note: on September 29, 2006 the Detroit News ran a story entitled "Ilitch to announce Joe's fate within 30 days." An announcement is 232 days over due (or almost 8 months).
6.18.07 
The lease agreement between Detroit and the Ilitches for Joe Louis Arena, above, and Cobo Arena expires in August 2008.
Ilitch has to decide the Joe's fate soon
Wings must renew lease in Aug. or go for new arena
David Josar / The Detroit News
DETROIT -- Mike Ilitch and the Detroit Red Wings have two months to tell city leaders whether they will exercise their option to renew for 20 years the exclusive lease -- considered the best of any NHL team -- for Joe Louis Arena and Cobo Arena.
The Aug. 16 deadline is expected to set in motion intense deal-making and negotiations that will involve the future of Cobo Arena, Joe Louis Arena -- the home of the Red Wings -- and how much money the state, city and taxpayers are willing to toss in to subsidize a new Detroit hockey arena.
"They talk to us all the time," Mayor Kwame Kilpatrick said. "They're still trying to decide whether to stay and improve the (Joe Louis) facility or move."
Ilitch, whose fortune started with a suburban pizza place in 1959, bought the Red Wings for $8 million in 1982. The team is now worth an estimated $258 million -- a value due in large part to the bargain-basement lease on the Joe. According to Forbes magazine, he is among America's richest citizens, worth $1.5 billion...
Some executives for Ilitch's companies are not sure city officials have the right deadline date. They note, for example, the team did not take occupancy for more than a year after the agreement was signed, a situation they suggest pushes the renewal date back...
Either way, a showdown is expected this summer...
Council doesn't like deal
So far, the Red Wings and their owners have remained quiet. The city isn't saying much, either.
The city recently sold to Olympia Development, another of the Ilitch-run companies, two vacant, tax-reverted parcels behind the Fox for $200,000. Earlier this year, the city awarded Olympia development rights for the historic GAR building nearby.
The Ilitches are known as hard negotiators. In the 1990s, Mike Ilitch threatened to move the Tigers unless the team got a new ballpark -- which it did, across Woodward Avenue from his Fox Theatre and Hockeytown Cafe.
This time, Ilitch is in the driver's seat, thanks to the deal brokered in 1979 by Mayor Coleman Young that kept the team from moving to Pontiac.
Ilitch will decide whether to extend the lease -- the city has no vote -- and if the pact is extended, it will become even more favorable for him and the Red Wings.
Currently, the city imposes up to a 10 percent surcharge on tickets sold to events at Joe Louis and Cobo Arena; Detroit gets a cut of concessions and luxury suites.
If the lease is extended, the city will lose the surcharge -- which brings in about $2.5 million a year -- and, in five years, its share of concession and suite revenue. Council fiscal analyst Irv Corley, in a February report to the council on the lease, said the contract is "strongly in favor" of the Ilitch companies. He called it "convoluted" and questioned whether the city was receiving its fair share of concession sales.
The lease is much more lucrative than those of other teams. For example, the San Jose Sharks pay $1.6 million a year for the building and get a small percentage of ticket sales, but the team also chips in money for capital improvements and agreed to split with San Jose any profits from naming rights.
Council members have been upset for several years about the lease arrangement, but their anger reached a new level in February, when the fiscal analyst, at their urging, probed the specifics of the arrangement between Detroit and the Ilitch-family controlled company.
"This is clearly a sweetheart deal, and if they (the city law department) don't find a way to terminate this contract I'm going to turn it over to the FBI because this is ridiculous," Councilwoman Barbara-Rose Collins said. (Complete Story)
The Aug. 16 deadline is expected to set in motion intense deal-making and negotiations that will involve the future of Cobo Arena, Joe Louis Arena -- the home of the Red Wings -- and how much money the state, city and taxpayers are willing to toss in to subsidize a new Detroit hockey arena.
"They talk to us all the time," Mayor Kwame Kilpatrick said. "They're still trying to decide whether to stay and improve the (Joe Louis) facility or move."
Ilitch, whose fortune started with a suburban pizza place in 1959, bought the Red Wings for $8 million in 1982. The team is now worth an estimated $258 million -- a value due in large part to the bargain-basement lease on the Joe. According to Forbes magazine, he is among America's richest citizens, worth $1.5 billion...
Some executives for Ilitch's companies are not sure city officials have the right deadline date. They note, for example, the team did not take occupancy for more than a year after the agreement was signed, a situation they suggest pushes the renewal date back...
Either way, a showdown is expected this summer...
Council doesn't like deal
So far, the Red Wings and their owners have remained quiet. The city isn't saying much, either.
The city recently sold to Olympia Development, another of the Ilitch-run companies, two vacant, tax-reverted parcels behind the Fox for $200,000. Earlier this year, the city awarded Olympia development rights for the historic GAR building nearby.
The Ilitches are known as hard negotiators. In the 1990s, Mike Ilitch threatened to move the Tigers unless the team got a new ballpark -- which it did, across Woodward Avenue from his Fox Theatre and Hockeytown Cafe.
This time, Ilitch is in the driver's seat, thanks to the deal brokered in 1979 by Mayor Coleman Young that kept the team from moving to Pontiac.
Ilitch will decide whether to extend the lease -- the city has no vote -- and if the pact is extended, it will become even more favorable for him and the Red Wings.
Currently, the city imposes up to a 10 percent surcharge on tickets sold to events at Joe Louis and Cobo Arena; Detroit gets a cut of concessions and luxury suites.
If the lease is extended, the city will lose the surcharge -- which brings in about $2.5 million a year -- and, in five years, its share of concession and suite revenue. Council fiscal analyst Irv Corley, in a February report to the council on the lease, said the contract is "strongly in favor" of the Ilitch companies. He called it "convoluted" and questioned whether the city was receiving its fair share of concession sales.
The lease is much more lucrative than those of other teams. For example, the San Jose Sharks pay $1.6 million a year for the building and get a small percentage of ticket sales, but the team also chips in money for capital improvements and agreed to split with San Jose any profits from naming rights.
Council members have been upset for several years about the lease arrangement, but their anger reached a new level in February, when the fiscal analyst, at their urging, probed the specifics of the arrangement between Detroit and the Ilitch-family controlled company.
"This is clearly a sweetheart deal, and if they (the city law department) don't find a way to terminate this contract I'm going to turn it over to the FBI because this is ridiculous," Councilwoman Barbara-Rose Collins said. (Complete Story)
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