Tue August 6, 2013
Will A Hockey Arena Save Detroit?
MICHEL MARTIN, HOST:
I'm Michel Martin and this is TELL ME MORE from NPR News. Coming up, Zimbabwe's long-time president Robert Mugabe has been deemed the winner of last week's election, but the opposition is calling the election a farce. We'll find out why in just a few minutes. First though, we want to turn to Detroit where primary elections are being held today. A huge field, 16 candidates including two write-ins, are vying to become the next mayor of the city. That field will be winnowed down to two. And of course this is all taking place against the backdrop of Detroit's financial manager forcing the city into bankruptcy last month. But there's another debate about Detroit's future that's also capturing national attention, it's about a hockey arena.
Plans to use public funds to help finance a new $650 million arena and development project are still on track, despite Detroit's bankruptcy. Michigan's Republican Governor Rick Snyder calls the arena, quote, an investment in Detroit's future, unquote. But critics say it's just another corporate buyout that overlooks Detroit's real problems. We wanted to talk about all this so we've called Dave Zirin. He's written about this for The Nation magazine where he's the sports editor. Also joining us is David Muller. He's the business reporter for MLive Media Group in Michigan, that's an online news service. Welcome to you both. Thank you for joining us.
DAVE ZIRIN: Great to be here. Thank you.
DAVID MULLER: Thanks for having me.
MARTIN: David, I'm going to start with you. I'm going to ask you to explain to us how this deal is structured, as simply as you can and what public monies are involved here.
MULLER: Sure. So it's about a $650 million project and 365 million is going to be privately funded from Olympia Holdings - that's the company that owns the Red Wings - and another 285 million is going to be public funds. And the way it kind of simply works is it's, essentially, going to be coming from property taxes that are usually captured by the Downtown Development Authority of Detroit for economic development projects. They actually had to get a state law passed to allow them to use that money for this particular project and, also, the state will be getting 30-year bonds backed by both private - both these private and public revenue streams. So that's kind of how it works in a nutshell.
MARTIN: So it is fair to say there's public money involved.
MARTIN: I mean, it's public tax revenue. Who's the main driver of this project?
MULLER: It's Olympia Holdings. It's the Ilitch family, which founded Little Caesars pizza. They also own the Detroit Tigers. And it kind of came out of nowhere, you know, a few months ago, there had been rumblings about it, but really it came to light when they actually needed to get the DDA - the Detroit Downtown Development Authority, approval to use these funds for this project. So that's when it - finally, we got kind of the fuller picture of what's happening here.
MARTIN: And where are they playing now?
MULLER: They're playing at the Joe Louis Arena, which is right along the river in downtown Detroit. You know, it's kind of a semi-industrial area in-between, like, the business district and where - and Cobo Center, which is where they have conventions, and then a little bit more industrial area beyond that. So this new arena - sorry.
MARTIN: Go ahead.
MULLER: The new arena is going to be in-between midtown and downtown areas of the city, which is kind of interesting in and of itself because midtown and downtown are two areas that have developed really rapidly. And the area where they're proposing - it's this 45 block area - is really, for the most part, kind of desolate, kind of sparse. There's not a lot there. So it's in-between these two areas of hyper-development.
MARTIN: Now, David, you wrote a piece saying that a lot of the claims about investment in sports arenas and the claims that these sports arenas generate so much economic revenue are generally overblown. I mean, this is not your opinion. This is the reporting that you did. But in this instance, is there any disagreement? That - so even if you are rearranging the deckchairs, let's say, and...
MARTIN: ...Bringing people from...
MARTIN: ...Someplace to another place, isn't that a place that could use those deckchairs?
MULLER: Right, and it's kind of hard to argue that when you drive through that area or ride your bike through that area because it is pretty sparse. But, I mean, everybody I've talked to, every economist who's studied this time and time again, it really, like you said, kind of rearranges the deckchairs. Like, economic activity moves from one place in the city to another place, essentially, and it doesn't - it kind of - yeah, at worst, draws away from where there already was economic activity, like around the Joe Louis Arena in this case.
MARTIN: Dave Zirin, you wrote a blistering piece about this. The titles says a lot. "On Vultures and Red Wings: Billionaire Gets New Sports Arena in Bankrupt Detroit." Pretty clear how you feel about this. Tell us why.
ZIRIN: Well, I feel about this, less because I have an expertise in Detroit, and more because I've looked at the pattern of all the places in which these publicly funded arenas have gone. And if you look at the last 20 or 30 years, it's really become a substitute for anything resembling an urban policy in this country. I mean, look at de-industrialized America. Look at places like Milwaukee, Cleveland, Detroit and Baltimore, and what you see over and over again, places that used to be industrial hubs, these stadiums come in as a panacea to say, no, this can be a solution for the fact that we've lost jobs, that jobs have left, that there's less union density. The problem with it is twofold. The first is exactly like David said. Every single study - this isn't about opinion.
This is about fact. It's like arguing round Earth versus flat Earth - is that they just don't return on the economic investment that they put in. That's one problem. The second problem is the kinds of jobs that it does create. So even in the best case scenario, that it creates jobs, it creates jobs that tend to be very low-paying, no benefit, service industry jobs and jobs that are not year-round jobs. It's basically seasonal work. I mean, NFL stadiums are the worst because you're talking about places that at best are even only open for about a dozen days a year. And think about that - for a 365 day project - a dozen days year in Detroit, this new arena will be open for games for about 40 games a year. And so then you think about all the attendant businesses around it, say waiters or waitresses, bartenders picking up extra shifts. All of that goes away when it's not game days. I mean...
