Little Caesars Arena and its District: Masterpiece or Corporate Landgrab?

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Six months ago, Robert Gibbs thought Little Caesars Arena was a bad idea. Despite the hype that often surrounds their construction, stadiums don’t actually do much economically for their communities. Evidence of that is widespread.

But then Gibbs, an architect and urban planner based in Birmingham, learned more about the project from peers directly involved in the design process. And he changed his tune. “Generally, I don’t think stadiums help neighborhoods,” Gibbs says. “But the new design of Little Caesars Arena is an extraordinary exception to the way arenas are built.”


The District Detroit

Set to hold its first event on Tuesday, Little Caesars Arena, the new home of the Red Wings and Pistons, is the main component of an ambitious plan to create a more expansive entertainment district in downtown Detroit known as The District Detroit. The 50-block area, anchored by three stadiums and several theatres, is being spearheaded by the Ilitch family, which controls the Little Caesars Pizza empire. The Ilitches will spend hundreds of millions of dollars to build the new arena and its surroundings, which will also include new retail and residential spaces. Projects already announced include a hotel, a multi-story office building and 686 residential units.

The positive narrative is hard to ignore. “All the hustle and bustle makes it possible to see past the gravel parking lots filled with broken bottles of booze and the long-neglected buildings ... to envision an area teeming with residents and commerce,” the Detroit Free Press wrote on Aug. 31. Multiple urban planning experts lauded many aspects of plan for the arena and the surrounding district, and city bigwigs couldn’t be more enthusiastic. “I think we’re going to be the envy of every city in North America,” says Matt Cullen, principal of Rock Ventures, the holding company for Quicken Loans founder and Detroit billionaire Dan Gilbert’s many endeavors. “I think it’s going to be tremendous.”

Tremendous?

Not everyone agrees. In fact, some see it as less than perfect, far short of whatever superlative proponents may use.

Experts worry it will be too noisy for an ideal living situation. Some economists criticize the hundreds of millions in public dollars used to finance the arena, and say other types of development would’ve done the job just fine or better. On top of that, a laser-like focus on one area could exacerbate the neighborhood-downtown divide. And local stakeholders are deeply troubled with just how the Ilitch family went about the process, prompting one local businessman to say that the Ilitches purposefully created a “dangerous ghetto” to drive down values of properties and snatch them up at dirt-cheap prices.

The Stadium Debate

In 2015, popular late-night comedian John Oliver made stadiums the topic of an episode of his HBO show, Last Week Tonight. In the episode, Dave Zirin, sports editor of The Nation, quotes an economist who says, “Rather than spend a billion dollars on a stadium, [a city is] actually better off flying a plane over a city and dumping a billion dollars on the populace, and just letting them pick up the money and spend it.”

That statement doesn’t gel with the pervasive belief about stadiums, that securing a shiny new arena, or the arrival of a team itself, is a huge victory for a city. When owners threaten to leave, fans go to incredible lengths to ensure they don’t. It’s not just the feeling of pride and identity that comes with a storied sports team. There’s a sense that new teams and arenas boost local economies by bringing jobs and tourism. This is a narrative owners love to promote, especially when they’re negotiating a better situation with their host city, says Michael LaFaive, senior director of fiscal policy at the Mackinac Center for Public Policy, a free market research institute.

But the numbers don’t lie, and economists and urban planners believe stadiums are not the most efficient use of urban real estate, especially if public funds are involved, which they usually are.

“The academic literature is pretty clear that the answer is generally no,” says Carolyn Loh, a professor of Urban Studies and Planning at Wayne State University and a former practicing planner. “The return on investment is usually poor, the economic spillover effects are usually not as large as advertised and the jobs created are low-wage.”

A 2008 study wrote that “sports subsidies cannot be justified on the grounds of local economic development, income growth or job creation,” and “economists in general oppose sports subsidies.” In a different study released in 2016, researchers found “no evidence of increased new businesses openings after the opening of new sports facilities in 12 U.S. cities in the 2000s.”

Gibbs describes stadiums as often being “black holes in the fabric of a city,” because for a large portion of the year, they sit silent and empty, a vast swath of valuable urban space used by no one. The success of restaurants and bars in the area is often limited, because they’re only at peak business for a few months.

“One of the problems with having a single arena and a single season is that it’s highly doubtful that a single stadium that’s very seasonal in nature is going to attract much of a residential presence, because there’s only seasonal demand,” says Robert Baade, a professor of business and economics at Lake Forest College in Illinois, who has done extensive research on the economics of sports facilities.  “You get rid of some of the seasonal elements by having the teams play in the area year-round.”

