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Detroit Red Wings owe city tens of millions from cable rights and other items?

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12-26-2012, 12:44 AM
  #1
LadyStanley
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Detroit Red Wings owe city tens of millions from cable rights and other items?

http://www.detroitnews.com/article/2...346/1128/rss16

Quote:
A little-known provision in Olympia Entertainment's lease of city-owned Joe Louis Arena and Cobo Arena promises Detroit a 25 percent share of cable television rights for live events. That's been the deal since 1980, but Detroit hasn't been able to collect a dime, according to city documents obtained by The Detroit News.

One rough estimate from finance staffers last year estimated the city is owed $70 million, but a national sports economist cautioned it's likely much lower.
...
Since its lease expired in 2010, the company hasn't paid millions of dollars for items such as rent, concessions and other revenue and property taxes, according to city documents obtained by The News.

In 2011, officials claimed the unpaid debt was $6 million that year, according to one city document.
...
[2007 statement:] A company vice president denied it owed any money and appeared to make a distinction between Olympia events and Red Wings games.

"It is our view that the provision in the Lease applies to Olympia events and revenue derived by Olympia from the sale of such rights," Robert Carr wrote in a letter to Monroe.

"Olympia has neither sold any such rights nor has it received any money for the sale of such rights."

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12-26-2012, 12:55 AM
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sunnyvale420
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Contract circumvension. "I said 3 doll hairs"

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12-26-2012, 01:00 AM
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First it was leaving the shell of Tiger Stadium standing emasculated to save tax, and now it's not paying the city what it is owed. I wish Ilitch wouldn't play the city like this as if Michigan owes him the world.

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12-26-2012, 06:40 AM
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Legionnaire11
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Is this saying that they have NEVER paid their share to Detroit, or just that they haven't paid since 2010?

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12-26-2012, 07:37 AM
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When I read about this off of Mlive, I thought they owed something like $1Million-$3Million in backtaxes or something like that.

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12-26-2012, 09:11 AM
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Quote:
Originally Posted by Legionnaire11 View Post
Is this saying that they have NEVER paid their share to Detroit, or just that they haven't paid since 2010?
This is my question as well. The article never really makes that clear and uses strange wording whenever it talks about that issue...

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12-26-2012, 09:31 AM
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Originally Posted by tigermask48 View Post
This is my question as well. The article never really makes that clear and uses strange wording whenever it talks about that issue...
Sounds like they've never paid their share of TV money because they dispute that they agreed to paying money for hockey events. On top of that they havent paid anything for rent since their lease expired in 2010. It's two distinct areas of conflict, one goes back to the 80's the other since 2010.

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12-26-2012, 08:19 PM
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This could get interesting.

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12-26-2012, 08:34 PM
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Legionnaire11
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Quote:
Originally Posted by Halibut View Post
Sounds like they've never paid their share of TV money because they dispute that they agreed to paying money for hockey events. On top of that they havent paid anything for rent since their lease expired in 2010. It's two distinct areas of conflict, one goes back to the 80's the other since 2010.
makes sense, wonder if there's anything serious to this one, or if it's just a ******** reporter digging up any dirt she can find.


Reading more, it looks like the lease payments will be negotiated as part of the next lease. The old deal expired in 2010 but the sides have not negotiated a new lease. In the absence of a lease, the Wings have not paid the city but whatever they owe for the missed years will be negotiated in the next deal. So that's really a non-issue right now.

On the TV rights, obviously Olympia owes something, but if the City never bothered to collect since 1980 for whatever reason I think there's got to be some kind of statute of limitations that Olympia could claim. Unless that doesn't apply to a contract like this. There's something to the story, but the amount owed is probably a lot less than the report claims it could possibly be.


Last edited by Legionnaire11: 12-26-2012 at 08:42 PM.
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12-26-2012, 08:59 PM
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Originally Posted by Legionnaire11 View Post
makes sense, wonder if there's anything serious to this one, or if it's just a ******** reporter digging up any dirt she can find.


Reading more, it looks like the lease payments will be negotiated as part of the next lease. The old deal expired in 2010 but the sides have not negotiated a new lease. In the absence of a lease, the Wings have not paid the city but whatever they owe for the missed years will be negotiated in the next deal. So that's really a non-issue right now.

On the TV rights, obviously Olympia owes something, but if the City never bothered to collect since 1980 for whatever reason I think there's got to be some kind of statute of limitations that Olympia could claim. Unless that doesn't apply to a contract like this. There's something to the story, but the amount owed is probably a lot less than the report claims it could possibly be.
From a credit standpoint you cannot be forced to pay, most, debts that are seven years or older. How that would apply to something like this, I do not know.

I can't figure out how this has taken 32 years to come out though? Especially since the Wings have been Detroits most successful sports franchise recently and historically. You would think the city would have done something about it by now, hell you would have thought they would have done something after the first year.

