Detroit Red Wings to Build New Arena With $450 Million in Bonds

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On Wednesday, September 17, the Michigan Strategic Fund board gave final approval for the sale of $450 million in 30 revenue bonds to help finance a new Detroit Red Wings Arena.

The financing plan includes $250 million in tax-exempt bonds and another $200 million in variable-rate taxable bonds backed by arena concessions fee payments.  Under the plan, Olympia Development, part of Ilitch Holdings (owners of the Detroit Red Wings), will pay 44% of the cost and the Detroit Downtown Development Authority (who would own the arena) will cover the remainder of the cost.  Further, Olympia is eligible for reimbursement of up to $75 million after it spends $200 million in construction.

The new arena, which will replace the historic Joe Louis Arena, will seat 18,000 and is part of a 250 acre redevelopment plan along and near Woodward Avenue in downtown Detroit.  The deal comes amidst the city’s bankruptcy restructuring of its $18 billion in debt. Mike Ilitch, chairman of Ilitch Holdings, is hoping to generate jobs and transform the district by stabilizing dozens of underutilized blocks.  The construction alone will create 1,000 jobs and can potentially revitalize the area with housing and retail after the Arena is operable.

 

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