Could economic downturn determine fate of Joe Louis Arena? (http://sports.yahoo.com/nhl/blog/puck_daddy/post/Could-economic-downturn-determine-fate-of-Joe-Lo?urn=nhl,149899)

By Greg Wyshynski
The Detroit Red Wings (http://sports.yahoo.com/nhl/teams/det/) obviously have bigger fish to fry (http://sports.yahoo.com/nhl/teams/san) these days, but Crain's has some great coverage today (http://www.crainsdetroit.com/article/20090322/SUB01/303229965/1069) of a potentially franchise-altering decision looming this summer for the Wings ownership regarding Joe Louis Arena: Mike Ilitch has "until June 30 to tell Detroit if he will modernize the 30-year-old, city-owned arena or construct a new venue that likely would cost $200 million to $300 million."
Yes, in an economy where everyone but the pawn shops needs a bailout and even NFL teams could be bleeding dollars (http://msn.foxsports.com/nfl/story/9370784/Are-NFL-owners-crying-wolf?-Maybe-not) in the coming years.
The Joe Louis lease expires July 1, 2010, but the Ilitch family has to declare its intentions this summer. Their decision is one steeped in the political mess that is Detroit, which the Crain's story spells out (http://www.crainsdetroit.com/article/20090322/SUB01/303229965/1069) better than we ever could.
But the two most intriguing factors at play in potentially leaving the Joe: What the city gains and loses if the Wings move to a new arena, and how the Ilitch family would finance such a venture when it's hard to borrow money to buy a Mazda let alone an 18,000 seat hockey arena.
On the financing front, the current economic climate makes the credit needed for an arena project tough to come by. The Wings could ask for an extension on their decision; or they could do this, according to Crain's:
One of them is financing a new stadium through a combination of private money from the Ilitches and taxpayer money through an extension of local hotel and car-rental taxes - the formula that financed Comerica Park [where the Detroit Tigers (http://sports.yahoo.com/mlb/teams/det/) play].
A new stadium offers the team more revenue from additional suites and corporate sponsorships. Debt financing by the team is iffy at best and has hampered stadium projects elsewhere in the country.
As popular as the Wings are, the use of any tax money -- sales or otherwise -- on a stadium project in stimulus times is going to be a tough sell.
What about a new lease for a new stadium? As Crain's points, out, Detroit could start charging for police and landscaping services (currently provided for free), and could collect property taxes beyond the current cap of $252,000 annually. But the city would risk losing ticket, concession and suites surcharges depending on where the financing comes from.
Then again, if the Red Wings renew the lease and renovate the Joe, according to Crain's "the city immediately loses the ticket taxes and in five years loses the surcharge on concessions and suites." So maybe a new arena would be in Detroit's best interest.
The two Crain's stories -- about the lease decisions (http://www.crainsdetroit.com/article/20090322/SUB01/303229965/1069) and about the future of the Joe (http://www.crainsdetroit.com/article/20090322/SUB01/903219994/1069) if the Wings leave -- come highly recommended for those who are fascinated by how these arena deals come about.
For example: Would there be a chance in hell this year that Prudential Financial Inc., would but the naming rights to the New Jersey Devils (http://sports.yahoo.com/nhl/teams/njd/)' arena for $105.3 million over 20 years?
Speaking of the Devils, a question for the Wings fans who read the blog. The contention in Jersey was always that an antiquated arena contributed to the team's inconsistent (and usually underwhelming) attendance.
While most of the talk about empty seats in Detroit comes back to "it's the economy, stupid," would a new, state-of-the-art arena have an impact? In other words: Does the Joe contribute, at all, to some of the team's attendance issues?

I haven't been to The Joe is a long time, so I couldn't comment on whether it should be modernized or torn down. It would suck for the history to go away though. First Tiger Stadium and then The Joe.

Its the coolest name for an arena going...The Joe

I don't see how they could modernize it. the setup is pretty bad. The rows are so close together your knees are in the back of the person in front of you. It makes for good viewing because you are closer, but I'm not sure it's going to work for upgrading it.

It might even cost more than starting from scratch if they had things that aren't up to code anymore.

