If Tom Gores buys Pistons next week, will they play in Detroit?

**iheartthed** · January-28-11, 02:02 PM

Originally Posted by BShea

I don't understand where this is coming from. The PS&E venues WITHOUT THE PISTONS make $70 million annually and don't have debt service. They're profitable without the Pistons. What's the problem?

I addressed it above...

There are a finite number of events and dollars that will flow into Detroit each year. Just the presence of a shiny new arena downtown will undoubtedly cut into the Palace's revenue margins, and this will be true whether or not the Pistons play in that arena. Because Detroit is not a growing market, it is that much more likely that the $70M in revenue for non-Pistons related events drops to something like $30M once the Palace is put head to head against a shiny new stadium in Detroit. So with that in mind, when you also remove Pistons revenue from the equation it probably doesn't make much sense to continue operating the Palace... from a financial standpoint.

**BShea** · January-28-11, 02:03 PM

Originally Posted by iheartthed

The only way Ilitch will build a new arena without the Pistons as co-tenants is if he financed the entire thing himself. Public financing is no longer an option for obvious reasons. Private financiers will balk at the thought of investing in an arena under the guarantee of revenues from only one franchise, in a market that is already saturated with stadiums such as Detroit.

From what I hear, don't bet on that. "Public financing" is a loaded expression. People may be very willing to extend the hotel/taxi cab tax to financing a portion of a new arena. Why? Because it's not a direct levy on everyone, and it's not a lump sum from a general fund.

Ilitch financed something like 60 percent of Comerica Park himself, and with the NHL salary cap limit reducing his exposure with the Wings, and a booming pizza business [[especially compared to when Comerica was financed), he may again finance the majority while getting a blend of tax breaks, use-taxes and corporate funding to finance a new arena.

**BShea** · January-28-11, 02:05 PM

Originally Posted by iheartthed

I addressed it above...

Again, there is a much more limited inventory of non-sports days at a venue with two pro teams. You're probably going to lose half the year or more to hockey and basketball.

**esp1986** · January-28-11, 03:10 PM

Originally Posted by BShea

The NBA and NHL handle scheduling, not the Pistons or Red Wings. The league's ability to schedule itself trumps whether top concerts want to come to Detroit on a certain date.

Building a new downtown arena doesn't create new event capacity. It's simply a new arena replacing an old one in Joe Louis [[assuming the Joe would be closed by the city).

If you have a new arena and shutter the Palace, you've closed off event capacity.

Again, it's the No. 2 arena in the country, and third-ranked in the world. And it comes without a mortgage.

Now you can't even begin to tell me that the NHL or NBA have never changed dates or times based on other events. I can recall a number of times games were changed for one event or another... Also, if the event is scheduled well in advance, the leagues simply work around them based on facility availability. I've seen it happen before. The leagues try as best they can to work around schedules of each other and the facilities they are using, and it goes both ways... occasionally a concert will be pushed back to allow for game scheduling, but typically they find something that works for everyone, there isn't just one unilateral voice that has the final say.

**rjk** · January-28-11, 04:17 PM

Originally Posted by iheartthed

Because people actually go to the games. The Red Wings are worth more than the Kings and the Blackhawks even though Los Angeles and Chicago are larger markets than Detroit.

As just one example, in 2007 the Pistons averaged 4,000 more fans a game than the Knicks. The Knicks were still worth $135 million more than the Pistons.

**rbdetsport** · January-28-11, 04:21 PM

There are a lot more things involved than just ticket sales.

**R8RBOB** · January-28-11, 05:06 PM

Originally Posted by rjk

As just one example, in 2007 the Pistons averaged 4,000 more fans a game than the Knicks. The Knicks were still worth $135 million more than the Pistons.

The price for a sports franchise is always going to be inflated. A sports franchise is only worth what another person or persons are willing to pay for it. If someone is willing to pay $700,000,000 for the New York Knicks then they will pay 700 million for them. The same for the Pistons. If someone feels the Pistons is worth $300,000,000 then that is what they are going to offer, however, the owner don't have to sell for 300 million. He or she can hold out waiting for that person to come with the 700 million.

