Rendering of Little Caesars Arena, Detroit
The Detroit Pistons will return to downtown Detroit beginning with the 2017-2018 NBA season, in a deal that will see them occupy the same arena as the National Hockey League’s (NHL) Detroit Red Wings.
The long-in-the-works deal will have both teams operating out of the under-construction Little Caesars Arena, Detroit, a $732-million facility spearheaded by the family and team of Mike Illitch, owner of the Little Caesars pizza restaurant chain.
The pairing, or some way of moving the basketball team back to Detroit, had been talked about for years after private equity billionaire Tom Gores bought the Pistons from the family of longtime owner William Davidson in 2011.
Exploratory discussions and negotiations kicked into high gear in early 2016 after Gores hired former super agent Arn Tellem as vice president of Palace Sports & Entertainment, the company that manages the Pistons, the team’s current venue, the Palace of Auburn Hills and several other Detroit-area entertainment venues.
“It really was the hiring of Arn that got things going,” said Tom Wilson, president and CEO of Illitch’s Olympia Entertainment, and a long-time executive with the Pistons until 2010. “The move was one of the projects he was brought on to look at. Tom (Gores) had a tremendous amount of faith in what was happening in Detroit, but he wanted someone to get in there, see if it was real and see if that was somewhere they should be.”
Because Little Caesars Arena was well under way when talks started, the Pistons will be tenants of the arena rather than partners in its management. Wilson said that created a scenario that made some very specific wording necessary when Olympia reps began selling luxury suite packages earlier this year since at the time they could only sell based on a calendar including the Red Wings schedule and the concerts and family events booked there by Olympia.
The Pistons deal brought an opportunity for suite buyers to get an upgrade for the roughly 50 regular season, playoff and exhibition games after the announcement was made. Wilson said all 60 suite packages and upgrades have been sold, and he said nondisclosure agreements between the two groups prevent public discussion of the revenue split and other components of the deal.
What’s clear is that it wasn’t a cheap decision since analysis Gores had performed put the cost of basketball-centric upgrades and creation of a downtown practice facility for the Pistons at $216 million. Some of those costs are expected to be covered by refinancing and extending the $250 million in public funding toward the arena, with the new public outlay limited to $34.5 million.
When the seasons for the two teams kick off next fall, it will mean that all four of Detroit’s major sports franchises will be based in the city itself since the late ‘70s when the NFL’s Detroit Lions and the Pistons relocated to the Pontiac Silverdome.
The Pistons moved into the then-state-of-the-art Palace of Auburn Hills in 1988 and have played nearly 30 seasons there, roughly 40 minutes north of the Motor City, with the Lions returning to Detroit when Ford Field opened in 2002.
Once both of the facility’s sports tenants are in regular season competition the calendar for Little Caesars Arena will be a busy one, which is typical of the other 10 arenas in North America that house both NHL and National Basketball Association teams. Capacity will vary, with 21,000 for basketball, 20,000 for hockey and around 17,000 for concerts.
The move creates something of a musical chairs effect for venues in the Detroit area, which will change the dynamic of concert scheduling and availability for the market. The Red Wings’ longtime home of Joe Louis Arena will be demolished after it is vacated and replaced with a hotel and mixed-use project that Wilson said will be unveiled by mid-2017.
The fate of the Palace of Auburn Hills – the primary destination for arena-level concerts and family events in the Detroit area since it opened – is less clear. Industry experts have questioned whether it could be viable without a sports tenant filling 50 dates per year and its proximity to Detroit-area auto industry research and manufacturing clusters makes its 110 acres attractive for redevelopment.
If the Palace stays open under Gores’ ownership, his company and the Illitch family’s entertainment interests will oversee about 107,000 seats of venue capacity in the Detroit area.
Kevin Grigg, public relations director for Palace Sports & Entertainment, said Gores and his team are still weighing the long-term future of the venue, which will continue to host concerts and other events. Its 2016 calendar featured 67 nonsports bookings.
“The Palace has been an incredible home and our ownership has made substantial investments in recent years to make sure it remains a go-to destination for concerts and other high-quality shows,” he said. “No decisions have been made on the future of The Palace, and we do expect there will be a lot of options. Our ownership and executives are committed to working alongside Oakland County and the city of Auburn Hills in determining the proper course of action for the future.”
Interviewed: Tom Wilson, (313) 471-7000; Kevin Grigg, (248) 377-8762