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Crain’s Detroit Business’s Shea reveals that the Red Wings’ new rink will be…corporately funded?

When getting down to brass tacks regarding the details surrounding and sources of funding for the Red Wings' follow-on rink and real estate development in sum--there's a 56%-private-funds-44%-public-ones split--the most controversial part of the dollar picture came at the beginning, when the State of Michigan legislature approved the diversion of $12.8 million in taxes collected by the Downtown Development Authority to fund the project.

Now the whole, "This money is coming from schools and children!" line was BS from the start, and Crain's Detroit Business's Bill Shea (who's been following the scuttlebutt surrounding Joe Louis Arena's follow-on facility for over half a decade now) confirms that fact, but he also reveals that the biggest public contributors to the rink will in fact be downtown businesses like General Motors, DTE Energy, downtown casinos, Quicken Loans and, well, Compuware:

General Motors Co. and other downtown corporations will be the chief funders via their property taxes of the public portion of the $650 million Detroit Red Wings arena and entertainment district under a plan announced last week.

Detroit's Downtown Development Authority intends to use $284.5 million in property taxes captured within its 615-acre downtown district to pay off bonds issued by the state to build the 18,000-seat arena at Woodward Avenue and I-75.

GM has the largest taxable value within that district, and it and other corporations, along with small- and medium-sized property owners, will foot some of the arena's bill through property taxes.

The remainder of the arena costs, or $365.5 million, will be picked up by Olympia Development of Michigan, the property development arm of Mike and Marian Ilitch's $2 billion Detroit business empire that includes the Red Wings, Detroit Tigers and Little Caesars pizza chain.

The Michigan Strategic Fund will issue 30-year bonds to cover the public portion of the arena's construction costs.

That's just the introduction to a really fascinating article breaking down where the financial trail leads and how it breaks down. And Shea writes in such a manner that those of us without financial degrees can understand how things work.

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Comments

Primis's avatar

Can we plaster that URL all over?

I wasn’t thrilled with the idea of the funding, but seeing that breakdown I realize we all just need to shut up.  It’s already been taken care of.

It’s a shame they didn’t clarify that from the start.

Posted by Primis on 06/23/13 at 11:49 AM ET

George Malik's avatar

Agreed.

Posted by George Malik from South Lyon, MI on 06/23/13 at 11:52 AM ET

Bugsy's avatar

Thank you, George, I take back my comment on the school funding question too. Gladly.

Posted by Bugsy on 06/23/13 at 01:28 PM ET

Nathan's avatar

This article definitely clears up a lot, and makes me feel better about the deal from a non-hockey point of view. When you look at these details, this deal is actually a heck of a lot better than most publicly-financed arena/stadium deals are.

While this will create some jobs and bring more money into the city, we all just need to realize it isn’t a panacea. This is still something that will basically draw folks in periodically from the suburbs to spend cash. It will not build/rebuild communities that are centered on families, education, etc. That all said, this actually seems like one of the few smart looking investments that has been made in the city with public money in my lifetime. So maybe we can all look at this as a positive sign and a start to something bigger and better.

Posted by Nathan from the scoresheet! on 06/24/13 at 08:04 AM ET

SYF's avatar

Thank you, George, I take back my comment on the school funding question too. Gladly.

Posted by Bugsy on 06/23/13 at 02:28 PM ET

Aye.  It clears up many questions for me as well.

Posted by SYF from The Revenge of Johnny E on 06/24/13 at 11:51 AM ET

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The Malik Report is a destination for all things Red Wings-related. I offer biased, perhaps unprofessional-at-times and verbose coverage of my favorite team, their prospects and developmental affiliates. I've joined the Kukla's Korner family with five years of blogging under my belt, and I hope you'll find almost everything you need to follow your Red Wings at a place where all opinions are created equal and we're all friends, talking about hockey and the team we love to follow.