MARTIN: ...But three of the four major sports are in the downtown core already, the Detroit Pistons play about 35 miles away at the Palace in Auburn Hills and there's some talk about their being able to move downtown and bring all four major professional sports downtown if this arena goes forward.
ZIRIN: Well, and it would be great if Mike Ilitch, who has invested a great deal of his own money in the city of Detroit, chooses to actually fund the entire arena himself. So that money can go towards things that clearly Detroit needs, like, I don't know, keeping the street lights on or making sure there's garbage collection or making sure people get their pensions paid. And that's the problem of it, is that when you strip it away, it looks more and more like a kind of neo-liberal Trojan horse, and really an exercise in corporate welfare.
MARTIN: If you're just joining us, we're talking about plans for a new Red Wings hockey arena in Detroit and why some people are outraged about how it's being funded. We're talking about this with Dave Zirin of The Nation magazine. He's a sports editor, that's who was speaking just now. Also, David Muller of MLive Media Group who's been covering this story. So David Muller, we're not in Detroit, Dave's not an expert in Detroit, but what are people in Detroit saying about this?
MULLER: It's kind of a mix, which is, maybe surprising, maybe not. But, you know, there are people that there's really obvious excitement. They think oh, cool, you know, we get a new arena for the Red Wings. And there's people who, not even looking into the economics of it, think, you know, they're kind of - they have some nostalgia for the Joe Louis Arena, where the Red Wings play now. And then, of course, there's people who say kind of what Dave just outlined, which is, you know, we - there are so many other things we could use this public money for, you know, why don't we do that?
MARTIN: Could the public - could those funds, generated in this way, be used for some of the other things that Dave talked about? For services, for retrofitting some of the school buildings, for example, 'cause the city is in the position of having to close a large number of school buildings simply because of the declining number of students there. For services, for street lights, for street repair, for other kinds of investments in the city, is that - could those funds technically be used for that purpose?
MULLER: Technically they could. If you argued that it was an economic development, which probably, certainly, most people would. But I think you'd have to frame it as an economic development. So if you're going to repair the schools, you'd have to say, well, here is what it's going to do for this area around the schools. You know, that's - you're using the property taxes and tax increment financing.
MARTIN: Well, go ahead, Dave Zirin.
ZIRIN: And safe to say - it's just, it's safe to say Mike Ilitch has a much stronger lobbying wing than do the people who are trying to get more money for the schools. I mean, these kinds of projects don't happen because people sit in a room and just decide that this is a good allocation of public resources. I mean, ownership groups in city after city, and Mike Ilitch as well, Athena Holdings, I mean, they have people who are paid lobbyists who go down there and agitate and argue and spread money around and support candidates and do what they have to do to make sure that the money gets spent in this certain way.
MARTIN: Can I ask you though, Dave Zirin, since you are a critic of this, is that you argue that this work is seasonal work, it's not great work, but isn't not great seasonal work better than no work? I mean, as we've discussed, that area that's contemplated for this is essentially barren.
ZIRIN: Yeah, it's very important how we frame the debate. The argument isn't no money is better than this money, the argument is there needs to be a better use of resources than this. I mean, as one economist said famously about this kind of sports funding - if you took several hundred million dollars and flew it up in a plane and just dumped it on a city and let people pick up the money and just spend it in local businesses, that would, at the end of the day, have a better economic effect on a city's health than it would putting the money into an arena.
MARTIN: I'd like to see that study, but - I'd like to see where that study has been tried. David Muller, what's next here? What happens next here? Is this, in essence, a done deal, and now it's a matter of waiting to see how the project pans out?
MULLER: Yeah. It's not totally a done deal. They still have to - there still has to be some agreements between the developers and the Downtown Development Authority. They reached a memorandum of understanding, all that. They got that ironed out, but they just still - they still need to go through some formalities. I think - you wouldn't even see a shovel hit the dirt, so to speak, until 2016 at the earliest. But it does, I mean, for all things considered, it does appear to be moving forward.
MARTIN: Does the local leadership - as we mentioned, the primary elections are today. A very large field of candidates vying for mayor, which is a surprise to some people given sort of the political situation where the financial manager, essentially, has all the power. Do local leaders have anything to say about this? And this is the final question.
MULLER: They've mostly stayed out of this altogether. I mean, there's so much more, obviously, going on. I mean, it's a big deal, but with the bankruptcy hitting just a couple weeks ago and with all of that, you know, the street lights - you mentioned the street lights and the closing of schools. I mean, more of the focus has been on that and especially the bankruptcy, especially the emergency manager who's going to be here for a few months yet, you know. Essentially, rendering the mayor - whoever wins the mayor election will be, essentially, powerless when they get in there. But the only thing that's coming really locally from local leaders is economic development leaders like the Detroit Economic Growth Corporation, of course, they're all in for it, so.
MARTIN: David Muller is the business reporter for MLive Media Group, that's an online media service - or news service. He was with us from member station WDET in Detroit. Dave Zirin is a sports editor for The Nation. He was kind enough to join us in our Washington, D.C. studios. Thank you both so much for speaking with us.
ZIRIN: Thank you.
MULLER: Thanks for having me. Transcript provided by NPR, Copyright NPR.