Detroit Soccer Team Turns to Private Investment to Fund New Stadium

Working in Detroit: Private investment fueled by the MILE Act

Opening day, Detroit FC

This article and video is part of a series on Detroit entrepreneurs. See the rest at www.mackinac.org/Detroit.

When Detroit's semipro soccer team needed a bigger stadium to accommodate its growing fan base, it did something unusual. Instead of seeking tax breaks or subsidies to support its ambitions, it turned to private supporters, mostly fans. It did so with the help of the Michigan Invests Locally Exemption or MILE Act.

Detroit City FC raised $741,250 from 527 investors to refurbish Hamtramck’s Keyworth Stadium. The team’s first game at its new home, on May 13, was a sellout with 7,410 tickets sold. That was more than double the 3,500 tickets it was limited to selling when the team played at the stadium at Detroit’s Cass Tech High School.

Keyworth, in Hamtramck, was not exactly in move-in condition. The World War II-era relic could seat 11,000 people but it needed major refurbishment. Its owner, Hamtramck Public Schools, did not have the means to repair it.

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The team offered to pay for the work in exchange for a 10-year lease but raising money for such a venture could have been a costly and lengthy process. That’s how the MILE Act was able to help. Michigan passed the legislation in 2013 to make it easier for entrepreneurs to use crowdfunding as a simplified way to raise money in small amounts from many people.

“We’re a small organization, so it would have probably cost more in legal fees to figure out how to offer ownership, if that was even something we were interested in. This offered a very streamlined way for us to solve our problem,” said Alex Wright, one of the team owners.

Under the new law, ventures and investors alike must be in Michigan, and the organizations must raise the money within a year. Detroit City FC raised $741,250 in 11 months from 527 investors. Investors, many of them team supporters, could take part through tiers starting at $250 and going as high as $50,000. They don’t have equity in the team but will earn dividends based on team revenue.

“If the atmosphere wasn’t exciting, the investment wouldn’t have been something I would have been a part of,” said Jeffrey Quesnelle, a team supporter and investor.

Stephanie Jaczkowski was a newcomer to investing. After recently finishing graduate school and landing a full-time job in Detroit, she was thrilled that she could support the team she loves.

“Having an opportunity to invest in something that is right here in the city of Detroit was something I really appreciated,” said Jaczkowski.

Rebecca Green considered it more an investment for her 3-year-old son, who loves going to the games.

“I knew that if we were to make any money back, it would be for his future, but not only that, he loves the team so much. It’s all he talked about all winter, so every day, hearing about DCFC spurred me to invest,” Green said.

Also benefiting from the venture is the Hamtramck school district. The median house value in the city is one-third the state average, and the district had little desire or ability to renovate the stadium.

Giving up 25 Friday nights to a private soccer team for the added improvements made sense to the board.

“What the community is getting back is a beautiful state-of-the-art stadium that will draw families to Hamtramck — the businesses, the restaurants and bars,” said Superintendent Tom Niczay.



Related Articles:

Detroit’s Economic Fortunes Won’t Get a Kick Out of Subsidizing a New Soccer Stadium

Detroit’s Soccer Stadium Should Stand on its Own

Taxpayers Should Not Be on the Hook for Stadiums

Wayne County 'Jail Fail' Site Moves Closer To Subsidized Redevelopment

Study: New Sports Facilities Do Not Increase New Business Openings

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