Detroit Sports Profit as DIA Collection Considered for Collateral

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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