With Detroit’s cluster, an establishment in the area now has at least one sport, often two, in season at any given time, plus concerts and other special events. That makes business a lot steadier and more reliable. “We always got a bump [when the Detroit teams were in season], but the Lions are only 10 weeks, and the Tigers aren’t very good and only in the summertime.” says Harry Kelafonitis, owner of Harry’s Bar, on the corner of Henry St. and Clifford St. “Now with Little Caesars Arena, it’ll just be nonstop.”


Little Caesars Arena (Deadline Detroit photo)

But things aren’t perfect. Ford Field in particular offers no integration with the surrounding blocks—structurally it’s little more than a fancy warehouse—and its team, the Lions, has a relatively short season, with eight regular-season home games. And in a few years, a fourth stadium could even be on the way, with no indications toward its design. Wayne County officials have accepted a preliminary proposal from Dan Gilbert and Pistons owner Tom Gores to build a soccer-specific stadium in the current “fail jail” site on Gratiot. 

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Another ding on stadiums is that they require a large amount of public resources, including suitable access via roads and public transportation, parking space and use of police and fire services. These are public dollars that could go elsewhere.

Baade, Cullen and Peter Allen, a professor at the University of Michigan’s Taubman College of Architecture and Planning, say they believe this is another way the clustering of stadiums could benefit the city. The facilities can share parking lots and other resources such as the QLINE, the city’s new rail car system that runs down Woodward Ave. “Stadiums require enormous infrastructure, parking, transit connections, ancillary services, and more,” Allen says. “The proponents might argue that they have an economic collaboration here that will help.”

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Even if new stadiums manage to put wallets in use, many are simply drawing dollars to a different part of town, rather than creating new dollars. “It’s really a sort of mercantilist argument, where you do better if your neighbor does worse,” LaFaive says. “Entertainment dollars just get transferred, they don’t get multiplied. A dollar spent on the Lions in Detroit is just a dollar that’s not spent on fireworks or a hot dog outside the stadium.”


Comerica Park (Detadline Detroit photo)

Margaret Dewar, an emeritus professor of urban and regional planning at the University of Michigan, says this is exactly what happened with the transition from Tiger Stadium to Comerica Park. Dollars spent simply shifted a few blocks north, but didn’t add anything to the city’s economy overall.

The latest example is Little Caesars Arena, which is a mixed bag. Dollars moving from the riverfront, where Joe Louis Arena hosted the Red Wings for decades, isn’t much. But dollars coming all the way in from the Pistons' old home in Auburn Hills is more substantial.

But The District Detroit is gambling it can buck this trend as well. Olympia Development, the real estate arm of Ilitch Holdings, issued a response to Oliver’s episode, which mentioned Little Caesars Arena: “This project is about so much more than a world-class sports and entertainment arena; it's about transforming a core part of our city for the benefit of the entire community.”

Dewar says real economic progress will only come if people make permanent lifestyle changes because of this development. Gibbs, who specializes in new urbanism, which prioritizes the walkability and multidimensionality of neighborhoods, says this is possible. In a best case scenario, new residents would move into the district because it would provide all they need—a places to work, live, eat, shop and go out.

“If the presence of the stadium means a whole lot of people want to live and work in Detroit who didn’t in the past, that’s a positive for Detroit that’s beyond [just moving money around],” Dewar says. “But does it? I don’t know that. I think it remains to be seen.”

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Even if the drain on public resources is solved, and development is more sustained, one large problem with stadiums still remains, Baade says. They’re walled-off mini-cities, offering food, drink and shopping only to those who pass through the gates. “If you build arenas so that they capture most fan spending inside the arena, you’re not going to generate the kind of spillover into the community that’s part of this integrated urban plan,” he says.


Ford Field (Deadline Detroit photo)

Comerica Park and Ford Field both have that problem. But Little Caesars Arena has retail and entertainment space built directly into the structure and fill a bit of a gap along Woodward Avenue. Restaurants and shops that would usually be retained within the paywall of the arena gates are open for business to anyone, regardless of whether they attend a game or whether a game is even happening. “I think we have seen a significant progression in the way stadiums have been located and more intentionally integrated into the community,” says Robin Boyle, a professor of urban planning at Wayne State University. “Little Caesars Arena is the next step.”

NOT ALL SMILES

Although he is supportive of the concept overall, Baade wonders if the loud, crowd-centric nature of sports stadiums might clash with the goal of creating a strong residential district. “Who wants to live in a place where you have fans milling about year-round?” he said. “Is that really the living arrangement you’d like to have?”

