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Mon March 31, 2014
The Ilitch family seeks a monopoly on the backs of taxpayers
I’ve talked before about the sweetheart deal that the city of Detroit gave Mike Ilitch in connection with the new hockey stadium and entertainment complex being built in downtown Detroit.
The city is giving Ilitch’s Olympia Entertainment all the land they need, absolutely free. The taxpayers are also kicking in most of the cost of the project.
In return, the city gets nothing – not one dime of the parking or pizza or ticket sales revenue.
When asked about that, spokespeople for both the emergency manager and the City Council muttered something like “they wouldn’t budge.”
We knew that before, but last week, details surfaced of an equally outrageous deal between the city and the 84-year-old pizza billionaire regarding the old stadium, Joe Louis Arena.
Here’s a little background.
Thirty-five years ago, the taxpayers built “The Joe” for the Red Wings, to prevent them from leaving town.
Detroit did need a new hockey arena then. The Red Wings were playing in an ancient red-brick structure in a bad neighborhood, and there was a real threat the team might move to Pontiac.
While the city paid for the Joe Louis Arena, it continued to own it, and got about a $7 million share of the Red Wings’ proceeds every year.
Many have forgotten this, but The Joe was also where history was made when Ronald Reagan was nominated for president in 1980. True, that was a long time ago.
When the hockey team leaves for the new arena, probably three years from now, the city will still own The Joe. But, incredibly, Detroit is being asked to give up the right to use it.
Here’s what Olympia Entertainment is insisting on: Under a deal currently before City Council, Detroit would have to tear the arena down, and the government would have to pay the costs to do so. And until that happens, the city is to be forbidden from holding any moneymaking events at the arena.
The Ilitch family wants to have a total monopoly on everything from tractor pulls to concerts.
Not only are the taxpayers not to be allowed to compete, they have to tear down the stadium they built and paid for.
In fact, the Michigan Strategic Fund’s board already has voted to make $6 million available to destroy the Joe. However, the city of Detroit does have to pay that money back.
Where is Detroit supposed to get it?
Well, the idea is that the city will redevelop the site, and tax revenues will flow in.
That might happen. Downtown Detroit is seeing a renaissance of sorts, but the whole concept sounds a little bit like Laffer Curve, leap-of-faith economics to me.
Incidentally, there is one other piece to this.
Detroit was believed to be owed as much as $80 million by the Red Wings, under a clause splitting cable TV revenues. Olympia wants Council to accept $5.2 million instead.
I’m not an expert on religion, but I find any cult that makes huge sacrifices to placate a sports team owner ridiculous in the extreme.
What I don’t know is why everyone is so irrationally afraid to stand up to Ilitch. In the name, that is, of common sense.