Illinois Holds $2.6 Million Payment for Home of Chicago Bears

Illinois Holds $2.6 Million Payment for Home of Chicago Bears
February 28, 2012

A state agency is withholding a $2.6 million payment to the Chicago Park District for improvements to the stadium where the Chicago Bears of the National Football League play.

The Chicago Park District owns Soldier Field, which 10 years ago received hundreds of millions of dollars in taxpayer-funded renovations. The Illinois Sports Facilities Authority (ISFA) board decided to hold up a scheduled payment to review its contract with the park district. The board apparently is bothered the authority must make payments for Soldier Field improvements but receives no revenue from Soldier Field events.

The ISFA, Chicago Park District, and the office of Mayor Rahm Emanuel did not return requests for comment.

One Chicago-area expert on taxpayer-subsidized stadiums noted the ISFA has been under increased scrutiny recently, suggesting the hold on the payment may be related.

Heat Over Restaurant

“ISFA built a restaurant at taxpayer expense [at U.S. Cellular Field], the proceeds of which go to the Chicago White Sox” of Major League Baseball, said Robert Baade, an economics professor at Lake Forest College in suburban Chicago. “That caught the attention of a lot of people, who are upset that such a thing could happen.”

The decision to delay approval of the payment came two months after the City of Chicago was forced to hand $185,000 in city funds to the ISFA to cover a shortfall in the city’s hotel tax collections. Hotel taxes are supposed to pay off the bonds used to fund the Soldier Field renovations.

Cost Overruns for Bears

The Soldier Field renovations were pushed by then-Mayor Richard M. Daley, who cited concerns that the Chicago Bears would leave for another city or state if the stadium were not modernized. Initially expected to cost $600 million with $400 million in taxpayer support, cost overruns pushed the total to an estimated $690 million with $432 million in taxpayer funding, according to a Chicago Tribune analysis.

The taxpayer’s portion was supposed to be paid primarily by a two percent hotel tax in the Windy City. Daley vowed in 2001 the hotel tax as well as annual subsidy payments of $5 million from both the city and state would be sufficient to pay off the bonds over 30 years, saying “I remain absolutely confident that taxpayers are not at risk for any part of this project. If I had any doubts, I would not proceed.”

According to the 2010 financial statements of ISFA, more than $395 million is still owed on the bonds that were issued in 2001 to fund the Soldier Field renovation. Annual payments on principal are scheduled to grow modestly until 2026, when they are expected to quintuple.

Dubious Economic Benefits

Supporters of taxpayer subsidies for sports stadiums often cite their supposed economic benefits. Current proposals for a new Minneapolis-area stadium for the NFL’s Minnesota Vikings tout up to $1.4 billion in immediate benefits and $275 million in annual benefits, which would cost up to an estimated $1.2 billion with the majority funded by taxpayers.

This view of the benefits of stadium subsidies is not shared by most economists, however. In a 2008 review of economic research on stadium subsidies, Professors Dennis Coates and Brad R. Humphreys of the University of Maryland and University of Alberta, respectively, report that “The clear consensus among academic economists is that professional sports franchises and facilities generate no “tangible” economic impacts in terms of income or job creation and are not, therefore, powerful instruments for fostering local economic development.”

“Stadiums are not catalysts for economic development,” said University of Chicago Economics Professor Allen R. Sanderson. Sanderson has conducted extensive research on the economic impacts of sports stadiums and serves on the editorial board of the Journal of Sports Economics. “They represent poor investments for cities.”

Sean Parnell (sean@impactmanagement.com) is a Heartland Institute policy adviser who writes from Alexandria, Va.