MLS expansion city profile: Detroit
Market Analysis
For a quarter century, as the city careened between consternation and crisis, the one Hockeytown constant was its hockey team. The economy changed. Technology and trade helped shape a new world order for which Motown wasn’t necessarily ready. Residents left and too frequently were replaced by corruption and crime. The city struggled to cut costs. By the summer of 2013, Detroit was nearly $20 billion in debt and filed for the largest (by almost five times) municipal bankruptcy in American history.
But the Red Wings never folded. In 1991, led by captain Steve Yzerman and rookie Sergei Federov, they lost a seven-game series to the St. Louis Blues. Nicklas Lidstrom arrived a few months later and in 1991-92, the Wings finished first in the Campbell Conference. Every season since has been a winning one. Average attendance dipped below 19,000 just once (2007-08), and those fans watched their team win six Presidents Trophies, six conference titles and four Stanley Cups.
It would be ironic if the 25-season playoff streak, which currently is the longest in North American pro sports, ends this spring. Detroit is becoming more than just Hockeytown, and it may not need the Wings in the same way. Next season, they'll move into a new, $730 million arena located a few blocks from the football and baseball stadiums. And the NBA's Pistons will join their NHL counterpart, making Detroit the rare city with downtown teams in each of the four traditional major leagues. Little Caesars Arena will anchor the northern half of “District Detroit,” a 50-block area on the edge of downtown that developers intend to turn into a pedestrian-friendly urban zone with the three stadiums, offices, entertainment and restaurants. It’s anticipated that the District will have an economic impact exceeding $2 billion by 2020. To the south of Ford Field and Comerica Park, Gores and his partner, Dan Gilbert, then hope to add a fourth downtown stadium and a fifth downtown team. The NBA is chasing MLS.
Detroit had a long way to go and still does in many ways, but the indicators are positive. District Detroit is one of several renewal projects at various stages of completion. Public and private entities have spent hundreds of millions to transform the Detroit International Riverfront. The QLine street car, which will run up and down Woodward Avenue, is scheduled to open soon. Unemployment is falling, people are returning to the city (it lost one quarter of its population from 2000 to 2010) and housing values are up—not necessarily to the same levels as the 2008-09 recession, but on the right track. According to the Detroit Regional Chamber, the metro area saw GDP rise 12.2% in 2010-15. That ranked 19th among the 50 most populous regions in the country.
Despite all its adversity, Detroit remains a major market. It’s at the center of the 14th-most populous metro area in the USA. Among the 12 cities competing for an MLS expansion team, only Phoenix has more people. There are 11 Fortune 500 companies headquartered in the area, including two in the top 10—General Motors and Ford. It’s the 13th-largest media market, trailing expansion rivals Tampa/St. Petersburg and Phoenix.
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Ownership Group
Detroit isn’t out of the woods—as recently as 2013, Forbes ranked it as the “most miserable” city in America thanks to the country’s highest violent crime rate and the decline in home values—but it certainly is attracting investment. And the chief source of that investment is Gilbert, a 55-year-old businessman who grew up in the Detroit suburbs and now is remaking and rebuilding his hometown. He’s more well known around the country as the owner of the Cleveland Cavaliers, who play in Quicken Loans Arena. Quicken is Gilbert’s company, and it’s helped make him the richest man in Michigan and, according to Forbes, the 286th wealthiest person on Earth. His current net worth is around $5.8 billion, according to the magazine. In the past five years, Gilbert, his Rock Ventures investment and holding company and Bedrock Detroit real estate firm have acquired, renovated and/or leased out around 95 separate properties. The press release announcing his intention to pursue an MLS team claims those initiatives have transferred or created more than 17,000 full-time jobs in downtown Detroit.
Gilbert is partnering with NBA rival Gores on the MLS project. Gores, 52, was born to a Catholic family in Israel that moved to Michigan in 1968. Southeastern Michigan has tens of thousands of Arab and Middle Eastern immigrants, who make up about 5% of the Detroit metro area’s population. Gores made his billions in private equity and now lives in Los Angeles. He bought the Pistons in 2011 but remains a soccer fan and has coached his daughter’s teams.
Gores is worth $3.3 billion, according to Forbes, and his Platinum Equity firm currently has a portfolio of more than 30 companies with more than $6 billion in assets.
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Stadium Plan
It’s been called the “Fail Jail,” and it symbolizes a time when Detroit made poor choices and lived beyond its means. Located a couple blocks south of the Lions’ Ford Field, the “Fail Jail” is a partially-completed, 2,000-bed prison that was abandoned in 2013 when cost overruns surpassed $90 million. It still sits on the corner of Gratiot and St. Antoine, occupying a prime piece of downtown property in the city Gilbert wants to revitalize. The jail reportedly would require $300 million to finish.
So Gilbert and Gores have made a proposal: Give Rock Ventures the property (and the unfinished jail) and in exchange, they’ll build a $420 million complex including a prison, courthouse, offices and a juvenile detention center on an eight-acre site less than two miles to the north. The county would contribute the same $300 million to the project and Rock would take care of the rest before eventually benefiting from an undetermined cut of the operational savings the government should realize.
Wayne County officials are vetting the deal, which will cost around $760,000 and should be done by May, according to the Detroit Free Press. Declining Rock Venture’s offer and moving ahead with completing the “Fail Jail” remains an option.
If the county agrees, however, the downtown site will be home to a 23,000-seat soccer stadium and adjacent hotel, housing, retail and entertainment development. The entire project reportedly would cost around $1 billion. Gilbert and Gores do not have an alternative site if the Gratiot swap falls through.
Soccer and Sports Scene
Detroit doesn’t have top-tier pro soccer, but it clearly has an appetite for the game at multiple levels.
