Chicago Stadiums Fail to Deliver Promised Benefits
Chicago has two taxpayer-subsidized sports stadiums, neither of which appears to be living up to the promises made by supporters of taxpayer funding.
Renovation of Soldier Field, home of the National Football League’s Chicago Bears, was completed in 2003 at a cost of $660 million, with $432 million of the cost covered by bonds issued by the Illinois Sports Facilities Authority (ISFA).
After one year of operation, the renovated stadium has netted less revenue than projected for the Chicago Park District, which owns the stadium, according to critics of the deal.
A few miles south of Soldier Field sits U.S. Cellular Field, home of Major League Baseball’s Chicago White Sox. That stadium is supposed to pay rent to the state after attendance hits a certain figure, but in recent years attendance has been below the target, effectively giving the White Sox a rent-free stadium.
The bond payments for both stadiums are funded by a 2 percent hotel tax in Chicago, which generates about $23 million a year. That tax was first levied in 1988, after the Illinois General Assembly created the ISFA to issue bonds for a new stadium for the White Sox.
Hotel Tax Subsidizes Park District
Chicago Park District officials projected a renovated Soldier Field would generate $10 million annually for park district programs. However, after one full year of operation, the park district actually netted less than $7 million, according to Allen Sanderson, a University of Chicago professor of sports economics.
“The revenues are modestly disappointing,” Sanderson said.
Park district officials dispute the conclusion, saying the stadium hit its revenue target.
“Soldier Field is fully funded,” park district spokesman Julian Green told Chicago Tribune reporter Hal Dardick for a December 13 article. “Property taxpayers are not holding the burden of Soldier Field.”
Park district officials did not respond to calls placed by Budget & Tax News.
Sanderson and other critics, including Erma Tranter, president of the local watchdog group Friends of the Parks, say the park district is fudging.
Dardick’s article points out that the ISFA distributed $3.5 million of hotel tax revenue to the park district. And, according to Dardick, a 2001 memo to the Chicago City Council shows Soldier Field was netting about $9.5 million a year for the park district--without hotel tax revenue.
“You have to subtract that hotel tax subsidy,” Sanderson told Budget & Tax News. “The park district is not netting $10 million, as they said they would.”
New Contract, Old Debt Affect Revenue
Sanderson said the apparent drop in revenue probably stems from a new contract the Bears negotiated with the park district. He also pointed out the renovation reduced the number of stadium seats, from 67,000 to 61,500, making Soldier Field the NFL’s smallest stadium.
Tranter told Dardick the park district is also neglecting to include in Soldier Field costs $4.2 million it paid toward debt last year for stadium improvements that were made in the 1980s.
Green told Dardick it is “unfair” to include those debt payments in Soldier Field’s net revenue calculations.
White Sox Go Years Rent-Free
At U.S. Cellular Field, the White Sox lease expires in 2011. According to Christopher Lackner, spokesman for the ISFA, which owns and operates the stadium, the White Sox have paid rent nine times since 1991, but only once since 2001, when the annual attendance target was raised from 1.2 million to 1.5 million. Total rent paid depends on total attendance.
“For all practical purposes, the Sox don’t pay rent,” said Sanderson, because in most of the years when the Sox have paid rent, they have barely passed the rent threshold.
U.S. Cellular Field originally cost $125 million to build, but enhancements have been made since the original construction, putting the total subsidy at more than $200 million, not including interest on the debt.
$20 Per Ticket Subsidy
In “What Do We Do With the Hotel Tax Now that We Don’t Need Any More Stadiums?” a report issued September 30, 2003 by MCIC, a not-for-profit research and information organization for the Chicago metropolitan region, the organization says under current projections, by the time the White Sox lease expires in 2011:
- The ISFA will have spent well over $200 million of public money to build the new stadium, the scoreboard, and other capital improvements on the site;
- The White Sox will not have paid a dime more in rent;
- U.S. Cellular Field will have attracted somewhere between a quarter million and a half million fewer spectators per year than ballparks with a similar capacity and teams with a similar won/loss record;
- Every person buying a ticket to attend a White Sox game from now on will have been subsidized by public money at the rate of about $20.20 per ticket.”
The study argues almost none of the money spent by the teams or fans benefits the surrounding area, and that the stadiums therefore have failed to live up to promises that were made about economic development.
Steve Stanek (email@example.com) is managing editor of Budget & Tax News.