**rjk** · January-28-11, 05:59 PM

QUOTE=R8RBOB;218941]The price for a sports franchise is always going to be inflated. A sports franchise is only worth what another person or persons are willing to pay for it. If someone is willing to pay $700,000,000 for the New York Knicks then they will pay 700 million for them. The same for the Pistons. If someone feels the Pistons is worth $300,000,000 then that is what they are going to offer, however, the owner don't have to sell for 300 million. He or she can hold out waiting for that person to come with the 700 million.[/QUOTE]

Sure, two billionaire Knicks fans could get in a bidding war and get the price up to $1.5 billion.
But the Forbes list isn't based on a bidding war. It's based on gate reciepts, plalyer expenses, revenue, operating costs among other factors. They're looking at hard numbers to come up with their list.

**R8RBOB** · January-28-11, 09:51 PM

Originally Posted by rjk

QUOTE=R8RBOB;218941]The price for a sports franchise is always going to be inflated. A sports franchise is only worth what another person or persons are willing to pay for it. If someone is willing to pay $700,000,000 for the New York Knicks then they will pay 700 million for them. The same for the Pistons. If someone feels the Pistons is worth $300,000,000 then that is what they are going to offer, however, the owner don't have to sell for 300 million. He or she can hold out waiting for that person to come with the 700 million.

Sure, two billionaire Knicks fans could get in a bidding war and get the price up to $1.5 billion.
But the Forbes list isn't based on a bidding war. It's based on gate reciepts, plalyer expenses, revenue, operating costs among other factors. They're looking at hard numbers to come up with their list.[/QUOTE]

Dig that but Forbes value the Warriors at 363 million yet we know that they were sold at 450 million. Like I said, it isn't what Forbes list the price at, it is what someone is willing to pay.

**tetsua** · February-10-11, 10:58 PM

http://www.freep.com/article/2011021...text|FRONTPAGE

**p1acebo** · February-10-11, 10:59 PM

Originally Posted by tetsua

http://www.freep.com/article/2011021...text|FRONTPAGE

Ya I saw that, my guess is they are staying in Auburn Hills.

**Junkin4Life** · February-10-11, 11:10 PM

Originally Posted by p1acebo

Ya I saw that, my guess is they are staying in Auburn Hills.

I guess that means it's case closed. lol they will remain there. The Palace of Auburn Hills is about 23 years old

**BrushStart** · February-10-11, 11:24 PM

I want to give Tom Gores the benefit of the doubt, but he made his billions flipping companies like Gordon Gekko. I just hope he:

[[a) doesn't sell-out and move the team out-of-state
[[b) chop up all of Davison's assets and try to flip them
[[c) screw with Ilitch's plan to build a new arena downtown
[[d) totally neglect the team and let it sink even further

The best case scenario in my opinion is that Gores teams up with Ilitch to build a new dual-purpose stadium downtown to be finished in 4-5 years. That lets the Palace get in a few more good years and still brings the Pistons downtown while giving Ilitch the partnership he needs to get the stadium built. That's a win for all parties.

**rjk** · February-11-11, 12:09 AM

Originally Posted by BrushStart

The best case scenario in my opinion is that Gores teams up with Ilitch to build a new dual-purpose stadium downtown to be finished in 4-5 years. That lets the Palace get in a few more good years and still brings the Pistons downtown while giving Ilitch the partnership he needs to get the stadium built. That's a win for all parties.

Why would that be a win for Tom Gores? Team owners want a new stadium when it will create more profit for them. What do the newer stadiums have that the Palace doesn't? Contrary to what a lot of people want to believe, the Palace isn't outdated. Illitch wants a new stadium in large part because he wants more luxury suites as the JLA only has 86. The Palace has 180, which is among the most in the NBA.

As far as Gores flipping the Pistons, I was more concerned about Illitch selling the team in a short period of time more than I was Gore. Illitch has never shown any interest in Basketball and at his age one has to wonder whether his wife/children have any interest in owning an NBA team.

**BrushStart** · February-11-11, 01:12 AM

Originally Posted by rjk

Why would that be a win for Tom Gores? Team owners want a new stadium when it will create more profit for them. What do the newer stadiums have that the Palace doesn't? Contrary to what a lot of people want to believe, the Palace isn't outdated. Illitch wants a new stadium in large part because he wants more luxury suites as the JLA only has 86. The Palace has 180, which is among the most in the NBA.

