District Detroit, new hockey arena could be boon to Motor City

Daniel Alfredsson, Niklas Kronwall, Brendan Smith, Jonas Gustavsson, Xavier Ouellet

The Ilitch Family recently unveiled unique and exciting plans for a new Red Wings hockey arena and an entertainment district in Detroit. The District Detroit, as the project is being called, looks very similar to downtown Los Angeles’ L.A. Live, with restaurants, shops and new housing surrounding the arena. Red Wings owner Mike Ilitch, who came up with the vision, stated in a press conference:

“It’s always been my dream to see a vibrant and energized downtown Detroit. I want people to look at Detroit’s new sports and entertainment district and see what I see — the potential for something very special. I couldn’t be more excited and proud to bring this vision to life.”

The $450 million arena and $200 million mixed-use entertainment district will be paid for by the Ilitch’s firm, Olympia Development, as well as public money. The entertainment district will be mostly funded by Ilitch, while the arena will be 58 percent publicly financed. The new arena will hold at least 20,000 seats including high-end luxury boxes near the ice.

The real winner here is the Ilitch organization, which will receive 100 percent of revenues from the new arena. At Joe Louis Arena, the Red Wings share  10 percent of ticket proceeds, 7 percent of suite sales, 10 percent of food and beverage concessions, 5 percent of souvenir sales and other revenues such as parking with the city. Under the current arrangement, the city generates approximately $7 million a year from the hockey games. With the new arrangement it will receive substantially less.

Although the city will be losing out on some revenue, several gains should overshadow those losses. District Detroit is projected to generate $1.8 billion in total economic impact, 8,300 construction and construction-related jobs and 1,100 permanent jobs. The city will also gain from sales tax, hotel tax and property taxes generated by the development. The new district will connect iconic parts of the downtown area, such as the Fox Theatre, Comerica Park, MotorCity Casino, Ford Field and the Fillmore Detroit. It hopes to create a new vibrant atmosphere that will also attract future development. The projected number of residential units is expected to be about 500; at least four new mid-rise buildings will surround the arena, and it will be near Comerica Park.

The naming rights for the new arena are to be determined. The sale of naming rights to new arenas in a market such as Detroit could net $4 million a year or more, according to Marc Ganis, president of Chicago-based Sportscorp. The Detroit Tigers are being paid $66 million over 30 year by Comerica, and for the naming rights to Ford Field, home of the Detroit Lions, Ford paid $50 million for 25 years.

Once completed in 2017, this new arena and entertainment district could challenge L.A. Live as the most innovative multi-purpose district in the country. If successful, District Detroit could become the city’s top draw for tourists, locals, and others, with the creative mixed-use environment it will establish.

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