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12-26-2012, 09:24 PM
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Quote:
Originally Posted by dtones520 View Post
From a credit standpoint you cannot be forced to pay, most, debts that are seven years or older. How that would apply to something like this, I do not know.

I can't figure out how this has taken 32 years to come out though? Especially since the Wings have been Detroits most successful sports franchise recently and historically. You would think the city would have done something about it by now, hell you would have thought they would have done something after the first year.
Detroit is the height or dysfunction. In Windsor, I had a neighbor who was home everyday. I asked him where he worked. He said he worked for Detroit Public Schools managing old unused buildings. After about 15 years of never getting any money to maintain the buildings and watching them fall into disrepair, he stopped going to work. They just kept sending the checks and never asked him anything.
With the Ilitch case it's not hard to envision that someone early on never bothered to set up the apparatus to collect money for the city

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12-27-2012, 01:05 AM
  #12
Fugu
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I don't think the Red Wings owe the city any money for cable rights.

Here's a statement from Olympia:

Quote:
"It is our view that the provision in the Lease applies to Olympia events and revenue derived by Olympia from the sale of such rights," Robert Carr wrote in a letter to Monroe.
"Olympia has neither sold any such rights nor has it received any money for the sale of such rights."

How is that possible? Olympia is an affiliate company, under Ilitch Holdings-- as are the Red Wings. Any TV money is contracted and paid to the Wings directly.

Olympia Entertainment:
Quote:
Located in the heart of Detroit, one of the leading entertainment markets in the country, Olympia Entertainment is one of the industry's most diverse sports and entertainment companies, owning and operating Detroit's fabulous Fox Theatre, as well as booking and operating Joe Louis Arena, Comerica Park and Cobo Arena. A division of Ilitch Holdings, Olympia Entertainment is owned by Detroit entrepreneurs Mike and Marian Ilitch and is affiliated with the Detroit Red Wings, Detroit Tigers, Little Caesars Pizza, Blue Line Distributing, Little Caesars Pizza Kits and Uptown Entertainment. Visit us at www.olympiaentertainment.com.
The Red Wings are owned by Mike & Marian Ilitch; and furthermore are NOT managed by OE.

The Ilitches own Ilitch Holdings Inc. (son, Christopher Ilitch, is the President & CEO).

Olympia Entertainment history:
Quote:
In 1982, Michael and Marian Ilitch purchased the Olympia Stadium Corporation, the management company for Olympia Stadium and renamed it Olympia Arenas, Inc. The newly purchased business was responsible for managing events at Joe Louis Arena (which had been completed in 1979 as the home of the Detroit Red Wings), Cobo Arena and the Glens Falls Civic Center. That same year, Mr. and Mrs. Ilitch purchased the Detroit Red Wings.
In 1987, the Ilitches purchased Detroitís iconic Fox Theatre (built in 1928) and renovated the 4,800+ seat venue, saving 80% of the original surfaces. In 1988, the Ilitches re-opened the Fox as the hub of the Foxtown Entertainment District and the building now houses the offices of Olympia Entertainment and Little Caesars Pizza. In 1989, the National Parks Service designated the Fox Theatre as a National Landmark.
The Olympia Stadium Corporation was renamed Olympia Entertainment in 1996 to reflect the management companyís expanded operations and venues.

Ilitch Holdings Inc, per Wiki:

Quote:
Ilitch Holdings, Inc. was established in 1999 to provide all companies owned by Mike and Marian Ilitch with professional and technical services.
From the official site:
Quote:
Ilitch Holdings, Inc.
Yesterday, Today, Tomorrow

Ilitch Holdings, Inc., was established in 1999 to provide the companies owned by Michael and/or Marian Ilitch with professional services. The Ilitch companies represent leading brands in the food, sports and entertainment industries and include Little Caesars, the Detroit Red Wings, the Detroit Tigers, Olympia Entertainment, Uptown Entertainment, Blue Line Foodservice Distribution, Champion Foods, Little Caesars Pizza Kit Fundraising Program, Olympia Development and MotorCity Casino Hotel.
Ilitch Holdings is comprised of skilled professionals providing expertise in the areas of finance, human resources, communications, legal, architecture, government relations, and information technology. Ultimately, we contribute to the success of Ilitch companies by providing streamlined processes and procedures that result in improved productivity, increased efficiencies and lower costs.
It seems fairly clear to me that Olympia Entertainment and the Red Wings are separate Ilitch companies. Any cable money the Wings receive is negotiated by the Wings, and not by Olympia Entertainment. OE is basically the arena operator in this case (among its other activities), but they are not involved in the management of the Wings. Ken Holland reports directly to Mike Ilitch, but as the health of the senior Ilitch has failed, more of the subsidiary management has fallen to their son, Christopher Ilitch, who is head of Ilitch Holdings.

