3 Benefits Of The Detroit Red Wings' $650 Million Arena District
The Detroit Red Wings and Olympia Entertainment announced the development of a $650 million sports and entertainment district this week.
In talks for quite a while, the plan appears to have been sped up; groundbreaking is set for September, according to Crain's Detroit Business. The district will consist of a new arena for the Red Wings, as well as five distinct neighborhoods throughout Detroit’s downtown and midtown areas. The estimated time of completion is 2017.
Chris Ilitch, president and CEO of Ilitch Holdings and son of Red Wings owners Mike and Marian Ilitch, laid out the plans last weekend. Ilitch estimated the development would create at least $1.8 billion in total economic impact over several years, 8,300 construction and construction-related jobs and 1,100 permanent jobs, as reported by the Detroit Free Press.
"Developments such as this typically have lasting long-term positive impacts," Darren Heitner told Benzinga. "However, before long there will undoubtedly be talk of more advancements. Such is the state of arena development in this day and age."
Detroit announced its intention to declare bankruptcy one year ago, which begs the question as to why it (via the Downtown Development Authority) would fund approximately $270 million worth of the project.
Bankruptcy concerns aside, the deal could be revolutionary in several ways.
1. Red Wings Have A New Home
The Red Wings have been playing hockey at the Joe Louis Arena since 1979. That may not seem like a long time, but in professional sports it's a lifetime.
The Joe has been the brunt of many complaints over the years, such as cramped seating and lack of amenities associated with other franchises. This new arena (at a cost of $450 million) would not only bring a modern home to the Red Wings franchise, but it would also move them closer to the heart of city and other Detroit teams. The Joe is currently situated several blocks away from Comerica Park (cost of $326 million) and Ford Field ($500 million).
The new arena would seat about 20,000, compared to the Joe Louis Arena's 18,500 seats. Could this have an affect on luring players to Detroit, a franchise with a North American record of 22 straight playoff appearances?
— WXYZ Detroit (@wxyzdetroit) July 21, 2014
“I would be shocked if it has any influence on players being enticed to join the Red Wings organization,” said Heitner. “This is a project mainly to revitalize the city and provide a benefit to those who live in and around the city of Detroit. Many players on the Red Wings are not even domiciled in the [downtown] area.”
The Red Wings franchise will keep all revenue generated from the arena.
2. City Of Detroit
Projects for Detroit’s other two sports teams, the Lions and Tigers, have been constructed in the last 15 years...yet the city still filed for bankruptcy and lost thousands of residents. Many other publicly-funded stadium in cities such as Miami and Columbus have also come under heavy fire.
The cost of those projects can severely cripple a city's financials. One stadium and one grand entertainment district, however, could bring different results. Foot traffic for 41 Wings’ games and several concerts will certainly bolster retail and restaurant revenue, but getting people to stay is the real kicker.
3. New Homeowners
Chicago’s Wrigleyville is one of few sports districts with heavy residential, retail and nightlife, but Ilitch's plan looks to go bigger.
Of the five neighborhoods, two of them are to be revamped with residential housing and apartments. More people, specifically the 35-year-old and younger crowd, have been looking to move downtown in recent years. In what may come as a surprise, the area has neared 99 percent occupancy.
Demand is high, and some residents are even being priced out.
For a city that has lost more than nearly two million people over the last half century, however, more inbound moving trucks can’t be a bad thing.
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