Posted on 16. December 2009 19:10 by
In 1974, the Pontiac Silverdome was brand-spanking new. Shiny and impressive in size, it was the new standard for sports venues.
Opened officially in 1975, it was home to the Detroit Lions, the Detroit Pistons and hosted Super Bowls and other huge spectacles, such as a mass by the pope that drew the largest crowd ever at the dome, more than 93,000 people.
The Silverdome cost about $55 million to build, and taxpayers anted up. In today’s dollars, that’s about $220 million – not a huge amount, compared to what the new Yankee Stadium or Cowboys Stadium cost recently, but still a lot of money.
It recently sold for $583,000.
Yes, $583,000. You don’t have to be a math genius to figure out that’s slightly more than 1 percent of what it cost to build, which means it lost nearly 99 percent of its value over the years. We hear about homes that have lost 60, 70 percent off their peak values of the housing boom, and we cringe. But how about 99 percent?
That might make it the worst real estate investment ever. It’s at least the poster child for the real estate problems in Detroit. According to an article in the Detroit News, a broker estimated the 127 acres the Silverdome sits on to be worth at least $10,000 an acre, which means the land alone was probably a steal for the new owners of the site.
Such is what is going on with distressed property sales in the area. The auto industry, long a source of jobs in Motown, has struggled. Unemployment is high, foreclosures are high, and real estate is going at bargain-basement prices.
Of course, 35 years ago it would have been difficult to foresee all the factors that led to the Silverdome’s fate: the move of the Lions in 2002 to brand new Ford field – ironically named for a struggling automaker that itself has become a symbol of Detroit’s woes – the loss of manufacturing jobs, the overall decline of the area.
With no crystal ball for those responsible for the investment, it’s hard to call it the worst investment decision of all time. Heck, all the speculation during the real estate boom that ended only three years ago led to decisions that probably qualify as much worse.
But even if it was a good decision at the time, the numbers don’t lie. Statistically speaking, by losing nearly all of the original $55 million, it might be the worst real estate investment of all time.
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