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12-27-2012, 03:40 AM
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Uhh you've got to think that the intention of the lease was that any cable money from events in the arena was shared with the city, regardless of the ownership structures of the relevant organizations. Or else why bother putting the clause in there?

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12-27-2012, 08:35 AM
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dtones520
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Originally Posted by Ernie View Post
Uhh you've got to think that the intention of the lease was that any cable money from events in the arena was shared with the city, regardless of the ownership structures of the relevant organizations. Or else why bother putting the clause in there?
What I think Fugu is getting at is that the Red Wings position is that they were under the impression that any televised event at the Joe that is not Red Wings related would be subject to this provision in their lease.

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12-27-2012, 10:05 AM
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Originally Posted by Ernie View Post
Uhh you've got to think that the intention of the lease was that any cable money from events in the arena was shared with the city, regardless of the ownership structures of the relevant organizations. Or else why bother putting the clause in there?

You can't put dibs one business entity's money (which is negotiated in a different mgt structure) and promise it to someone else.

Consider if OE, which originally was purchased as a separate company by the Ilitches, had been bought by someone else. That company leases The Joe out to the Wings. They could still have a clause that anything that they produce/negotiate for TV would be subject to this type of clause, but since they neither produce, contract nor own the rights to the Wings broadcasts, they still wouldn't get any money for it.

This isn't unusual for a set up either, whether a team owns its own arena or leases one and are the Arena Operator, the businesses are set up as separate entities (incorporated or LLCs).

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12-27-2012, 02:46 PM
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Detroit is the height or dysfunction. In Windsor, I had a neighbor who was home everyday. I asked him where he worked. He said he worked for Detroit Public Schools managing old unused buildings. After about 15 years of never getting any money to maintain the buildings and watching them fall into disrepair, he stopped going to work. They just kept sending the checks and never asked him anything.
With the Ilitch case it's not hard to envision that someone early on never bothered to set up the apparatus to collect money for the city
I have heard Detroit is pretty dysfunctional.

Other cities fork over cash to keep stadiums in their cities. Maybe Detroit has been ignoring this so that Illitch would keep his teams in the city, not take them to the suburbs.

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12-27-2012, 02:57 PM
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First it was leaving the shell of Tiger Stadium standing emasculated to save tax
Que? It was owned by the city and stood there because multiple attempts to sell the land (to Wal*Mart, at one point) were stalled by attempts to get it listed as a historical site.

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12-30-2012, 11:52 PM
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Originally Posted by Fugu View Post
You can't put dibs one business entity's money (which is negotiated in a different mgt structure) and promise it to someone else.

Consider if OE, which originally was purchased as a separate company by the Ilitches, had been bought by someone else. That company leases The Joe out to the Wings. They could still have a clause that anything that they produce/negotiate for TV would be subject to this type of clause, but since they neither produce, contract nor own the rights to the Wings broadcasts, they still wouldn't get any money for it.

This isn't unusual for a set up either, whether a team owns its own arena or leases one and are the Arena Operator, the businesses are set up as separate entities (incorporated or LLCs).
Sure, maybe that's how things are structured now, but in 1980? If the intention was that Detroit would get 25% of any cable deals for events in the stadium, Illitch surely can't wiggle out of it buy changing the business structure.

The city will probably use this as leverage to get a better stadium deal, so I doubt that you'd see $70m change hands.

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12-31-2012, 12:57 AM
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Originally Posted by Ernie View Post
Sure, maybe that's how things are structured now, but in 1980? If the intention was that Detroit would get 25% of any cable deals for events in the stadium, Illitch surely can't wiggle out of it buy changing the business structure.

The city will probably use this as leverage to get a better stadium deal, so I doubt that you'd see $70m change hands.
The Ilitches didn't own Olympia or the Wings in 1980:


In 1982, Michael and Marian Ilitch purchased the Olympia Stadium Corporation, the management company for Olympia Stadium and renamed it Olympia Arenas, Inc. The newly purchased business was responsible for managing events at Joe Louis Arena (which had been completed in 1979 as the home of the Detroit Red Wings), Cobo Arena and the Glens Falls Civic Center. That same year, Mr. and Mrs. Ilitch purchased the Detroit Red Wings.

Even so, it seems that Olympia was just the arena manager for Joe Louis, and would not be the entity that negotiated or received broadcast revenue from Red Wings games.

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12-31-2012, 08:49 AM
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Originally Posted by Brodie View Post
Que? It was owned by the city and stood there because multiple attempts to sell the land (to Wal*Mart, at one point) were stalled by attempts to get it listed as a historical site.
I stand corrected, though the Tigers did maintain the lease after the Tigers left.


Last edited by Concordski: 12-31-2012 at 09:27 AM.
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