%, in public investment would "come through existing economic development money, requiring no new taxes." Olympia group will "pick up" 42% of the new arena’s construction cost. The rest will "come from a financing arrangement using school and local property tax revenue to pay off state-issued bonds." The DDA will "own the arena and lease it to the Red Wings for an initial 35 years" (DETROIT NEWS, 7/21).

CAUTIOUSLY OPTIMISTIC: In Detroit, Stephen Henderson wrote the Ilitches "deserve credit for laying out plans that rival the coordinated development you’d see in anticipation of Olympic games." Yet it is the execution of the vision that will "make or break it." Former Detroit Mayor Dennis Archer in '94 "sold a vision that Comerica Park would create Detroit’s 'Wrigleyville,' invoking the vibrant neighborhood around Chicago’s north side ballpark," but that "didn’t happen" (DETROIT FREE PRESS, 7/20).

The NFL is "evaluating various sites in the L.A. area and looking into alternative financing models for a stadium, including paying for one itself as opposed to having an individual owner foot the bill," according to Sam Farmer of the L.A. TIMES. There are "two main financing scenarios." In the first, a club has a "stadium site and concept in mind, puts together a financing plan and looks to the league for help." The NFL "helps pay for the venue but also assesses a hefty relocation fee." The club then has "full control of the stadium." In the second scenario, the league "pays for the stadium, offsetting that $1-billion-plus investment by selling" naming rights and PSLs. The stadium then becomes the "home of one or two teams (perhaps to be named later), who don't have the astronomical cost of a stadium on their books." In theory, the relocation fee would be "smaller because the NFL benefits from those sponsorship sales" (L.A. TIMES, 7/20).

 The L.A. TIMES' Farmer noted the Rams, Chargers, and Raiders -- all of whom previously played in L.A. -- are "eyeing the market." Interest from those clubs is "not new," but for the first time "since the saga began, each team has what amounts to a year-by-year lease." With long-term TV and labor deals in place, and a "proven willingness to experiment with a new way of doing things -- witness changes to the Pro Bowl, draft and scouting combine -- there are indications the NFL is ready to make another run at L.A." The fact that the "iron is glowing hot doesn't guarantee a return to L.A. any time soon." But NFL execs and owners "insist the city is once again a bright blip on the radar screen" (L.A. TIMES, 7/20). The S.F. Chronicle's Scott Ostler said if a stadium is build in L.A., Raiders Owner Mark Davis "would take the team in a second." Ostler: "I think he likes Oakland and he keeps saying that's his No. 1 choice, but if they built a ballpark for him down there, he would go." S.F.'s KGMZ-FM's John Lund said, "I think they'd like to keep the team in Oakland, but the city of Oakland is making it very difficult" ("Yahoo Sports Talk Live," CSN Bay Area, 7/18).

CONSIDERING ALL OPTIONS: NFL Commissioner Roger Goodell said he believes a new stadium in Oakland "is necessary," but he noted the city is "trying to balance a lot of issues ... both with baseball and with football, and we're looking for long-term solutions." Goodell: "We think a new stadium is required there. We know we have great fans there, but a stadium is important in making sure the team continues to be successful going forward." He said the league "won't rule it out" for Raiders and 49ers to share Levi Stadium, but the "first priority for Mark Davis and the Raiders is to get their own stadium." Goodell: "At some point in time that may be something he would consider. But right now his focus is on getting a new stadium for the Raiders" ("NFL Total Access," NFL Network, 7/18).

Renderings for a proposed 24,000-seast MLS stadium in Las Vegas include "a vinyl retractable roof, and air-conditioning ducts every three rows in the stands," according to Ray Brewer of the LAS VEGAS SUN. Findlay Sports & Entertainment Group and developer Cordish Cos. "realize a big hurdle in their quest to bring an MLS expansion franchise to Las Vegas is building a suitable facility to manage the desert heat." All seats in the proposed venue "can be shaded," and on game days, the roof "will be closed during the day with air conditioning blasting to keep the facility cool." The playing surface "will be turf and the sides of the stadium are open." Plans "aren’t final and could be altered before the group goes before Las Vegas City Council on Aug. 20." That is when council "will review the groups’ financing plan and vote whether to give them the green light to move forward." If the council votes "against the project, it would be dead." If approved, the group "expects to hear from MLS by the end of the year." Findlay officials "haven’t disclosed how much the stadium would cost, or how much public money would be required" (LAS VEGAS SUN, 7/19).

Daktronics has "become a global giant in sports entertainment," as company revenue grew by 6.5% last year, "largely because of demand from the NFL," according to Ken Belson of the N.Y. TIMES. To generate extra revenue, Daktronics and other manufacturers "have been developing software for teams to use on their displays." In addition to "creating tailor-made graphics, Daktronics hosts seminars for programmers who operate scoreboards" in MLB ballparks and NFL stadiums. Daktronics co-Founder & Chair Al Kurtenbach said, "We see the living room as our biggest competitor. Our job is to help the venue manager with fresh content. We can give fans a reason to stay." Belson noted nearly every NFL team "has some Daktronics equipment, and the company’s scoreboards are in many well-known venues, including Madison Square Garden and Citi Field." Meanwhile, the company's "closest competitor" in the roughly $800M market, Mitsubishi Electric, "has focused on marquee locations" such as Yankee Stadium and AT&T Stadium. Mitsubishi Electric National Sales Manager Todd Stih said, "We are focusing on the higher end of the market. Tiffany still has to sell the best" (N.Y. TIMES, 7/20).