Pistons owner Tom Gores, Christopher Ilitch, CEO of Ilitch Holdings and Mayor Mike Duggan announce plans for the Pistons to return to Detroit. Steve Perez, The Detroit News
The multi-layered deal unveiled Tuesday to move the Pistons back to Detroit combines millions in public and private investment to add even more punch to downtown’s thriving sports and entertainment scene.
Starting next season, the Pistons’ home court will be in the city after 39 years of playing in the suburbs, part of a deal the owners estimate could have a $596 million economic impact in southeast Michigan. The deal includes a request for up to $34.5 million in taxpayer-backed bonds to pay for arena upgrades.
The Pistons will play in Little Caesars Arena, the still-under-construction multimillion-dollar venue that also will be the home ice of the Detroit Red Wings. In 2018, the Pistons will move its corporate offices to the city and build a separate “community center/practice facility” that could cost another $32 million to $55 million at a yet-to-be-announced location; the Pistons would back the bonds on that expenditure.
The billionaire owners of the Pistons and Wings also will form a mega-entertainment venture that would control many of the major performance venues in Detroit and its suburbs.
“This is a historic day for our franchise and the city,” Pistons owner Tom Gores told a packed press conference Tuesday at Cass Technical High School, the Detroit Public School a few blocks from the arena. “I’ve always believed that a sports franchise is a community asset with the power to inspire people.”
If the deal gets the necessary approval from the various government agencies as well as the National Basketball Association, Detroit would be the only city in North America to have all of its four professional sports teams housed within four blocks of the city center.
Christopher Ilitch, CEO of Ilitch Holdings, said the move is “a bold move that will have a positive effect throughout our entire community.” Christopher Ilitch is part of the family that controls the Detroit Red Wings, Little Caesars pizza chain, Olympia Entertainment and large tracts of Detroit property.
Mayor Mike Duggan predicted the deal will get the necessary government approval from city and state departments in the first quarter of 2017.
“We’re not going to have a problem with it,” Duggan said at the press conference. “The teams are all working together on that, so I anticipate (within the) first couple months of 2017 this will be just fine. I’m not seeing anything in here that should hold us up.”
Adding locker rooms
The deal to bring the Pistons back to Detroit involves asking for taxpayer-backed bonds to pay for arena modifications that would include separate locker rooms for NBA teams and changes to the floor. The bond money would come from property taxes from businesses and residences in the area covered by the Downtown Development Authority, where the main contributor is General Motors Co., along with other companies. The bonds will essentially be refinanced from bonds issued in 2014 to pay for some of the construction of the arena.
The area covered by the DDA is a roughly 1-square-mile development district encompassing much of the downtown, which was expanded last year to include the arena site. The money comes from increased value of taxes already paid by property owners within the district and captured by the DDA for economic development use, better known as tax incremental financing. The DDA captures the entire increased value of properties in its district.
The Pistons have also agreed to back up to $55 million in additional bonds if a “community center/practice facility” is built on public land. The location of that practice facility is down to two locations, officials said. One potential site would be next to the arena and on top of a parking deck, officials said. Another public site is also under consideration; a Detroit City Council member said that location is somewhere on West Grand Boulevard.
While the two sports teams will remain separate franchises, Ilitch Holdings and Palace Sports & Entertainment have agreed to establish a joint venture in connection with the many Detroit-area venues now controlled by the Ilitches. Combined venues include Little Caesars Arena, Comerica Park, Fox Theatre, City Theatre, The Palace of Auburn Hills, DTE Energy Music Theatre, Meadow Brook Amphitheatre and Freedom Hill Amphitheatre.
Gores said there has been no decision on what happens to The Palace.
Oakland County Executive L. Brooks Patterson issued a short statement Tuesday: “We wish the Pistons well. Thanks for all the memories.”
The deal was approved Tuesday by the board of the DDA, which owns Little Caesars Arena. It’s the first step in getting city approval. The City Council must approve the deal, including the taxpayer-backed bonds.
A University of Michigan study commissioned by the Pistons says the economic impact of the move, including renovations to the new arena, the building of the practice facility and the relocation of the Pistons’ employees is $596.2 million for southeastern Michigan.
In for the long haul
The Pistons have been at The Palace of Auburn Hills since 1988. Seating capacity for basketball games at The Palace is nearly 20,000. The seating capacity at Little Caesars Arena is 20,000 for hockey and up to 21,000 for basketball.
The Palace’s future is unclear, but it could be redeveloped for other uses. The Palace already hosts concerts, circuses and other events.
Arn Tellem, hired by Gores to coordinate the early effort to move the Pistons back downtown, said the Pistons intend to enter into a long-term agreement to use Little Caesars Arena that matches the original agreement between the DDA and Ilitch Holdings.
The original agreement has the Red Wings playing at Little Caesars arena for 35 seasons starting in 2017. When that initial term is up, Ilitch Holdings would have the option to continue to use the arena for 12 five-year extensions. So the Red Wings and the Pistons could be playing at the Little Caesars Arena until 2112.
The Pistons outlined a 10-point “community benefits” plan that includes hiring at least 51 percent of Detroit residents for construction of the practice facility. Another $100,000 will be donated to support workforce development initiatives for Detroit residents. Also, 20,000 free tickets per regular season will be given to city residents.
In addition, the Pistons plan to spend up to $2.5 million over six years to build or renovate 60 basketball courts in parks throughout the city.
Detroit City Council member Mary Sheffield said the agreement is expected to come before council early next year. Sheffield said she will focus on community benefits and how the neighborhood will be impacted. The practice facility and headquarters proposed on West Grand Boulevard is in her council district.
Councilwoman Raquel Castaneda-Lopez said she learned more about the deal Monday, but hasn’t reviewed any of the documents.
“I’m excited the Pistons are going to be playing in the city again,” she said. “But I can’t say necessarily that I’m excited about the deal itself, because I haven’t seen any of the details.”
“I’m proceeding with caution on what we’ll be able to see from this,” said Castaneda-Lopez, who wants to know how the new agreement would impact security and traffic, and how it would play into the Ilitch family’s plans for housing and parking in the surrounding neighborhood. “There’s a whole host of questions that we don’t know.”
Detroit News staff writers Christine Ferretti and Mike Martindale contributed.