Dive Brief:
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According to the Detroit Downtown Development Authority, construction costs for the Detroit Red Wings' Little Caesars Arena have risen $105 million to $732.6 million, The Detroit News reported.
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City officials said the increases are a result of design tweaks, permits, subcontractors and other project costs. However, higher costs could also mean that the Detroit Pistons will share the facility.
- Olympia Development — the development arm of the Ilitch family, which owns Little Caesars and the Red Wings — said the official cost of the arena remains unchanged at $627.5 million and that the city's figures include items that the organization does not recognize. Olympia is obligated to cover so-called soft costs on the project, and according to Yahoo Sports, city officials said the developer will pay for the extras.
Dive Insight:
When the project, located in downtown Detroit, was announced in 2015, its estimated cost was $450 million. The combined state and federal investment in the facility is approximately $285 million, and the Ilitch family has reportedly kicked in more than $1.2 billion for the new hockey venue in addition to retail, office, multifamily and hotel projects in the surrounding five-neighborhood area.
Last November, officials announced that owner upgrades had pushed the total price tag up to its current $627.5 million. At the time, Olympia officials said private funding covered items like a large, state-of-the-art LED screen, a practice rink, gondola seating in suite areas and a video and graphic skin on the arena's exterior.
Due to significant public contribution to the arena, the city insisted that 51% of the project's workforce — estimated at roughly 5,500 workers — be made up of Detroit residents. Despite job fairs and employee training programs, contractors have not been able to meet those goals, earning them a $500,000 fine in October.
In response, the Detroit Office of Human Rights Director Portia Roberson, who oversees that hiring program, told the Detroit Free Press that there's no reason to believe either the developer or contractors did not make their best efforts: there just weren't enough local qualified workers available. The money from fines, she said, would go into a fund to train workers for future city construction opportunities.
