Silverdome's bargain price reflects financial woes in Detroit suburb of Pontiac
Monday, February 1, 2010
PONTIAC, MICH. -- Once this city had its own car, 23,000 busy factory workers and the $55.7 million Silverdome, a storied Teflon-coated stadium where the Detroit Lions played, Elvis Presley sang, WrestleMania's Hulk Hogan stalked and Pope John Paul II prayed.
Today, Pontiac is in such bad shape -- a $7 million deficit, roughly $100 million in debt -- that the state has declared a financial emergency and sent in a turnaround expert to oversee finances. The car is gone -- General Motors is killing off its Pontiac brand. Most of the factories are deserted -- GM has only 3,882 employees here now. And the turnaround expert, Fred Leeb, has sold the Silverdome to a Canadian developer, who paid just $583,000 for the 80,300-seat stadium and 127 acres of land -- less than many Washingtonians pay for a house.
In their efforts to live on ever-shrinking revenue, governments across the country are trying to get unprofitable public property off their books. Arizona, facing a $1.5 billion budget shortfall, has started auctioning off a passel of buildings, including the governor's and legislators' offices, in a sale-leaseback plan in hopes of getting enough money to totter along another month. California, confronting a $20 billion deficit, talked about selling the Los Angeles Memorial Coliseum and San Quentin State Prison. Instead, the state put the Orange County Fairgrounds up for auction and decided to sell and lease back 11 state office buildings.
Here in Pontiac, the process has unsettled many residents. How could the Silverdome go so cheaply? What was Leeb thinking?
Leeb, 57, arrived last year and quickly took aim at unprofitable projects. Over the years, the city has invested about $80 million building and maintaining the Silverdome, a theater, an outdoor entertainment pavilion and other projects that have become a major burden in a time of recession and a diminished GM, the largest taxpayer.
Since taking on the $150,000-a-year job, Leeb has slashed city payrolls, cut expenses on photocopiers and printers (savings: $54,000 a year), and renegotiated an expensive contract with the city's firefighters union that is expected to create between $2 million and $3 million a year in savings.
The Silverdome, he decided, had to go. The stadium and its 127 acres had been empty, save for some weeds and cracked concrete, for eight years. Tearing it down would be too expensive, and local developers and real estate salesmen said the stadium would surely fetch bidders.
Pontiac's taxpayers built the Silverdome for the Detroit Lions in 1975 -- it was one of the NFL's largest stadiums at the time, and it had its profitable years. When the Lions left in 2002 for Ford Field in downtown Detroit, the team paid Pontiac $26 million to break the lease. Over the years, the Silverdome was used for a variety of events, including the 1979 NBA All-Star Game, the 1982 Super Bowl and a stop on Michael Jackson's 1984 Victory Tour. It drew its biggest crowd -- 93,682 people -- for a 1987 Mass by Pope John Paul II.
Attempts to sell it never got far, and the city was stuck spending $12 million -- $1.5 million a year -- in maintenance. Lately, a tractor-trailer driving school has rented the huge parking lots to train drivers.
For almost a month, the city accepted sealed bids on the Silverdome. It got three offers.
One offered a range of $13 million to $22.5 million to turn the site into a landfill, but it had many contingencies involving zoning and financing. The other two offered $500,000 bids-- including one from Andreas Apostolopoulos, a Toronto real estate investor -- without details of their plans, Leeb said.
Leeb decided to host a face-off auction.