Vince Ellis

Detroit Free Press

The Detroit Pistons are “very close” to an agreement to return downtown, owner Tom Gores confirmed to the media tonight before his team’s home opener against the Orlando Magic.

The Pistons are nearing the completion of a deal to join the Red Wings in Little Caesars Arena when the building is scheduled to open next fall.

The Pistons would leave the Palace, the franchise's home since 1988.

Running late because of construction along Lapeer Road, Gores sat at the Palace podium shortly before tip-off and got right to the point.

“I think if we’re going to do it, it’s going to be soon,” Gores said. “I’ve always been relatively transparent with you guys and we’re getting close, we’re getting close.

“At the same time, I always want to appreciate the Palace and this great arena. As I said before, we’re going to adorn it, but at the same time I have to be honest with you guys we’re getting close.”

When asked to clarify, he added: “Very close to a deal. We’ll see.”

He declined to discuss the remaining sticking points, but they are dwindling by the day. He said the plan would be to begin play downtown next season.

The Free Press reported this week that the leadership teams of Gores and the Ilitch family have been talking to the NBA and city officials about several issues as they try to finalize the deal.

• The sides are still researching what it would take to modify the still-under-construction Little Caesars Arena, being built for the Wings, to accommodate the requirements of an NBA team.

• The Pistons also are considering potential downtown locations for business offices and a multi-million dollar practice facility. A person with firsthand knowledge of the situation told the Free Press that there are several parcels of land under consideration.

Another area being negotiated is the lease agreement – the Pistons would like a shorter deal, the Ilitch side would prefer a longer deal. The sides will likely meet somewhere in the middle, the source said.

A deal, the source said, would likely include the merger of the entertainment businesses of both entities – Gores’ Palace Sports & Entertainment and the Ilitches’ Olympia Entertainment. A deal to join forces on broadcast rights could be consummated at a later date.

“We don’t have a deal, just so you guys are clear,” Gores said. “But we are talking serious just to be straight with you guys.”

The two sides spent most of the summer working through details. And while they're not finished yet, they have made substantial progress.

The long road

Almost immediately after Gores completed his $325-million purchase of the Pistons and PS&E from Karen Davidson in 2011, whispers began that the Los Angeles-based billionaire from the Flint area would look to get his team downtown.

Things got moving in earnest when longtime sports agent Arn Tellem was hired as Palace Sports & Entertainment vice chairman in the summer of 2015. PS&E is the umbrella organization over the Pistons and the concert business.

Tellem, who is the lead negotiator, was given a number of tasks, chief among them to explore ways to partner with the Ilitches -- including the possibility of moving the team downtown.

He also was tasked with engaging talks with Oakland County officials to discuss avenues to remain at the Palace.

The county had engaged the Pistons several times over the years about a potential agreement under which the county would acquire the facility, the team would sign a long-term lease to stay, and the two sides would share in capital expenditures on the facility, a source told the Free Press. But Oakland County balked with indications there wasn’t the political capital nor will, according to the source.

Sources told the Free Press that the Palace is not for sale.

The Pistons also have had internal discussions about redeveloping the property. Los Angeles and Philadelphia have developed entertainment districts around arenas, and PS&E did look at a similar project.

But the signs are pointing downtown.

There were thoughts about building an arena, but with a new state-of-the-art Little Caesars Arena slated to open in the fall of 2017, the natural move is to join forces with the Ilitches.

Going into the negotiations, issued had to be resolved.

• Gores wanted to be an equal partner in the building, not just a tenant.

• The Pistons wanted to make sure that there was an avenue to get a return on the substantial investments in Palace upgrades since Gores bought the team.

• The Pistons had to ensure that the move didn’t negatively impact season-ticket holders and sponsors.

There is a sense of urgency because the arena, which is costing $627 million to construct and is located just north of downtown, is nearing completion. The window for easier and less-costly adjustments is quickly closing. Any adjustments to the construction could be subject to approval by both the Downtown Development Authority and the Detroit City Council.

The NBA Board of Governors finance committee would review the lease agreement, and the entire board will vote on approval.

Gores didn’t seem worried about a deadline.

The benefits

So why the partnership?

Attendance has declined in recent years for the Pistons, who have ranked in the bottom six in NBA attendance for five straight seasons.

The Palace sits lonely on Lapeer Road, and fans have come to expect a memorable gameday experience. Lions, Tigers and Wings games fill downtown restaurants and bars with patrons.

Gores has spent more than $50 million in Palace upgrades since purchasing the Pistons – including refurbishing locker rooms, investing in a new scoreboard, new seating and improving the wireless experience for patrons.

Although the Palace is still a great venue as a fan experience, upkeep costs will likely only rise.

And there’s also the would-be competition of a shiny new arena downtown, which is expected to significantly hurt the Palace’s concert business.

The organization struggled to sign a naming-rights deal for the Palace, with age of the venue cited as a stumbling block.

The bottom line is Gores would not be considering this move if he didn’t expect revenues to rise substantially with the venue change.

For the Red Wings, they could join with the Pistons in future TV negotiations and also would get an added 41-plus dates of occupancy at the new arena.

And there is the added incentive to remove the Palace as competition for the new arena when the newness wears off.

The partnership would keep PS&E venue DTE Energy Music Theatre for summer outdoor concerts. PS&E also operates Meadow Brook Music Festival on the Oakland University campus and manages Freedom Hill Amphitheatre in Sterling Heights.

What’s next?

If the deal is consummated, it could be viewed as a success for Detroit Mayor Mike Duggan, as past city leaders have publicly encouraged the Pistons to move back downtown.

Chris Ilitch, president and CEO of Ilitch Holdings, and Gores would also be remembered as the men who returned the Pistons to the city.

It would be billed as a homecoming, but the Pistons would leave Oakland County, their home since 1978.

The Palace faces the prospect of being shuttered and demolished after this final season – a building that was a part of three NBA titles. Gores said there is enough time to properly honor the Palace and deceased former owner Bill Davidson.

“We should take it in, we should enjoy the Palace,” Gores said. “It’s been a historic arena.

“It’s a real credit for this arena to be as lively and functional as it is so many years later is pretty incredible.”

Members of Davidson’s family were in attendance tonight.

As the Free Press has reported, the building is not expected to go the way of the Pontiac Silverdome, which has been an ignored eyesore for years. Gores and Oakland County leaders are committed to making sure the site is developed.

“I think we really have to be mindful of this community, Auburn Hills and their loyalty in showing up,” Gores said. “Am I concerned about (losing Oakland County support)? I want to pay attention to it. I want to respect them for all the years of attending and so on. This has been a real community. I feel the same wherever we’re playing.”

Free Press staff writers Joe Guillen and John Gallagher contributed. Contact Vince Ellis: vellis@freepress.com. Follow him on Twitter @vincent_ellis56. Download our Pistons Xtra app on iTunes or Android.