In cash-strapped Detroit, few question sports arena funding

DETROIT Mon Jul 29, 2013 7:02am EDT

'Detroit' is seen on the top of an iron man-hole cover on a street in Detroit, Michigan July 27, 2013. REUTERS/ Rebecca Cook

'Detroit' is seen on the top of an iron man-hole cover on a street in Detroit, Michigan July 27, 2013.

Credit: Reuters/ Rebecca Cook

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DETROIT (Reuters) - While Detroit has become a top emblem of U.S. urban economic decline with its recent bankruptcy filing, it remains a resilient and vibrant sports town.

Major League Baseball's Tigers and the National Football League's Lions, like teams in other U.S. cities, have obtained public financing for new arenas, despite questions about their promised economic windfalls.

The Tigers' home stadium Comerica Park, which opened in 2000, was built at a cost of $300 million, 38 percent of which was publicly financed. Tigers owner Mike Ilitch, who also owns the Red Wings, paid $185 million. Indian casino revenue and a voter-approved 2 percent rental car tax and 1 percent hotel tax paid the public's share, according to the National Sports Law Institute at Marquette University.

Ford Field, the Lions' domed stadium, was built next door to Comerica and opened in 2002 at a cost of $430 million, 36 percent of which was publicly financed by the same Wayne County tourist tax and payments from the city of Detroit, the state of Michigan, and the quasi-public Downtown Development Authority. The Lions, owned by Henry Ford's grandson William Clay Ford Sr., paid $70 million. There were also $50 million in other corporate contributions, the institute said.

And while area bars and restaurants are typically packed on game days, the neighborhood is a ghost town when neither team is playing. After the games, most fans go straight back to their homes in the suburbs.

Sports economist Andrew Zimbalist, a professor at Smith College, compared the economic impact of a new stadium to that of a large grocery store or department store.

"As a general matter, stadiums and arenas basically reallocate geographically spending within a metropolitan area," he said, adding that most of the money spent at sporting events goes to cover team costs like payroll. The Tigers, for instance, have the fifth-highest payroll in baseball, paying their players a combined $148 million.

Still, a state board recently approved issuing bonds to help pay for a new arena for the Red Wings at the heart of a proposed 45-block entertainment district just north of downtown.

The total project is slated to cost $650 million. About 44 percent of the project would be financed through public sources. Most of the public money will come through state property tax abatements on the now mostly vacant land where the arena will be built.

Despite such questionable economics, the project faced only modest local opposition.

Gretchen Whitmer, the Democratic leader in the Michigan State Senate, said the state would be better off investing money in areas like public safety or schools.

"I think the best investment we can make as a state is to ensure that we have good schools, that we have public safety that will show up in a time of crisis, those are the types of things that really draw residents into the city of Detroit and I would say that's the best type of investment we can make as a state if we want to get people living in the city," Whitmer said.

Nonetheless, some still contend the costs are worth it for what a new stadium contributes to a city's psyche.

"You can show me a spreadsheet, and I'll still trump you because it's the psychic benefit of having a sports club," sports historian John Thorn said. "It separates a city from thinking of itself as big league or thinking of itself as bush league."

(Editing by Dan Burns, Frank McGurty and David Gregorio)

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Comments (6)
1942.bill wrote:
“”It separates a city from thinking of itself as big league or thinking of itself as bush league.” Does the city ever stop to think that it is BROKE? Sounds like typical liberal prioritizing.

Jul 29, 2013 6:02am EDT  --  Report as abuse
NogginAbroad wrote:
Panem et circenses. Worked in Rome, should work in Detroit. What could go wrong?

Jul 29, 2013 7:39am EDT  --  Report as abuse
swips88 wrote:
Detroit should have no authority to issue new bonds for Capital projects if they can’t pay off existing bonds and are now in Bankruptcy.

Regarding new Arena for Red Wings:
“The total project is slated to cost $650 million. About 44 percent of the project would be financed through public sources. Most of the public money will come through state property tax abatements on the now mostly vacant land where the arena will be built.”

How do Property tax abatements raise revenue?

In New Jersey we lost a good Republican Representative because she chose the Environment over Sports. Millicent Fenwick was defeated by Frank Lautenberg in Senate race primarily because of the Sports project.

The Meadowlands in East Rutherford NJ is where NY Giants and NY Jets play. Formerly NJ Nets home who left for Brooklyn and NJ Devils also left for Newark.

Just goes to show how big sports is in the minds of the voter. Meadowlands Sports project also was approved in a Voter referendum.
The public doesn’t understand how stuff like this gets paid for. Bonds Schmonds, what the heck, give me my sports.

Jul 29, 2013 12:40pm EDT  --  Report as abuse
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