Depressed Detroit: The Sale of the Pontiac Silverdome

A yet-to-be identified Canadian family-owned real estate organization (from Toronto) has bought the Pontiac Silverdome $583,000. It will reportedly be used as an indoor soccer facility. The cost to build the 80,000 seat arena in 1975 was $55.7 million. That would be $227 million in 2009 dollars.



The sale price is less than the average home value (even after recent declines) in many upscale neighborhoods. The land area adjacent to the arena is 127 acres. The sale price is less than $4,600 an acre! Is that typical of prime commercial land in the Detroit area? If so, that is real depression.



According to Mike Martindale in The Detroit News (here), the sale price (at sealed bid auction) surprised many Detroit area real estate experts. A land value of $10,000 an acre was mentioned in the article as a fair land value. The city of Pontiac was anxious to get the annual maintenance costs off its tab and put the property on the tax roles. Upkeep costs of $1.5 million per year were mentioned by the Detroit News.

The winning bid was higher than three others submitted. The value of the other three bids has not been revealed. All this occurred after a sale in 2008 for $17 million fell through.

This shows the plight of the area, where unemployment is around 30%. The city of Pontiac has a current operating deficit of $6.5 million and a debt of $103 million (The Wall Street Journal - Christina S. N. Lewis here). Some of the debt may still be carried over from the building of the stadium. Part of that debt was paid down in 2001 with a payment of $26 million by the Detroit Lions, one of the former tenants.

Comments

[Leftfield]

I hope this makes an impression on citizens who have long subsidized huge projects like the Silverdome for millionaire owners, entertainers and athletes. It never made sense for the public, unless you used loose thinking, which has grown to be typical in American public policy. 1/2 $million is the market value of this quarter-$billion boondoggle. Something we can't afford any more. The sooner voters stop allowing con artists, hacks and thieves with titles and academic degrees to swindle us, the sooner we stop the damage, and recover.

2009 Nov 19 04:11 PM

[Whippet]

The only thing uglier than the sales price and the architecture were the football games played by its home team.

Honestly, it seems like a crappy deal for the buyer. I don't see how you can make that sort os $hithole cashflow above maintenance costs in the depressed Michigan economy.

And outdoor soccer on astroturf is about the worst game imaginable.

2009 Nov 19 04:23 PM

[Leftfield]

Maybe this is a foretaste of the prices taxpayers will receive when they finally put the toxic "assets" Washington is purchasing for us from Wall St., on the market. You know, stuff they tell us we're likely to make a profit on.

2009 Nov 19 05:37 PM

[Tony Petroski]

Run a few tractor pulls and a Bruce Springsteen concert and you've made your money back. There has to be a catch here. Unpaid taxes of $57 million?

2009 Nov 19 06:59 PM

[untrusting investor]

Wow, truly stunning. Thanks for posting the article and the information.

2009 Nov 19 07:21 PM

[John Lounsbury]

Tony - - -

No taxes due - it is owned by the city. One micky finn in the deal would some hidden flaws that would require tens of millions to bring the structure up to code. I thought of putting that speculation in the article but didn't. It is possible, if such occurred, the buyer would have a good case to get his purchase money returned plus legal expenses from the city on the grounds of duplicity on the part of the seller.


On Nov 19 06:59 PM Tony Petroski wrote:

> Run a few tractor pulls and a Bruce Springsteen concert and you've
> made your money back. There has to be a catch here. Unpaid taxes
> of $57 million?

2009 Nov 20 12:30 AM

[Steven Hansen]

John, at $4600 an acre, maybe it can be converted back to farmland, and convert the inside of the dome to growing vegetables. with truck farming you can grow three crops a year.

better yet, get a grant from the government for biofuels productions and purchase the property.

or create a windfarm in the parking lot.

how about making it a giant health care facility and naming it obama land?

2009 Nov 20 11:35 PM

[TinyTim]

I don't know which is more appalling. That the city let it go for $583,000, or that $55.7 million in 1975 is up to $227 million in 2009 dollars.

If a deal for $17M fell thru just last year, one has to wonder about other issues. Many of these issues question the competency of the city.

2009 Nov 21 02:58 PM

[John Lounsbury]

TinyTim - - -

The reason the deal fell through last year was the buyer (1) turned out to have no resources to complete the purchase and (2) would not have been able to maintain the property.


On Nov 21 02:58 PM TinyTim wrote:

> I don't know which is more appalling. That the city let it go for
> $583,000, or that $55.7 million in 1975 is up to $227 million in
> 2009 dollars.
>
> If a deal for $17M fell thru just last year, one has to wonder about
> other issues. Many of these issues question the competency of the
> city.

2009 Nov 21 05:15 PM

[Detroit NEws]

MAjor waste of money here.

Feb 01 10:37 PM