Gibbs too, voiced concerns about heavy traffic patterns and irregular surges of cars and pedestrians disrupting the neighborhood’s character.

At least two cautionary tales exist for Detroit. Baade points to Pioneer Square, where Seattle built two new sports stadiums in a similar effort to create a robust stadium district. "A lot of the other commercial activities in the community were crowded out precisely because owners of other businesses did not find a symbiotic relationship with [the stadiums],” he says.

The other is Philadelphia, according to Boyle. The city transformed a struggling southside neighborhood into a sports mecca, building three stadiums and a concert venue in one place. It’s a well-equipped space to attend a game, he says, but not much else.

But if its vision is fulfilled, The District Detroit will be unparalleled in modern American urban planning. No other city has attempted such robust community development with so many stadiums in one place.

Kelafonitis, owner of Harry's,  believes the extra lengths the Ilitches are going to build a well-rounded community around the stadiums will make the difference. He says The District Detroit is the best thing that could’ve happened for his business.

“You can’t walk from casino to casino, so they haven’t created any vibe around them. They’re all little islands; when money goes into them, it doesn’t get spread out anywhere,” he said. “The city of Detroit needs to be walkable. When you cluster [the stadiums] like this, it creates a huge walkable district, and it creates a base from which you can grow everything.”

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With the emphasis on creating a specific, 50-block area of rejuvenation, it’s easy to wonder whether The District Detroit will only serve as another wedge between downtown and the city’s neighborhoods. When asked about the divide after his mayoral primary victory in August, Mayor Mike Duggan called it “fiction.” But Steve Neavling writes in Motor City Muckraker just the opposite: “The deepening divide between downtown and the neighborhoods is anything but fiction. Under Duggan’s watch, foreclosures, water shutoffs and poverty reached new highs, while downtown has experienced an unprecedented boom.”

From a technical standpoint, Loh believes clustering the stadiums is the right call for Detroit. The “geography of investment” needs to reflect the demographic reality of the city, she says, or it won’t be effective. “Detroit’s history is full of examples of both public and private investment spread out too thin around the city, and therefore resulting in a diluted or negligible impact,” Loh says. “So, if you’re going to build a new stadium in a city that has lost population, keeping it close to other entertainment venues makes sense to me.”

Placing the original General Motors headquarters on W. Grand Blvd. in the New Center area is one example of this, Loh says. It diverted a significant part of the workforce away from downtown, and “left both areas weaker.”

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The most damning criticism of the operation is easily its use of public money.  “I think stadiums and public sports are good, but the payment model with public subsidies need major reworking,” Allen says. “Owners get too wealthy, the fans pay too much and the taxpayers are not benefitted.”

As of May, the total cost of Little Caesars Arena was $862.9 million, according to the Michigan Economic Development Corporation. Nearly 40 percent comes from the City of Detroit, although all parties involved are quick to point out none of the amount comes from the city’s general fund. “There was just no economic reason for providing fiscal favors to one billionaire, let alone another,” LaFaive says. The net worth of the Ilitch family is $6.5 billion, according to Forbes.

LaFaive has written extensively on this topic, but he’s not alone. Loh says the evidence is clear citizens don’t get a return on what they pay, and plenty of academics and journalists say the same. “Public subsidies of professional sports stadiums don’t benefit local residents,” LaFaive adds. “The moment you drag taxpayers into the equation, you have to subtract any costs imposed on them.”

In June, two people filed a lawsuit protesting the use of $34.5 million earmarked for educational use as additional funds for the Piston’s transition into the arena. A federal judge later dismissed part of the suit.

The City of Detroit did not respond to several requests for comment.

DIFFERENT PATHS

Though the district solves part of the problem of seasonal “black holes” by clustering stadiums open during every season in the same spot, that doesn’t solve the fundamental problem of a massive structure that doesn’t interact well with its surroundings. Even Little Caesars Arena, which does that to an unprecedented degree, isn’t of much use when no one’s hitting pucks or dribbling balls inside. “The question becomes, could you have done it differently using other kinds of commercial anchors that aren’t so controversial?” Baade says. “Is it the best use of scarce urban real estate? Does it generate the type of economic activity that would allow for the same level of development that would occur if you chose a different type of development?”

Loh says other anchors would probably have been “more cost-effective and possibly more sustainable,” but would not say for sure without an analysis of the area. These could include shopping centers, department stores, hotels, restaurants or major office space. Baade says “a collection of small businesses” could work.

Instead of stadiums, LaFaive says, he’d prefer something known to have a “high return on investment,” such as companies that do research and development.

