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Minor League Team Coming to Little Caesars Arena?

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The Detroit Red Wings and Detroit Pistons eventually could have company at Little Caesars Arena in the form of a minor league sports team.

Adding a third team remains a few years away, but it represents an opportunity for smaller businesses to spend marketing dollars inside the new arena they otherwise couldn't afford to pay with the major league teams. It's a difference of thousands versus millions.

The Wings and Pistons are to begin play at the $635 million arena in September, but it would be at least three or more years before the venue and its management could realistically consider more teams in the building, said Tom Wilson, president of Olympia Entertainment. Olympia will handle scheduling at the new arena.

For a couple of years, all attention will be on the complex task of moving two major league franchises into a brand-new 20,000-seat building, and scheduling concerts and other events jockeying to use the state-of-the-art facility, Wilson said.

"Our focus has been so much on getting this thing built and making it magnificent" for the Red Wings and Pistons, Wilson said.

But leasing the arena to minor league teams - or the owners of the Red Wings and Pistons launching additional teams themselves - could happen, he said.

"It's always possible. Some of those leagues have called; we've had feelers from the Arena Football League and lacrosse," Wilson said. "So many of those leagues struggle for an identity; they're looking for a big city or a new arena."

Any new team would use the arena when it's least busy, which means after the hockey and basketball seasons end. The Pistons and Red Wings each play 41 regular-season home games from October to April.

"It most likely would have to be a summer-based thing like the WNBA or arena football," Wilson said.

Another challenge is fitting alternative sports teams around major concerts, which are quite lucrative for arenas.

"You can't risk losing a major concert for a minor league sport," Wilson said. It's done elsewhere, however, such as the Staples Center in Los Angeles being home to four teams and a full concert schedule.

Ultimately, what adding a minor league team would mean is that sports marketing opportunities would be available to businesses unable afford to link their brand to the major league teams.

Sports insiders say Olympia is keenly aware that it can generate additional revenue from a third team.

"As you see with tickets and sponsorships pricing, it won't be available to everybody to start, so they'll be looking for ways to put in other teams and events," said Mike Dietz, president and director of sports marketing firm Dietz Sports & Entertainment in Farmington Hills. He's had clients swing sponsorship deals with the new arena but declined to name them.

"I think eventually they'll have a third tenant in some sport," Dietz said.

Modern technology means that the days of companies paying to have their names affixed to a wall or scoreboard have evolved.

"That arena's been built so that most of the signage is digital, not static, so it can be changed easily," he said. "They can make it look and feel so their sponsors feel they're getting the attention that they need."

Olympia hasn't disclosed its corporate sponsorship pricing other than suites, all of which sold out in 2015 at a cost of $300,000 a year under seven- to 10-year leases.

Dietz estimated that basic minor league corporate sponsorship deals in general range, such as in Single-A baseball, from $15,000 to $75,000 a season.

"With the major league teams, it's going to get close to six figures just to start out," he said.

Among the major corporate sponsorship buyers so far at the arena are Little Caesars Pizza, Meijer Inc., St. Joseph Mercy Health System, Michigan First Credit Union and Comerica Bank. Financial terms of their deals with Olympia have not been disclosed.

The barrier to entry in corporate sports marketing has plunged because teams and venues are much more sophisticated with deals, Dietz said, and the advent of social media has meant companies can craft other ways to link themselves with teams beyond traditional signage.

Promotions using social media expose a brand to more people than just fans at a game, he said.

"You can get involved in social platforms but not arena signage," Dietz said. "Each team has all their Twitter followers and Facebook folks."

Signage has evolved, too: Little Caesars Arena will be equipped with plenty of digital messaging boards that increases available inventory for sale.

But that raises new questions for advertisers of all sizes: "Sponsors have to sort through that. Are 5 minutes of LED advertising enough to drive sales or build brand awareness?" Dietz said.

Olympia said businesses of all sizes can afford deals now.

"It's true that there are different price points for different products - much like a ticket for one popular, established entertainer might cost more than a smaller, lesser known act," Wilson said. "That said, we have entry points for all businesses."

Rich minor league history

After a couple of years getting Little Caesars Arena up and running, Olympia will begin to seriously weigh its options on another sports tenant. Adding a third team would represent a rebirth of arena-based minor league sports.