Never liked that arena... steep stairs... tight seats... dark and dreary.
The Olympia club otoh is sweet...
oh yeah and put the suites where they belong, down by the action.

yeah, we won tickets to the suit and it was basically at the rafters. It's just a bad setup. There also isn't anything around there really. If it was in the fox area there is hockeytown and greektown pretty close to generate a better atmosphere. Put something on the river that actually uses the view.

I don't see how they could modernize it. the setup is pretty bad. The rows are so close together your knees are in the back of the person in front of you. It makes for good viewing because you are closer, but I'm not sure it's going to work for upgrading it.

It might even cost more than starting from scratch if they had things that aren't up to code anymore.

But they must have some sort of plan or they wouldn't be discussing it in the article.

If I ever have a choice on a house, I tear it down. You can spend a ton of time and money till you can start construction again.

My guess would simply be replacing seats (they are pretty old looking), re-painting etc. more cosmetic stuff.

I agree with Tahoe, I can't begin to say how much I miss the Joe. But I think you guys raise some great points. I don't think they can just add some seats and fix the bathrooms. They would have to modernize facilities and (I would hope) improve the exits and flow of the thing. And if they modernized it how long would that take? And if it took a year where would the Wings play? It's not like other sports where you can just lay down hardwood or turf.

The second thing that occurs to me, and I admit I haven't read the Crane article so I'm just basing this on what I've read here, is how fucking stupid business is done by the city of Detroit! Ok, so we have the team that for many years was the sole reason anyone ever came downtown, owned by the man who's probably put more back into the city than any Michigan millionaire. And you do what? You issue him an ultimatum? You mean you couldn't find a way to talk with him and discuss with the best options for both the Red Wings, the Illitches and the city of Detroit? You don't think that it's in your best interest to work your damnedest on a solution so that the city, whatever the final solution, can reap as much benefit as possible, economic or otherwise?

I should sign up for Crane just to see if I'm right. And if I am, what a bunch of fucking morons.

About half of Crain's Detroit's content is free, the other half you have to have a paid subscription to read.

Crain's is definitely for the intellectual elite, though.

I don't think thats an ultimatum as much as a clause(sp?) in leases where they're just looking for what the tenant is planning on doing when the lease expires. It give the owner some time to figure out their options.

I agree you 100% that the city should be discussing with him on how to keep the Wings in town.

I think you might be right. It sounds more and more as I read things about this like it is just a contractual part of the lease.

Still, they're morons dammit!

I remember hearing a couple of years ago that the Joe had the least widest "lobby" area around the arena and it really shows when you try to leave. It really isn't a huge pain in the ass, but it does take a good 5 - 10 minutes to leave if you are attempting to walk to another side of the arena after the game.

It would be cool to put it as close to Ford Field and Comerica as possible and have a sweet Detroit Triangle in Downtown.

That tunnel to the parking lot is a lot of fun too.

Bump:


Olympia Entertainment has until Tuesday to inform the city if they want to opt out of the lease that expires next year that gives them control of Joe Louis, an adjacent parking garage and part of Cobo Center for roughly $475,000 a year. If not, the lease will automatically be extended for another 20 years under similar terms.

If the Red Wings extend the contract, a decision that is the team's alone, the city could no longer tack on up to a 10 percent surcharge on tickets to games and events that accounted for $3 million in revenue last year.
Also Detroit would no longer get a cut of concessions and suite rentals. Olympia Entertainment would lose up to $1 million in annual tax breaks. The amount of tax liability is written into the lease deal.

I didn't realize it would be a 20 year lease if they don't opt out. BTW, I read that the Penguins pay 4 mil a year to lease their new building next year.

Someone told me they wanted to make the Joe into an aquarium like they have in Gatlinburg or Baltimore.

I can't see the council approving that one anytime soon.

http://www.dan-dare.org/FreeFun/Images/CartoonsMoviesTV/FindingNemoWallpaper800.jpg

BREAKING NEWS: Ilitches won’t renew lease with Joe Louis Arena http://is.gd/1eoKQ

Smart move. They can do a shorter lease at the Joe while they decide whether to build a new one. It also allows cobo to expand because the Wings won't have a lease there. They can just lease the Joe separately in a new lease for however long.