Ilitch Goes for Hat Trick with Pistons Acquisition Attempt

13 Aug

Mike Ilitch after winning the Stanley Cup in 2008

Detroit Red Wings owner Mike Ilitch has announced his intention to purchase the Detroit Pistons and possibly move them out of the suburbs and into a new downtown arena. If he is successful, he’d be the owner of three professional sports teams, including the Detroit Tigers of Major League Baseball.

The 81-year-old creator of the Little Caesars Pizza chain said he was concerned that the Pistons might move out of state. Pistons Owner Bill Davidson died at the age of 86 in March 2009 and his widow Karen Davidson has since put the team on the market and entertained several overtures from out-of-state bidders.

“When I read in the paper there was the chance that this great sports town could lose one of its professional sports franchises, I just didn’t see how we could let that happen,” Ilitch wrote in a statement. “I really want to see the Pistons remain the Detroit Pistons. We talked about it internally, and when you take our 33 years of experience in professional sports, our commitment to this community, our passion for winning and pursuing championships, and you couple that with the opportunity to have a local, engaged owner for the Pistons, we decided to take a run at it.”

Of course, a Piston’s buyer would get much more than a team. Palace Sports and Entertainment also manages the DTE Energy Music Theatre, as well as the Palace of Auburn Hills, a suburban arena often viewed as one of the top NBA facilities in the U.S. If Ilitch bought the team, he might attempt to move the Pistons downtown, near the bulk of his real estate holdings.  Earlier this year, Ilitch hired former Palace CEO Tom Wilson to work for Olympia Entertainment, just as the Red Wings lease for Joe Louis Arena was set to expire.

“Tom has an intimate knowledge of the Pistons and how they operate,” said Tony Tavares, president of Sports Properties Acquisition Corporation, which assists with big time sports deals. “He is a very capable and competent sports executive, and if anyone knows the Pistons, it’s him.”

The team is considering renovating Joe Louis Arena, or possibly building a new arena.

The price tag for that type of project could be anywhere from $200 to $500 million, although the low price of real estate and construction in Detroit could top the project out at $300 million. It’s unclear how a new project would be financed, but Ilitch already has a number of properties located downtown including Detroit’s Fox Theatre, the Masonic Temple and City Theatre, along with the MotorCity Casino.

“In today’s political environment, building a publicly-funded arena is incredibly difficult,” said Tavares. “He’s probably trying to form some type of public-private partnership to finance the deal.”

There’s also a possibility that Ilitch could move his team to the Palace of Auburn Hills — or abandon the space and sell it at a markdown.

“Keep in mind that the Palace and Joe Louis compete against each other for concerts, so Ilitch is probably going to look to consolidate to one arena,” Tavares said.

The Pistons remain a popular team, winning the championship in 2004 and making it to the playoffs every year until 2009. Last season they only won 26 games, but the team has signed Tracy McGrady in hopes of improving on-court performance.

There is no formal deadline to buy or sell the team, but Davidson has said she’d like to see the transaction completed by the start of the NBA season in late October. Ilitch must then go through a vetting process before the NBA’s Board of Governors, who conduct an audit to ensure Ilitch has enough cash on hand to maintain the team. Forbes magazine estimated the team is worth $479 million, the fourth highest pricetag in the NBA. — Dave Brooks

Interviewed for this article: Tony Tavares, (775) 853-4712

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