Alternatives to the major league Detroit sports teams used to abound. The Detroit Drive arena football game averaged more than 14,000 fans per game at Joe Louis Arena during its 1988-92 run. The Detroit Vipers ice hockey team and Detroit Shock women's basketball team were popular, if not profitable, at the Palace of Auburn Hills.

The recession made such teams - often barely profitable, and usually in the red - economically unfeasible, Wilson said, even if they were drawing thousands of fans a game. Owners wanted to ensure their dollars were being spent on their major league teams, and marketers followed suit. Wilson ran Palace Sports and Entertainment during the heyday of local minor league sports.

There are thriving minor league teams elsewhere in metro Detroit today, such as the developmental United Shore Professional Baseball League in Utica and the semi-pro Detroit City FC drawing more than 5,000 fans a game in Hamtramck. But those are outdoor sports, and the age of alternatives to the arena-based major league teams ended locally when the late William Davidson sold the Shock in 2009.

The post-recession recovery means a minor league team at Little Caesars Arena is much more likely than a few years ago.

"It's always possible," Wilson said.

A third team in the new arena will come down to economics, and the decisions will drive what advertising opportunities are available to businesses.

For Olympia, it's an opportunity cost, said Andrew Zimbalist, professor of economics at Smith College and author of several sports finance books.

"What would you put there that night if there isn't a game?" he said. "Can (Olympia) bring in a rock concert or Ice Capades or rodeo show?"

Ancient art of scheduling

Filling the event calendar won't be a challenge for Olympia as promoters jockey to get their shows in the new arena, but picking the best mix of events becomes more complex as you add sports teams, industry insiders say.

"It is a battle for available dates," said Haynes Hendrickson, president of Haddonfield, N.J.-based sports consultants Turnkey Sports & Entertainment Inc. "A non-major league team is going to want weekend dates to maximize their attendance. Those are valuable dates to commit to a non-major league team when you could bring in more lucrative events such as concerts and family shows."

It's widely believed that the Palace of Auburn Hills will close, and possibly be demolished, after the Pistons leave, and Joe Louis Arena already is scheduled for the wrecking ball after the Red Wings exit. That squeezes the market for entertainment acts in the Detroit market, which means more competition among event promoters to get into Little Caesars Arena - and reduces in-venue marketing opportunities.

"Demolishing both the Joe and the Palace will reduce the number of possible venue days in Detroit; one arena in place of two," said Rodney Fort, a University of Michigan sports economics professor. "That pretty much puts (Olympia) in the driver's seat."

Making it work

There are examples of major league teams sharing their arenas with minor league clubs.

Detroit real estate investor Dan Gilbert has an entertainment empire in Cleveland that includes the NBA defending champion Cavaliers and two minor league clubs that share its arena. One of his top aides explained that minor league teams help brand build for all parts of Gilbert's holdings, which also include casinos and a race track.

"They really enable us to engage with a wide and diverse fan base, and helps us cross-promote," said Len Komoroski, CEO of the Cavaliers and Quicken Loans Arena.

The minor league teams - the Lake Erie Monsters of the American Hockey League and the Cleveland Gladiators of the Arena Football League - serve to allow families and sponsors to experience the building at a lower price point than Cavs games, Komoroski said.

"Each event offers a touch point where we can engage with people," he said.

He declined to specifically say if the minor league teams are profitable. The Gladiators averaged 11,046 per game, and the Monsters drew 8,438 per contest.

It's done elsewhere, too: Eight of the 10 arenas currently shared by NBA and NHL teams have another pro or college team that uses the venue for its home game.

A different type of team

An alternative option to a traditional sports team moving into the arena could be an e-sports team, said Victor Chiasson, assistant professor of sport management at Eastern Michigan University.

"Based on where the new investments in non-major league teams are going, an e-sports franchise using Little Caesars Arena may have the best chance of succeeding and also gives the millennial audience another reason to visit the new facility," he said. "The new Golden 1 Center in Sacramento and Madison Square Garden have hosted events."

E-sports tournaments at arenas have drawn thousands of fans who watch uniformed teams playing video games in competition for cash prizes, with the game action displayed on large video screens. The owners of the Sacramento Kings recently launched NRG eSports, which hosts competitive video game tournaments.

E-sports are on Olympia's radar.

"We've looked at it a little, but not immersed ourselves in it yet," Wilson said. "It's happening all over the country."

Twitter: @Bill_Shea19

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February 9, 2017
 
 
 

 

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