When asked about the planning process for the Gilbert and Gores-funded soccer-specific stadium, Cullen said it’s possible Rock Ventures could build something else besides a stadium or jail there. “It’s concurrent, but not dependent [on an MLS team],” Cullen said. “If [an MLS franchise] didn’t happen, it’d be a mixed use development.”

Dewar points to the Detroit Riverwalk as an example of a type of urban development that’s sustainable and consistently draws in visitors who spend money. The bottom line, she says, is whether what you’re building moves money from a nearby area, or creates new dollars spent.  Stadiums don’t have the best track record for the latter.

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Ilitch Family's Timing

Considering alternatives to The District Detroit also raises the question of timing. The Ilitch family’s history in Detroit dates back 50 years, to when they opened the first Little Caesars Pizza in 1967. They purchased the Red Wings in 1982, Fox Theatre in 1987 and the Tigers in 1992. As early as 1992, local media was reporting on plans for a new Red Wings stadium. “What the Ilitch organization has done is think bigger,” Boyle says. “This was not an overnight sitter. This has been intentionally inquiring and holding land for quite a long time to put that parcels together.”

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A cover of the Detroit Metro Times in 2014

Although it’s sometimes hard to cut through praise of the Ilitches, they certainly have critics. Much of that criticism centers around why the Ilitches took so long to launch their revitalization effort, and the consequences of that wait.

Curbed Detroit architecture critic Kelly Ellsworth said just as much in a 2013 piece. Ellsworth argued Ilitch had been purposefully disinterested in developing downtown Detroit for a long time, and was only spurred into action when competition arrived on the scene in the form of Dan Gilbert. “This rapid [development by Gilbert] draws a sharp contrast to the glacial pace of development we find in the areas just north of Grand Circus Park, specifically those controlled by the longest-enduring member of Detroit's real estate plutocracy, Mike Ilitch,” Ellsworth wrote. “With an approach that values surface parking over the built environment, Ilitch Holdings has turned wide swaths of downtown land into a literal wasteland and postponed development of a promising area for well over a decade.”

Boyle disagrees. He says the timeline for creating the arena and The District Detroit isn’t far-fetched at all.

“This is big-scale urban development, and it takes a lot of cash and patience and the ability to put together the teams of people to do it,” Boyle says. “Generally speaking, what they have done down there fits into how cities are evolving.”

Kelafonitis, of Harry's Bar, says he understands coordinating the purchase of all these iconic properties, the building of a new one and the ideation for an entire district takes time. But what he has a problem with is the way the Ilitches went about the process.

Kelafonitis chose the site for his bar because he believed the area had a bright future. He bought the property in 1994, and in the next year, he says, the City discreetly agreed to a big picture plan with the Ilitches for redeveloping the area. They employed a scorched earth strategy. “[The City and Olympia Development] had a deliberate campaign for a moratorium on any land sales,” he says. “The City confiscated what they could, would not give out any licenses, and gave the Ilitches 15-17 years [to do what they wanted to do].”


Harry Kelafonitis (Deadline Detroit photo)

The Ilitch organization began buying up properties all around him and for the future site of Little Caesars Arena. According to Kelafonitis, many of those properties stood vacant for years, and that’s exactly what the Ilitches wanted. He says the organization wanted to create a “ghetto scene” to drive down property prices. At night, drug addicts used Ilitch properties as shooting galleries, and during the day they’d break into businesses and cars. Kelafonitis says it “wreaked a lot of havoc” on him. “Maybe this will drive people out and make the area look hopeless and drive prices down,” Kelafonitis says of what he thinks was the Ilitch mindset. “You motherfuckers, you knew what you were doing. You did this on purpose.”

That being said, Kelafonitis is on board with the need for powerful billionaires to jumpstart development. No investor had the bravery to put money into downtown until Ilitch did, he says. But he has not experienced the second part of that equation.

“They don’t care what we have to say. The way they go about it, they step on you, then act like you’re so lucky to be in their realm,” he says. “A lot of times when I talk to city officials they don’t even know what’s going on in the project. Olympia doesn’t give them information.”

As of press time, Olympia Development and Ilitch Holdings did not comment for this story.

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The next five years will show whether the Ilitches will come through for the city, and whether the family’s attempt at remaking part of downtown Detroit succeeds. Tax revenue to pay for the arena needs to be collected without a hitch. Plenty of housing and retail space is yet to be built.

But of course the biggest test on the horizon is whether new residents will come. The District Detroit is laying out a buffet of (mostly) affordable housing, sleek entertainment options and convenient community resources. If the area’s population grows, it will be validation that Detroit just might be tough enough and creative enough to fight its way back to true prosperity.

But if this doesn’t work, what then?

 






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