The area hosted the first indoor World Cup games in 1994 at the old Pontiac Silverdome, including the 1-1 tie between the USA and Switzerland. Michigan Stadium in nearby Ann Arbor has hosted the two largest crowds in American soccer history. Last summer, 105,826 showed up to watch an International Champions Cup exhibition between Real Madrid and Chelsea. Two years earlier, Madrid and Manchester United set a record with 109,318.
That interest extends to the U.S. women, who attracted 35,538 fans to Ford Field for a 2015 friendly against Haiti. In 2012, more than 17,300 were there to see the Americans defeat China. The U.S. men last played in Detroit in 2011, when 28,209 showed up for a CONCACAF Gold Cup border battle with Canada.
Soccer is strong at the grassroots as well. More than 100,000 players are registered with the Michigan State Youth Soccer Association. The University of Michigan and Michigan State have combined for seven NCAA tournament bids this decade and the area is home to two of the strongest “fourth tier” teams in the country.
The PDL and NPSL are nationwide leagues of amateur or semi-pro sides that play a limited spring and summer schedule. Both circuits have a flagship in Detroit. The PDL’s Michigan Bucks, who play in Pontiac, are the league’s only three-time champion (including last year) and are owned by Dan Duggan, the younger brother of Detroit mayor Mike Duggan. The Bucks reportedly averaged about 800 fans at their indoor field last season.
Fourth-tier Detroit City FC keeps building despite uncertainty posed by MLS expansion
That’s a decent number at the amateur/semi-pro level, which makes Detroit City FC’s success all the more notable. Le Rouge are a phenomenon. A locally-owned, supporter-built club that launched in 2012, DCFC drew more than 1,200 fans in its inaugural season and last year, attracted more than 5,200 per game (over 10 games) to Keyworth Stadium, which is about 4.5 miles north of Ford Field.
The stadium itself is a symbol of the commitment made by DCFC’s supporters and staff. An initial fundraising campaign that ended one year ago raised more than $740,000 that was used to renovate Keyworth. Additional upgrades are planned ahead of the 2017 campaign. DCFC is a small team with a big-time brand and big-time support, and the club’s story and colorful atmosphere have attracted widespread media attention and visits by foreign clubs. Last year DCFC played FC United of Manchester, a kindred, supporter-owned club that competes in England’s sixth tier. This May, Northern Ireland Premiership club Glentoran, which played in the Europa League as recently as 2015, will pay a visit.
DCFC has played the Bucks in each of the past two U.S. Open Cup tournaments. Honors have been split.
While DCFC’s success can be read as an indication that Detroit is ripe for top-tier pro soccer, it shouldn’t necessarily be interpreted by itself as a sign of hunger for MLS. Theirs is a culture that won’t be co-opted easily. If Gilbert and Gores move forward, they’ll have to factor DCFC into their messaging and almost surely will face criticism if they don’t make an effort to start dialogue.
Detroit’s big-league teams do reasonably well considering circumstances in their city and the standings. The Lions haven’t won a title since 1957 and haven’t hosted a playoff game since 1994, yet they average more than 60,700 fans a game. The Pistons haven’t won a postseason series since 2008 and still attract an average of 15,350 to suburban Auburn Hills, while the Tigers, who’ve won two AL pennants in the past 11 years, ranked 13th in MLB drawing more than 31,000 per game to Comerica Park. Detroit or its surrounding suburbs have hosted a Super Bowl, Winter Classic, NCAA Final Four, NCAA Frozen Four and Ryder Cup in recent years.
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MLS Pros
Detroit remains a large market with major league pedigree and if it continues its resurgence, it’s a place from which MLS will benefit thanks to its large population and significant corporate presence. Despite its lack of pro soccer–the NASL's Express lasted three seasons and folded in 1980–there’s a clearly established interest in the sport.
Gilbert and Gores also offer the best of both worlds in the MLS boardroom. They’re billionaires several times over and their status as NBA owners comes with cache and welcome ties to additional promotional and marketing opportunities, sponsors and potential sources of revenue.
Finally, the envisioned stadium project could be part of a spectacular piece of downtown renewal with which MLS would love to be associated. The scene surrounding matches against potential rivals in Chicago and Toronto could be something to behold.
MLS Cons
As of now, there is no Plan B. Gores and Gilbert originally wanted a decision from Wayne County by the end of this month. That almost certainly will not happen and the longer the wait, the more time there is for competing proposals to surface or dissatisfaction to arise. Gilbert will hope his track record in downtown development will tip the scales in his favor, but a delay could hurt Detroit’s chances of earning an MLS spot this year.
MLS will have to be confident in Detroit’s economic recovery. It’s a city with immense potential, but there are competing expansion candidates with more favorable growth trends at the moment. There’s also massive competition from the other major sports. Some may find it risky to make a play for discretionary dollars in a city that’s still finding its way back.
Commissioner's Thoughts
“I think what Detroit City FC is doing is fantastic … the passion for their club and for the energy behind it as a community-based professional sports team, I think it speaks to where soccer in America is going. That you could have something that is almost a quote ‘kickstarter business.’ I know that they're very passionate about their team, and I wish them great success and would love to see something like that in every market,” MLS commissioner Don Garber said during a December conference call.
Regarding Gores and the Pistons, Garber said, “Tom is a guy that I think is really smart, really experienced in professional sports. He makes a great owner in MLS and has moved with Arn Tellem who is a good friend of mine, a proposed plan move to take the [Pistons] down into the city, I think, speaks wonders for where Detroit is hoping to get to, which is this continuation of a city on the rise. It's got a lot of urban energy, and more and more people moving down to the city core. I look at it as a positive, not a negative.”
