25 Nov Commercial property bargains: Domed stadium for price of a middle-class house
CHICAGO – Would you buy an 80,000-seat Domed stadium for $583,000?
Pontiac, Michigan just sold off Pontiac Stadium which was built for $55,700,000 in 1975 for $583,000. That is almost a penny on the dollar. Wait, let’s adjust for inflation. Make that about a quarter of a penny on the dollar.
LOCATION, LOCATION, MICHIGAN
Michigan cities, especially those tied in with the auto industry, have suffered a lot of job erosion and a very poor real estate market. Some say there is no real estate market in many areas because you have to have a buyer first.
Let’s put this in an everyday perspective: Let’s go out to dinner tonight. No honey, let’s save that $50 or $60 and go out and buy a couple of nice houses in Michigan. For CASH.
People have not been able to sell their house and with this type of deal made on a multi-million dollar sports complex, what is an average three bedroom two-car garage house? $16.50? $20.00? Okay – $30.00 take it or leave it.
The Pontiac Silverdome sits on 127 acres. The price for the entire complex comes to less than $4,600 an acre including the full domed stadium or just under $7.30 a seat which is less than a beer at most sports venues. Talk about foreclosures!
Funny, I don’t remember seeing this as a headline anywhere. But I did see Oprah was retiring, Sarah Palin’s book was selling, all the sport scores and many other trivial headlines. Where was this story on all the news media?
When real estate people cannot sell your house, they blame it on the market. I remember one arrogant real estate salesperson that said, “I don’t sell your house. The market sells your house.” At that point, I didn’t renew his contract and dropped the price of the house to what I would have gotten after paying his commission and sold the house myself.
ARE OTHER CITIES AND THEIR ASSETS FAR BEHIND?
There has been some bargains on office buildings in New York and other cities. A couple of months ago, I focused on a $160 million condo conversion that sold for a little less than 20 cents on the dollar in a upper-end neighborhood in New York and I thought that was a huge red flag.
The selling of the Pontiac Silverdome for this price IS a huge red flag.
There are some that are warning that Chicago is the next Detroit and that “McCormick Place is broken”. (http://www.secondcitycop.blogspot.com/ ) There is talk about the loss of revenues in Chicago, the selling off of assets like the parking meters that maybe could have gotten more money, but maybe that was the best deal they could get at the time.
There are always people that say – you could have gotten more for that car you just sold or that house you sold. Maybe you can’t.
Chicago is the next Detroit? That comparison seems to be a huge stretch. The City that works turning into the “City that used to work”? Chicago has a lot going for it.
It has the highest sales tax in the country and that is driving many people to shop in surrounding areas that have half the sales tax. Okay, not a good example.
It has lost many corporate headquarters in the last fifteen years and there has been job erosion that no one seems to own up to. Hmmm. Okay, that was not a good example either.
It was just named as being 148th out of 200 cities in job creation since 9/11. Wait. Let’s look for a better example.
Some new downtown condo buildings are now being turned into apartments because there is no workforce that can afford them. (Which I predicted several years ago would happen when I asked the question of where are all the jobs being created to support the buying of all these new condos in Chicago?). Okay, another example to be concerned about but it was at least pointed out several years ago. Where was the mainstream media in all of this?
Well, let’s look outside the city for some better economic news. How about the 9,700 seat Sears Centre in Hoffman Estates (portable seats can add about another 2,000 in capacity)? That was built for about $62,000,000 in financing and back in 2006. Hmmmm. $55,000,000 doesn’t buy as many stadium seats as it did in 1975.
Some are questioning its viability in the market as it was almost on the verge of closing. Will that be the next bargain sports complex sold by a municipality? Stranger things have happened.
Sears Centre, Hoffman Estates, IL
Can you imagine that city trying to sell the Sears Centre?
Let’s start the bidding at $6 a seat. That would be $58,200. No, too low and a couple of bidders offer $6.50 a seat and $6.75. Remember, there is not 127 acres that go along with it so what do you expect in today’s market? And all the real estate experts saying, “Let’s look at the comps – like the Pontiac Silverdome.”
Okay. We’ll give you what the Pontiac Silverdome got but NO more – $7.30 a seat. That’s $70,810. No way. Hey, that’s over a penny on the dollar and you aren’t throwing in 127 acres!!
Okay, we will double the offer which is more than generous in today’s sports complex market. LOOK at the comps!
We’ll pay you DOUBLE what the Pontiac Silverdome got – $14.60 a seat that’s our final offer. Take it or leave it. No one else is offering you anything even close to that lucrative price. You have NO bargaining position at that lucrative offer. Get it off your books or keep paying upkeep on it.
Sold for $141,620!!! That could NEVER happen here?? Dream on. It did happen in Michigan at HALF the price per seat, so no one can ever say, “That is an impossible outcome.”
Carlinism: Municipalities are holding on to some white elephants – they just don’t know it – YET.
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