As far as Gores flipping the Pistons, I was more concerned about Illitch selling the team in a short period of time more than I was Gore. Illitch has never shown any interest in Basketball and at his age one has to wonder whether his wife/children have any interest in owning an NBA team.

It's a win because no matter how awesome you think the Palace is today, in 10 years or less, it will be past its normal lifespan, and will have maxed out it's depreciation deductions under the tax code.

At some point not too long from now, it will make sense to simply build a new stadium rather than continuing to retrofit the Palace. By that time, Ilitch will have already built a new single-purpose NHL stadium for the Wings in Detroit, and Tom Gores will be in the market for taxpayer funding to finance a new basketball stadium. When the public is reluctant to fork over several hundred million dollars, Gores is the type of aggressive businessman with little attachment to Detroit who will threaten to relocate the team unless taxpayers finance his new stadium. That's a very likely possibility.

So, yes, I really hope Tom collaborates with Ilitch on a new stadium 4-5 years out and keeps the team in Michigan, and the taxpayers only get bilked on one stadium instead of two.

**Genesyxx** · February-11-11, 08:16 AM

Something that stuck out to me about the story I read yesterday is the part where the Pistons are one of the most profitable in the league due to them not having any debt. Building a new stadium in the city with all these greased-palm shysters wouldn't be the best move to make. Fans showed up and sold out the Palace for two years plus despite the distance. No reason to change that.

**jtf1972** · February-11-11, 08:37 AM

Until the DETROIT Pistons play in DETROIT, they should be referred to as "The Detroit Pistons of Auburn Hills, Michigan." [[Just because it sounds stupid as hell)

bartock · February-11-11, 08:45 AM

Originally Posted by jtf1972

Until the DETROIT Pistons play in DETROIT, they should be referred to as "The Detroit Pistons of Auburn Hills, Michigan." [[Just because it sounds stupid as hell)

No, they shouldn't.

**schulzte** · February-11-11, 11:09 AM

Originally Posted by rjk

Why would that be a win for Tom Gores? Team owners want a new stadium when it will create more profit for them. What do the newer stadiums have that the Palace doesn't? Contrary to what a lot of people want to believe, the Palace isn't outdated. Illitch wants a new stadium in large part because he wants more luxury suites as the JLA only has 86. The Palace has 180, which is among the most in the NBA.

As far as Gores flipping the Pistons, I was more concerned about Illitch selling the team in a short period of time more than I was Gore. Illitch has never shown any interest in Basketball and at his age one has to wonder whether his wife/children have any interest in owning an NBA team.

I agree with this. Why would a new owner want to move out of a good building that he just bought? He's not going to make significantly more money moving into a newer building downtown. Its all about revenue, and the Palace generates about as much revenue as an arena could. People talk about the arena being 23 years old. Its not, it has been significantly modified and updated over the years. I honestly don't think the Pistons new owner has anything to gain financially by moving to a new downtown arena. I'm tired of hearing about how an arena's useful life is thirty years. Nonsense. Olympia Stadium stood for 52 years, was in great shape when the Red Wings left, but was just too small and in too nasty an area. Chicago Stadium stood for 65 years, Maple Leaf Gardens for 67 years, I could go on. The Palace isn't too small [[it might be too big actually), it certainly doesn't lack luxury suites [[most of any arena in the world), and its been well maintained. Why leave? The Pistons aren't going to save Detroit, only good schools and jobs can do that.

Mr. Illitch is probably going to have to go it alone on this one. He's going to have two options, renovate Joe Louis Arena incrementally or build a somewhat less opulent new arena himself that he can cash flow and be profitable with while splitting the show and concert business with the Palace. I think that can be done if the building is constructed within certain budget constraints. A new arena really doesn't need to cost $400 million.

The main problem at JLA is not the sheer number of luxury suites, they've actually taken suites out of JLA, there used to be 83 and there are now 68. Most NHL arenas have 70-100 suites. The Palace is a significant outlier.

