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Detroit Mess: The Stadium Versus The Art Museum

Ok, I exaggerate: The two are not really connected. But the news the other day that was posted online at the Wall Street Journal’s Money Beat Blog is rather astonishing in the context of the Detroit bankruptcy, which threatens the Detroit Institute of Art’s collection.

NHL Lockout Economic Impact HockeyBefore I tell give you the quote, big hat-tip to Hyperalleric.

Here’s the story:

As Detroit settles in for a long, tortured trip through bankruptcy court, the public financing deal for a new arena to house the Red Wings will likely skate by intact….

Michigan’s state legislature approved Wednesday a $450 million bond offering that would form the public backbone of Ilitch’s Holding’s $650 million entertainment center and development district near the heart of downtown Detroit.

The bonds will be floated by the Michigan Strategic Fund, which handles all of the state’s private development funds. The public, $283 million portion of the bonds will come from the Downtown Development Authority, which earmarks a slice of downtown property taxes for reinvestment there. They both have investment-grade credit ratings and function independently of Detroit’s city government, which makes their involvement in the deal important. Detroit’s credit rating is somewhere between junk status and radioactive.

“This isn’t a source of money that can be redirected to the city,” [Brian] Holdwick [executive vice president for the Detroit Economic Growth Corporation] said. The private portion of the MSF bonds will come from Olympia Development of Michigan, which is run by Red Wings owner and sports-and-pizza mogul Mike Ilitch.

Ok, I get that — but does Holdwick understand the optics of this? In the midst of a city that may, or may not, be willing to strip its glorious art museum of its treasure, the state will help build a new stadium?

I will only cite for you evidence that stadiums never live up to their billing: here’s an article from 2002 by economist Alan KruegerThe High Cost and Low Benefit of Sports Subsidies. Here is: As Stadiums Rise, So Do Costs to Taxpayers. I could go on, but the evidence is clear: these things do not ever deliver the benefits they promise.

Hyperallergic cites different evidence. This is not unclear.

Sports fans, judging by comments, are all for it. I cite one sane commenter:

Something I haven’t been able to find through using various search engines, is, what the heck is wrong with their current stadium that justifies wasting money on a new one?…

The evidence rests.



  1. Sports stadiums are always a boondoggle. This is outrageous. Does anyone have an idea how we can pressure the state?

    • Well, lets remember that I was talking here about optics. I do think the two are unrelated because of the DDA. Now you can perhaps oppose a new stadium but it probably won’t help the DIA.

  2. FWIW, the State DOT wants to spend $2.7 Billion to widen freeways in Detroit. I think by now we’ve figured out that freeways generally don’t benefit cities, or they benefit the suburbs more than the center city. OTOH, many other cities are tearing down freeways (Portland, 1970; SF and the Embarcadero Freeway; Milwaukee; etc.).

  3. You did not mention that Mr. illich and Detroit have already two stadiums built just a couple of blocks from this contested property. I was just in Detroit fior my ongoing photo project on the city, At the DIA twice. Each time it was packed with visitors … All ages,all colors and culture.

    From what little i have learned about Detroit in only four visits so far: people drive in for baseball or.footall,park, visit perhaps a restaurant or bar in close prximity to stadiem and leave. No other benefit to te city.

    Oh and btw, within thedevelopment plan, what property or income or sales taxes would be going to the city?

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