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Cobo Arena: The 12,000-seat arena handles special
events and conventions.
facilities. Some critics are concerned
about a new arena's impact on the
metropolitan area.
Quite simply, there may not be
enough market demand to support
four competing entities — the
Detroit-owned Joe Louis and Cobo
arenas, the Silverdome, and the Au-
burn Hills center. As William
Waterman, chairman of the Pontiac
Stadium Authority, says, The real
tragedy is the building • of another
arena. You see, there's just not that
many leisure dollars out there, so
the cost of competing will hurt all of
us."
With all the major professional
sports teams already spoken for, the
competition will focus on concerts.
And arena managers and many
promoters agree with talent buyer
Rick Franks of the Southfield-based
entertainment-booking firm Cellar
Door, "Pretty much every show plays
Detroit now." Southeastern Michi-
gan is a major music market and no
touring performer, from Neil
Diamond to Echo & the Bunnymen,
fails to make a Detroit appearance.
Joe Louis: Home of the Red Wing hockey team, boxing,
wrestling and pop concerts.
Hermelin is involved in finan-
cial services, insurance, venture cap-
ital investments and real estate de-
velopments in several states. Sosnick
is a master builder, having de-
veloped such landmarks as the
Travelers Towers in Southfield and
the Top of Troy, an edifice trium-
phant over neighboring buildings
more in height than architectural
ascendancy. Davidson, who ranks in
Forbes' list of the 400 richest Ameri-
cans, owns Guardian Industries. He
led the flat glass manufacturing
company from the brink of bank-
ruptcy to vitality, then bought its
outstanding stock three years ago for
$302 million.
Certainly these are men of con-
siderable resources, so the task of
putting Arena Associates under a
win/loss column may lack a person-
ally compelling quality for the aver-
age sports fan.
The Silverdome loses, however.
It lost the Pistons and an annual
profit of about $400,000 generated
from rent, food and souvenir conces-
sions and parking fees. It is an
Pontiac Silverdome: Its 80,000 seats are right for the
Lions, too much for the Pistons. •
$7.2 million. Pontiac contended it
was an improper use of Michigan's
Commercial Redevelopment Act and
sued to prevent the tax abatement.
Oakland Circuit Judge Fred Mester
dismissed the suit Oct. 1, but he did
not rule out the possibility of a dam-
age award for the loss of jobs and
revenue.
Detroit Mayor Coleman Young
also threatened to sue. He believes
the Commercial Redevelopment Act
was designed to rebuild blighted
commercial areas, not rolling tracts
of countryside.
Olympia Arenas, owned by Lit-
tle Caesar's pizza magnate and Red
Wing hockey owner Mike Ilitch, will
lose a piece of the pie and profits.
"That's going to divide the shows to
a great extent," says Robert
Cavalieri, Olympia vice president.
He says the bottom line is each
arena will have fewer shows, and,
because the bidding will be more
competitive, Each event will be
from one-third to 50 percent less pro-
fitable."
Because Olympia leases Joe
featured at the Detroit arenas,
downtown businesses will feel the
pinch, But assigning a dollar
amount is less than scientific. Both
the Central Business District Asso-
ciation and the Metropolitan Detroit
Convention and Visitors Bureau
have no figures that reflect retail
spending generated by an arena
event. That's not unusual.
"It's amazing, but there's no in-
formation on that throughout the
entire industry," says Beverly Fires-
tone, director of research for the
Chicago-based International Associa-
tion of Auditorium Managers. In the
absence of reliable data, Firestone
conservatively estimates that half of
a concert-going crowd would dine,
drink or dance before or after an
event. And she adds, You could
safely say each would spend about
$20." That means each full house at
Joe Louis is worth about $250,000 to
downtown businesses.
And now, for the apparent win-
ner: Our residents are very
pleased," says Leonard Hendricks,
Auburn Hills city manager.
01. S EU NIS
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With a growing number of
arenas competing for a limited audi-
ence and a limited number of per-
formers, the playing field is set for a
high-stakes clash of the coliseums.
The major players are the cities of
Detroit, Pontiac and Auburn Hills,
Olympia Arenas (the company that
manages the 12,000-seat Cobo Arena
and 21,000-seat Joe Louis), and of
course the Arena Associates. So who
will win and who will lose in the
stadia scrimmage?
It's hard to say how Arena Asso-
ciates will fare. But it's very easy to
say that Hermelin, Sosnick and
Davidson are risk-takers both capa-
ble and accomplished, and all have
been successful.
amount that is "not startling," says
Waterman. "The non-economic loss
— the loss of prestige of having the
Pistons — is great."
The City of Pontiac, according to
Assistant to the Mayor Glenn Re-
edus, will lose about $30,000 in city
income taxes on Pistons' salaries.
Reedus says Pontiac restaurants and
taverns that cater to sports and
concert-goers will experience no sig-
nificant change in sales from the
new arena, which will be just four
miles from the Silverdome.
The City of Pontiac also lost —
it sued the City of Auburn Hills.
Auburn Hills granted Arena Associ-
ates a 12-year, 50 percent tax
abatement, worth somewhere around
Louis and Cobo from Detroit, the ci-
ty's fortunes will also be affected by
a reduction in arena events. Detroit
presently gets a portion of the ticket
price — ten percent at Joe Louis and
seven-and-a-half percent at Cobo —
and ten percent of concessions from
both. That's worth about $3 million,
according to Helen Irving, Detroit's
director of parking, the municipal
department which gets the proceeds.
City-owned parking lots will
also sell fewer parking spaces; the
typical parking fee is $5. But Irving
is optimistic, saying a marketing
push should be able to maintain an
events schedule comparable to the
present one.
If, as suspected, fewer events are
Auburn Hills, a community of
16,000 residents, is an L-shaped city
hugging the north and east bound-
aries of Pontiac. And although the
city has plenty of unpaved roads, it
has experienced a no-less-than stel-
lar commercial and office boom since
its birth three years ago.
Auburn Hills has been very ac-
commodating to the Arena Associ-
ates. Hendricks says the land for the
arena was purchased in November
1985 (a final six-acre parcel was
purchased last spring). In December
the city council established the prop-
erty as a commercial redevelopment
district. And at that same meeting
the council granted the tax abate-
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