Detroit's Tigers stadium (image via Flickr user Cavalier92)

Detroit’s Tigers stadium (image via Flickr user Cavalier92)

As the Detroit Institue of Arts (DIA) continues its long slide to Emergency Manager Kevyn Orr’s butcher block, several issues have come to light regarding the fate of its artwork and the financial context of the Detroit bankruptcy. On Sunday, the Detroit Free Press published an article confirming what we had previously suspected regarding the possible use of the DIA’s artworks to collateralize new debt. That piece outlines how Orr has repeatedly told the DIA that he would like to use its assets to raise $4-500 million “to create a revenue stream for perhaps 20 years.” What this means is somewhat ambiguous, but this much is clear: the museum’s collection is worth more than enough to collateralize a debt obligation of this magnitude. DIA chief operating officer Annmarie Erickson explains to the Free Press, however, that “putting the art up as collateral doesn’t protect it.”

This is of course correct — in the event of a future bankruptcy, which given the rocky economic prognosis for Detroit is hardly inconceivable, the artwork would then have to be sold to make whole the creditors. And although the DIA intends to refuse any such proposal, the fixation on the DIA is an interesting foil for those other great publically subsidized institution located in Detroit, baseball’s Detroit Tigers, hockey’s Red Wings, and basketball’s Pistons teams. The remarkable prosperity of Detroit’s sports franchises was highlighted in a front page story by Joe Drape in Monday’s New York Times, wherein the rich subsidies enjoyed by sports teams are revealed to have come with surprisingly few strings attached — and no recourse to the City’s management itself — including a $285 million public subsidy for a marginally improved stadium for the Red Wings. In contrast to the Detroit Institute of Arts, which as an entity exists with ostensible independence from the City, Detroit’s sports teams cut their lucrative deals directly with the state, shielding them from the vagaries of municipal economics.

What’s even more interesting is that, like the DIA, the sports teams have seen their fan base remain constant even as the broader economy in the Detroit metropolitan area has fallen into a trough. Unlike the DIA, the sports teams are for-profit businesses, and their commercial results are continuing to yield rich rewards for their owners as the city around them falters. Immune as they are from Orr’s creditor satisfaction supernova, all they have to offer is a cautionary tale about the privileged status sports franchises enjoy, even in the most vulnerable areas. So although it might be impossible to claw back any of the profits these businesses are enjoying, or modify the contracts that have immunized them from the financial morass that surrounds them, there is perhaps a lasting message — one long known, and previously discussed at length in this space — about the economic utility of begging the construction of stadiums with plum subsidies.

Even if Detroit weren’t distressed, the deals struck with these sports franchises would be a raw deal, but surrounded by the complete and utter devastation to the livelihoods, services, and infrastructure in their vicinity, they are floodlit monuments to the cupidity of urban power brokers. Kevin Boyle, a professor at Northwestern, summarized the point to the New York Times:

“It’s really troubling to me to see that much public money going to build a new stadium when there’s catastrophe in the neighborhoods.”

And the Times aren’t the only ones to notice the egregious inequity of this condition. In an article noting a recent demonstration by the the Socialist Equality Party in front of the DIA, the World Socialist Web Site (WSWS) noted that the attitude that has imperiled Detroit’s museum is symptomatic of a growing broader indifference to the integrity and importance of cultural institutions, the fundamental right to patrimony. Noting both the recent closure of the New York City Opera and the resignation of Minnesota Orchestra musical director Osmo Vänskä (the latest development in their yearlong lockout), WSWS’ Joseph Kishore writes:

“What is taking place in Detroit is part of a national and international process. Cultural institutions, and the right of the working class to have access to culture, are under attack everywhere.”

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Mostafa Heddaya

Mostafa Heddaya is the former managing editor of Hyperallergic.

4 replies on “Detroit Sports Profit as DIA Collection Considered for Collateral”

  1. The comparison between the DIA’s troubles and Detroit’s sports team successes is missing a big point. The owners of these teams aren’t the only ones making money-the city benefits as well. The sports teams bring in people who brings in revenue to the city, which then allows them to keep their art. The sports fans are spending money in the city, going to bars, restaurants, staying in hotels, and even attending the museums. I grew up in a working class sports town too and I know more people are definitely flocking to Pittsburgh, spending a ton of money because of our sports teams, which in turn helps the city. Now, do I wish I lived in a world where people flocked to the museums in the same way? Sure, but I don’t. I know that if Pittsburgh had to make Sophie’s choice of a museum or our sports teams, we’d be shipping some Warhols out of there so fast. But at the same time, I know more people are visiting museums like the Warhol because it’s right near our baseball stadium.

    1. Hi Emily, The problem with that thinking is that it is not proven and people often overestimate the impact of sports teams. It is also claimed by politicians all the time just to win votes from sports fans.

      The stadiums are built with public money and the return is often much less than the original debt.

      Here are two articles that explore the topic: http://www.theatlantic.com/business/archive/2012/09/if-you-build-it-they-might-not-come-the-risky-economics-of-sports-stadiums/260900/

      And this quote from this article is pretty clear:

      “Cities have been contributing public funds to sports stadiums with promises that the stadiums will revitalize areas and be an economic boon, but the data doesn’t back up those claims.”

      http://www.planetizen.com/node/5099

      1. Hi Hrag, I’m not saying that a new stadium is going to solve all of Detroit’s problems. I’m mainly confused as to why there is a comparison being made between the DIA and Detroit sports. Seems to be two different issues only connected by their potential for economic growth.

        As for the Atlantic article, perhaps the potential for economic growth with sports should be taken on a city by city basis. This article is on Arizona, not Detroit, who don’t have a big hockey fan base so a new stadium sounds risky. Detroit, however, is a sports town with, as cited here, a consistent fan base even in times of serious economic turmoil.

        Do sports help every city? Of course not, but I’m just going by what I’ve witnessed in Pittsburgh. With PNC Park and Heinz Field, the North Shore in Pittsburgh has cleaned up its parks, opened some great restaurants, hotels and I’ve noticed a significant increase in people when I go to the Warhol. Plus sometimes sports are just a good morale booster for hard times, n’at.

        1. Beyond the anecdotal value of your Pittsburgh example, the scholarship on the matter is pretty conclusive: public subsidies are, on average, a very raw deal as stadium projects always exaggerate their very negligible economic impacts (e.g. in 36 cities from 1958-87, per Baade 1994). (Also worth noting: do you know exactly how much the city of Pittsburg is benefiting *relative to* the subsidies they provide and have provided to the franchises? It’s easy to fall into the common gambit of alluding to fictional “working class” interests to excuse what amounts to rents paid by municipal politicians to their corporate patrons.)

          There’s a lot of academic work on this by Robert Baade, here’s his most recent: http://college.holycross.edu/RePEc/hcx/Matheson-Baade_FinancingSports.pdf

          Another survey article on this in The Nation: http://www.thenation.com/article/162400/why-do-mayors-love-sports-stadiums#ixzz2aduiecrN

          Did you read the NYT piece? The comparison I’m making here is pretty obvious: both stadiums and museums are cultural institutions that receive a form of public subsidy. But, unlike a nonprofit museum like DIA, sports stadiums are for-profit enterprises pitched as urban economic engines, which is a documented lie, statistically, in the United States. Yet the logic continues to carry through, even in Detroit, with $285 mm going to a private corporation to develop an unnecessary new stadium while the art museum, educational programs, and other cultural services are imperiled.

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