The real problems with the Joe are 1) isolation from downtown development 2) suites are on the top of the arena rather than in the middle where they can generate more revenue 3) lack of club and value added seating and dining options 4) one cramped concourse that serves 19,000 fans 5) lack of restroom facilities 6) main entrances that are accessed from street level by massive and rather unsafe outdoor concrete stairways. It would take one hell of a renovation to correct 2-6.

http://www.newolympia.blogspot.com

**sirrealone** · February-11-11, 01:20 PM

I agree, the Palace may be 23 years old in terms of construction age, but it is no more than ten or fifteen years old in terms of how it compares to other arenas.

When the Palace was built, it was considered extravagant. Arenas built before the Palace were built just big enough, just functional enough, and with just enough amenities to get by. That's how the Joe was and that's how many arenas were that were built up until the Palace was built. Heck, i think arenas in Sacramento and Charlotte were built after the Palace that were obsolete almost immediately after they opened because, as it turns out, the number of suites, the size of the concourse, the number of amenities, and other 'necessities' in today's arena business couldn't be met.

Here's the thing. The Palace still meets all of those things.

There's no reason that we have to talk about tearing down a 23 year old building simply because other arenas built around that time are being torn down. The arena is structurally sound. It's not falling apart.

It makes me laugh because I think many that decry the demolition of buildings in Detroit are more than happy to call for the wrecking ball to hit the side of the Palace.

If you look at arenas built in the last few years, tell me what they have that the Palace doesn't have. Certainly nothing to justify tearing down the Palace and spending hundreds of millions of dollars on something new.

As it's been pointed out, a good portion of the $420m that Gores is paying is for the Palace. He's not going to make that kind of investment and then just turn his back on it [[and throw the money down the drain) just because he wants something new.

If Gores keeps the place up, I think the Palace hosts the Pistons for at least another twenty three years. Easy.

**Danny** · February-11-11, 01:43 PM

If the Gores bought the Pistons. He will not move them to Detroit. He will keep them in Oakland County at the Palace of Auburn Hills for years to come. Who knows He might move the Pistons to California. It's his call. Let's wait and see.

**R8RBOB** · February-21-11, 09:10 AM

After reading this http://www.detnews.com/article/20110...p-Pistons-sale one has to ask, is it time for Karen Davidson to lower her expectations?

If she had a number of potential owners willing to buy the team then she could be choosy with the number that she wants. To be fair to Mrs. Davidson, she could sell the team to someone like the owner of the Vancouver Canucks and he would pay her price but he would become Clay Bennett 2.0 and move the team to Vancouver. Same for Larry Ellison, CEO of Oracle. He actually outbid the new owners of the Golden State Warriors but his bid was too late. Now he wants to buy a franchise and move it to San Jose. He too could pay her price and it would be bye-bye Pistons.

This is why I believe everyone was pulling for Ilitch to get the team because the team would remain in Detroit. Gores is a wildcard. The media can hype that he lived in Flint or he went to MSU but in the end he is a Beverly Hills guy and he don't have any current ties to Michigan. This guy buy and sells things. His interest in the Pistons could be to flip the team and sell it to someone like Ellison who was willing to buy the Warriors for over 450 million dollars and that was for the team only. No arena. Just saying.....

**East Detroit** · February-21-11, 08:52 PM

Wings will play at the Palace and in the meantime the Wings/Pistons new place in Detroit will be built, subsidized by people who would be afraid the Wings/Pistons would stay in Auburn Hills.

Tit for tat, and the corporations win. You'll see.

**Hypestyles** · February-21-11, 09:38 PM

i'm not going to the pistons games any more often with them 20+ miles north of the city.. glad to see that they are "staying", however..

**Red Devil** · February-21-11, 10:40 PM

Originally Posted by R8RBOB

This is why I believe everyone was pulling for Ilitch to get the team because the team would remain in Detroit. Gores is a wildcard. The media can hype that he lived in Flint or he went to MSU but in the end he is a Beverly Hills guy and he don't have any current ties to Michigan. This guy buy and sells things. His interest in the Pistons could be to flip the team and sell it to someone like Ellison who was willing to buy the Warriors for over 450 million dollars and that was for the team only. No arena. Just saying.....

I dont think he will flip the Pistons, since then he wouldn't be able to show off the team to his clients and employees, not to mention the Hollywood crowd. He seems to be a flashy guy, and NBA franchises are the flashiest pieces of rich guy bling that you can find.