Detroit Arena: All Cost, No Benefit

Detroit Arena: All Cost, No Benefit

Detroit is bankrupt, but Republican Michigan Gov. Rick Snyder and Detroit’s Emergency Manager Kevyn Orr are going forward with a plan to finance a taxpayer-funded arena. Michigan’s taxpayers are expected to pay $444 million for the stadium. 

Based on being in initial meetings regarding Kansas City’s Sprint Arena, and seeing the locker rooms of the under-budget PNC Park in Pittsburgh this month, it is clear the strongest case for taxpayer funding of a stadium is usually a combination of factors: 1) the government being in better financial position than the team using the stadium, and 2) local businesses would be hurt if the team leaves town because they cannot get a new stadium. So why is bankrupt Detroit putting up an arena?

Nearly a decade ago Rick Horrow and I met with the Mayor of Kansas City as he began to lay out a plan of what would become the $276 million Sprint Center. Even after a very intense cost-benefit analysis taxpayers can be torn on if they want their money going into such an effort. Cost overruns are often assumed, though PNC Park in Pittsburgh came in at a relatively very inexpensive $216 million after opting for the less expensive real estate in the Northside.

In the case of the new arena for the Detroit Red Wings, taxpayers alone will pay out more than the total cost of either PNC Park or the Sprint Arena, even though the city is bankrupt and the Detroit Red Wings never threatened to leave town if they did not receive a new arena.

According to CNN, even Democratic State Senate leader Gretchen Whitmer is breaking with Gov. Rick Snyder, saying, “If the vote was held today, since the bankruptcy, I wouldn’t put my money on it passing.”

The Red Wings are in fact a rare profitable NHL team, according to the same article.

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