Red Wings

Red Wings and DDA announce $650 million dollar arena plan… but can Detroit afford it?



Good news Red Wings fans, those long lines to use the restrooms, lack of amenities while attending Red Wings games and making sure a life insurance policy is in hand while climbing the JLA steps may soon be coming to an end.

Wednesday, the Wings and the Downtown Development Authority announced a $650 million plan for a new 18,000 seat arena and entertainment district that would replace the 32-year old outdated Joe Louis Arena.


“Today, this public-private partnership took a significant step forward in laying the groundwork for a major catalyst development, which will create approximately 8,300 jobs, stimulate economic activity and have a positive and lasting impact on our community,” said Christopher Ilitch, son of Mike Ilitch and president and chief executive of Ilitch Holdings Inc., another family company.

The plan for a new arena for the Red Wings has been a growing focus of Mike Ilitch’s for quite sometime now and has recently picked up some steam within the last six months. Earlier in the year Ilitch announced his own plans for the arena and even consulted with some architects for the building last year. The agreement on the framework between the Red Wings and Downtown Development Authority is a step in the right direction to eventually see the groundbreaking on a new arena however there’s plenty of other hurdles to contend with notably city council and several other state and local agencies.

One of the bigger questions though is where is a cash-strapped city like Detroit (who currently has it’s finances managed by an EFM) going to fund this project?

From Click On Detroit:

Detroit’s Downtown Development Authority outlined the plan Wednesday, saying the project would cost an estimated $650 million.

The plan is subject to approval by Wayne County — $365 million would be funded through private investment and the remaining $285 million in public investment.

The arena would seat 18,000 and cost $450 million alone. It would include a 10,000-square-foot retail space, office space and a parking garage.

So essentially what the City of Detroit is looking at here is nearly 44 percent of the funding coming public investment whether that be trying to tap a new tax base from a declining population in the city or taking money from a school system who much like the rest of the city is in shambles. Back in December State lawmakers approved legislation that would allow the DDA to collect tax dollars for the new arena and entertainment district. According to the Associated Press, the DDA has been allowed for nearly two decades to pay down Detroit’s general obligation bonds with about $12.8 million a year that otherwise would have gone to education statewide. 

This also comes after Emergency Financial Manager Kevin Orr estimates that Detroit’s long-term debt is more than $17 million dollars.

Perhaps on the brighter side of all of this though is developers and supporters of the recently approved legislation believe that the new development would create new construction jobs and eventually new jobs in the district. This also all comes without mentioning the nearly $1 billion dollars being injected into the Detroit and State economy. Mayor Dave Bing also offered up some supportive words saying the project will “continue to add momentum to the transformation of the city.”

Regardless the new arena and entertainment district is currently slated to be built near Comerica Park and Ford Field lying close to the Woodwark and I-75 cross sections. Furthermore under the current plan would place ownership of the facility with the DDA while Olympia Development (a subsidiary of Ilitch Holdings) would hold exclusive rights to use, manage and operate the arena. This also includes the buildings naming rights.

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