ment. (A zoning change was un-
necessary because the area -Was
zoned to allow an arena in the late
'70s when there was talk of building
Olympia II for the Red Wings.)
Hendricks sees only plusses
from the arena. Auburn Hills will
get $120,000 in property taxes. The
facility will create 100 full-time jobs
and 180 part-time positions. Hen-
dricks says the- water and sewer
hookups will be paid by the user.
"And my assumption is they can use

that facility from 1-75 and M-24
(Lapeer Road) without having to
build additional roads."
The city didn't get any reve-
nues from the Silverdome, just the
negative factors like more traffic and
parking on our streets," says Hen-
dricks. Now we're positioned to in-
crease our tax base some, and get
some recognition — hopefully na-
tional recognition with the Pistons,
an NBA team, based in Auburn
Hills."

The arena will host rock
and other kinds of
concerts, circus events,
trade shows, family
shows and "lots and lots
of basketball."

He says the only cost will be
three additional police officers to the
current 21-person force. Hendricks
believes only three or four officers
will be needed to handle game-night
traffic because the arena is situated
by 1-75. (The City of Pontiac uses up
to 16 traffic cops to handle basket-
ball crowds at the Silverdome, which
can expand its basketball layout to
handle up to 45,000).
When it comes to wins and los-
ses, what may be least apparent is
the position of Arena Associates. Al-
though Olympia Arenas is profita-
ble, Cavalieri asserts, "Arenas across
the country are notorious, massive
money losers." Few experts argue,
and most non-experts — taxpayers
— are aware of the Silverdome's
rocky record and its annual $800,000
a year state subsidy.
In fact, it's not uncommon for
arenas and stadiums to be subsidized
by municipalities or states. The
rationale is that arenas and the
entertainment opportunities they
create enhance the quality of life,
bring in additional revenues to the
community and may even spur local
economic development. So sports and
entertainment venues provide a
service, even though they can't fi-
nancially make it on their own.
Hermelin insists his group will
have no part of public funds. And in
view of arenas' traditionally poor
balance sheet, Waterman says, "I
have not seen any economics that
point to the financial advantage be-
hind building another arena."
If not financial gain, what is
prompting Davidson, Hermelin and
Sosnick to invest $55 million into a
new arena? One insider, who asked
not to be quoted, speculates David-
son simply wants to build himself an
arena. Other observers wonder how
much the friendship of the three
business colleagues has to do with
arranging the deal.
Sosnick and Davidson refuse to
speak on such matters, but Hermelin
is emphatic. This is business. This
is not friendship," he says. "We're
developers and we look for develop-
ment opportunities. We have 4 1/2
million people in Oakland and
Macomb and Genesee and — if you
stretch your hands out from here,
you cover a lot of counties and a lot
of people. A significant market isn't
being serviced with entertainment."
Hermelin is clearly excited
about the project and is optimistic
about its success. He says the arena
will host rock and other kinds of
concerts, circus events, trade shows,
family shows like Sesame Street,
and "basketball — lots and lots of
basketball."
The Arena Associates has a
lease agreement with the Pistons
beginning with the 1988-1989 sea-
son. They declined to comment on
the terms of the contract. But cur- -
rently, according to Waterman, the
Silverdome grosses $1.3 million from
the basketball team's 41-game ar-
rangement. Obviously, securing the
Pistons, which has held the NBA

.

Construction has begun on the Auburn Hills Entertainment Center

attendance record for the last three
years, is a good start towards eco-
nomic viability for the new arena.
Hermelin would not discuss the
operating costs and debt service for
the facility, or how many additional
shows will be needed to offset those
expenses.
Joe Louis, for example, needs
about 150 events. "Tht makes us
profitable," says Cavalieri, "but
we're not carrying a debt service.
Our rent is substantial, but it's not
$6 million a year," which is his es-
timate on the debt service for the
new arena. Cavalieri estimates the
operating cost will be $15 million.
That total may be the sum of
sour grapes and wishful thinking
(another financial expert put operat-
ing costs at $5 million), but what-
ever the figure, it is certain the new
arena will have to feature a lot of
events to break even. And sports and
concerts are preferred because they
generally bring in more revenue
than family shows.
That won't be a problem," as-
serts Hermelin. "We've been ap-
proached by the major promoters.
They're anxiously awaiting our
business."
"Absolutely!" says Franks of
Cellar Door Productions, although
he adds no discussions have yet
taken place. In a phone conversation
with Franks, he expressed his
enthusiasm for the Auburn Hills
arena with "Makes for more avail-
able dates. More available dates."
Indeed the promoters are happy
to have another hippodrome, at least
according to Cavalieri. He says, The
promoters will play one facility off
against the other to get the rent as
low as possible — quite frankly, they
(the promoters) don't care where
they go."
But he also believes lower rents
do not mean lower ticket prices. He
likens the situation to the start of
free agency in baseball where the
owners bid against each other on a
limited pool of talent, thus driving
up player salaries which were re-
flected in higher ticket prices for the
fans.
Regardless of the implications,
the Auburn Hills Entertainment
Center is going up. After visiting
several arenas across the country
and Canada, Detroit architect Gino
Rossetti created what Hermelin calls
a "state-of-the-art design with a
sound system and acoustics that will
produce an exceptional sound
environment."
The arena will feature four
overhead TV screens for live televi-
sion coverage and instant replays,
and an electronic scoreboard capable
of message displays. A 150-seat res-
taurant and a 200-seat cocktail
lounge will compliment the regular
concession stands.
The most unique design aspect
is the layout of the private boxes.
The plan calls for the typical upper
level boxes or "skyboxes," but also a
concourse level and, for those who

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