Lease No-Go For The Joe

Olympia Entertainment announced June 26 that it will forgo an option to automatically renew its lease at aging Joe Louis and Cobo arenas in Detroit, instead apparently hoping to renegotiate a shorter extension with the city.

The move would help buy time for Olympia to secure financing for either a major overhaul of the Joe Louis Arena, home of the Detroit Red Wings, or a new venue.

A renewal of the current lease would have committed Olympia to another 20 years at “The Joe.” Instead, the City of Detroit and Red Wings owner Mike Ilitch will be able to negotiate a shorter-term lease, according to the Detroit Free Press.

In the meantime, hopes for a new hockey arena are on hold.

“Everybody really felt that it would make more sense to focus on developing a new lease for Joe Louis Arena,” Karen Cullen, vice president of corporate relations for Ilitch Holdings, told the paper. Ilitch Holdings is Olympia’s parent company.

Renovating the building could cost as much as $180 million, and a new arena would cost more than $300 million as well as take two years to build, analysts told the paper.

Joe Louis Arena, completed in 1979, is one of the oldest arenas in the National Hockey League and lacks newer amenities like private boxes. Olympia was not the owner of the Red Wings when the original lease was signed.

“The existing lease was crafted more than three decades ago by individuals no longer associated with either Olympia Entertainment or the city,” Ilitch Holdings President/CEO Christopher Ilitch, said in a statement.

It failed to anticipate “the infrastructure replacement and repair needs of a 30-year-old building in order to meet the competitive industry standards of today,” the Free Press quoted him saying.