Dive Brief:
- Costs for the Detroit Red Wings' Little Caesars Arena have now reached almost $863 million, according to Crain's Detroit Business, nearly double the original estimate of $450 million.
- Included in the new projections are $40 million for expenses related to the Detroit Pistons' relocation to the venue and $12 million of additional subsidies for the surrounding District Detroit development.
- State and local government financing accounts for $324 million of total stadium funding, and the Ilitch family, founders of Little Caesars and owners of the Red Wings, have contributed 62%, almost $539 million, toward construction of the downtown project, which includes the arena and parking garage.
Dive Insight:
Aside from the District Detroit subsidies, the Ilitch family, through its Olympia Development organization, has also financed work on the 50-block redevelopment project itself. So far, Olympia said, its investment in the project and ancillary development has reached more than $2 billion.
Last November, the Detroit Downtown Development Authority, which will ultimately own the arena, announced that costs had increased to $732.6 million. Olympia disputed the figure at the time, arguing that the city had included soft costs that the Ilitch-owned development company didn't recognize.
Before that, owner add-ons to the arena — including a mammoth LED screen, a practice rink, suite gondola seating and a video and graphic skin on the arena's exterior — pushed the price tag up to $627.5 million.
Because of the considerable city and state financing component, the city mandated that 51% of the estimated 5,500 workers on the project be Detroit residents. Despite what contractors said were their best efforts — including recruiting events like job fairs and employee training programs — they failed to meet that benchmark, so the city fined them a total of $500,000 last October.
The city of Detroit hopes the current building boom underway will revitalize the area. Officials say projects like the Red Wings arena development, the 6.6-mile QLine Streetcar initiative and a massive $70 million housing complex currently underway could reshape downtown Detroit.
