National Basketball Association

Why moving the Pistons downtown makes financial sense

Published Jun. 30, 2017 6:28 p.m. ET

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Since the 1970s, the Detroit Pistons have not played within the city limits. While they have stayed in the Metro region, they have been based out of the municipalities of Pontiac and Auburn Hills over the last 38 years.

Soon, the Detroit Pistons could be moving back to the Motor City and its downtown core.

Team owner Tom Gores has been negotiating with Olympia Entertainment to relocate the franchise from the Palace of Auburn Hills to Little Caesars Arena at I-75 and Woodward Avenue over the past few weeks, according to Crain’s Detroit Business.

With the new facility opening in less than a year, the negotiations have been speeding up and entered the final stages yesterday. The move is expected to be announced in the next few days.

This season could be the last one the Pistons call the Palace home.

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For some fans, they do not want to see the Pistons leave the Palace due to the history. The team has won eight division titles, five eastern conference championships and three NBA titles since it opened in 1988.

For others, such as Twitter user Brandon Kerr, they feel moving to a brand-new arena would not be a big advantage compared to staying in Auburn Hills.

There is one very important reason why the Pistons moving back downtown would be a good decision: it makes financial sense.

Back when Gores bought the team and Palace Sports and Entertainment in 2011 from Karen Davidson, the widow of former owner Bill Davidson, he mentioned he would consider moving the Pistons downtown “if it made financial sense.”

When recently asked by the media about a possible relocation, Gores said he and PS&E are always looking into it:

“We’ve gotten a chance to really know (Mike and Marian Ilitch). I know Chris (Ilitch), not well. They’re a great family. I respect a lot of what they’ve done for Detroit,” Gores said [Sept. 26] at Pistons media day. “We’re always assessing it. We have to for the city. We’re constantly assessing it. It has to be good for everybody, us included. We’re really in the middle of assessing it.”

With a new arena opening in the heart of Metro Detroit in September 2017 and the media reports about the discussions, it seems Gores has assessed the situation and is ready to make the move.

First off, the current arena’s location is a major disadvantage.

For many people, the driving distance to go to the Palace is too far to go for some.

Back in 2010, much of the tri-county area’s population was within a 15-mile radius of downtown Detroit, according to Michigan’s Center for Shared Solutions and Technology Partnerships.

Dec 15, 2014; Los Angeles, CA, USA; Detroit Pistons owner Tom Gores reacts during the game against the Los Angeles Clippers at Staples Center. Mandatory Credit: Kirby Lee-USA TODAY Sports

The Palace of Auburn Hills is 27 miles away from downtown, as seen on Google Maps.

Those totals have most likely changed since 2010, but it still does take at least an hour to get to the arena from the center of Detroit.

Some hardcore fans may, and do, still make the trip. The problem is others may not, which could be why the team had the 25th-best attendance (16,515 people per game) last season. They have also been in the bottom six teams for attendance for the past five years. This is after having a 259-game sellout streak end in 2009.

It would make sense financially to move the franchise closer to its fan base to try and raise attendance.

That location disadvantage will also mean promoters may choose to go to Little Caesars Arena rather than the Palace for concerts, as Pollstar president and editor-in-chief Gary Bongiovanni told Crain’s Oct. 15:

“The new arena will certainly impact the market. Artists love to play new buildings, in part because they are state-of-the-art venues built with acoustics in mind, but especially because fan support is nearly always better if the building is new.”

The figures show just that – the Palace had less than half the amount of patrons for non-Pistons events in 2015 (213,599) compared to what it had two years ago (460,835), according to Crain’s. Olympia also is estimating to have 140 events at LCA outside of the 41 Detroit Red Wings games during the 2017-18 NHL season. The Palace’s planned events change each year based on touring schedules.

That loss of business would mean it would not make as much financial sense to keep the Palace open, even with the more than $40 million in upgrades Gores has put into the facility.

As well, Joe Louis Arena, the current home of the Red Wings since 1979, is being razed when the team moves in part because the Ilitch family did not want it to compete for event dollars.

If the Pistons were to move back downtown, the Palace could also likely be torn down for the same reason, taking its storied history along with it.

Oct 21, 2015; Auburn Hills, MI, USA; Detroit Pistons guard Spencer Dinwiddie (8) before the game against the Charlotte Hornets at The Palace of Auburn Hills. Mandatory Credit: Tim Fuller-USA TODAY Sports

The Palace has had a lot of moments, good and bad. It has seen the rise and fall of the Bad Boys era, the defensive powerhouse teams of the 2000s that made six straight conference finals – along with winning the 2004 championship – and the Malice at the Palace. It has seen multiple teams take the hard-court inside the house the Davidson family paid $90 million to build.

At the same time, despite the venue’s many upgrades and long history, the team has also tried for a while to find a sponsor to buy its naming rights in recent years. The costs for maintaining the Palace can also rise over the next decade. It’s also one of the oldest arenas remaining in the league – only Madison Square Garden and Oracle Arena have stood for longer. One other arena that opened in 1988, the Bradley Center, is being replaced in the near future.

If the Pistons want to move into LCA, they also need to decide quickly. It would cost more to build the team’s facilities and locker room inside the Olympia-owned arena if they decide to relocate after it opens in September 2017. That seems to be the main reason why they discussions have been picking up speed.

Moving the Pistons downtown for next year would make the most financial sense for not just the future of PS&E, but also for Gores and his franchise.

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