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What ‘No’ to the Cubs Might Mean for Sports Subsidies in Chicago

It’s nice to have pull in this town.

Last year, when talk abounded of taxpayer subsidies for a Wrigley Field rehab, I sent a message to Rahm Emanuel via the Mayor’s Office online feedback form.  It went something like this:

Dear Esteemed Mr. Mayor,

I’m deeply concerned about the city’s impending financing of a Wrigley Field renovation while Chicagoans endure city budget cuts and layoffs adversely affecting education, violent crime prevention, social services, and livelihoods in general.

Yours Truly,

  • C.M. Lamberti
  • Obscure Blogger and Underemployed Academic
  • 48th Ward
  • Chicago, IL

P.S. Down with Rahmunism!

P.P.S. Have a nice day.

Apparently my note had the desired effect, because Mayor Emanuel announced last week that “there will be no taxpayer subsidy in the refurbishing of Wrigley.”

You’re welcome Chicago.

I probably shouldn’t take all the credit; it’s true that others, like Ben Joravsky, did their part.  And maybe Sean Dinces’ report recently released by the Chicago Teachers Union turned some heads.  It puts Sox and Bulls owner Jerry Reinsdorf in his place with other corporate big wigs; those who curse “big government” waiving their right fists, while muttering “thanks” out the sides of their mouths as they clinch with left hands wads of government cash under the table.

In a statement, Mayor Emanuel touted his own stern, unwavering position on the Wrigley Field issue, insinuating that it took the Cubs fifteen months to finally hear the word “No.”  But as Neil deMause points out, early reports of imminent consent wafting from the mayor’s office last year suggest some teetering.

And why not?  Stadium subsidies and sports infrastructure tax breaks have been the norm in this city for twenty-five years.  The Cubs have been the exception to the rule.  And in my estimation, while no team is deserving of taxpayer subsidies, the Cubs as they currently operate are the least undeserving of the major sports franchises in this town.

Wrigley Field is an economic anachronism.  As opposed to newfangled stadiums like U.S. Cellular Field—which internalize economic activity in order to maximize profits for the team—the Cubs park is integrated into the surrounding neighborhood and enjoys a symbiotic relationship with surrounding businesses of a certain type.  Read all about it in an academic study by economists Robert A. Baade, Mimi Nikolova, and Victor A. Matheson titled: “A Tale of Two Stadiums: Comparing the Economic Impact of Chicago’s Wrigley Field and U.S. Cellular Field.”

The concourses in Wrigley Field are smaller than modern stadiums, meaning less room and fewer vendors (as a result, the White Sox generate about 35% more in non-ticket revenue per fan than the Cubs), meaning a larger market for food, drink, and team paraphernalia outside of the park.  Wrigley Field lacks large parking lots, or “asphalt moats,” effectively separating fans from the surrounding neighborhood.

And all of those day games that folks say are a reason the Cubs haven’t won a World Series in over a century?  They actually benefit the neighborhood economy.  Following night games, fewer fans want to grab a bite or a drink at a nearby restaurant or tavern.  Moreover, day games allow nearby restaurants and theaters to do business in the evenings without being “crowded out” by 40,000 baseball fans.

Despite being the least undeserving, the Cubs haven’t yet siphoned from the public well.  A spring from which other team owners in this town have drawn liberally for vast irrigation systems nourishing ever-expanding orchards of trees bearing money!  Lots and lots of money!  Defying decades of conventional parental logic!

For the White Sox and the Bears, awards have come via the Illinois Sports Facility Authority, a government agency with enormous spending power made up of officials appointed by the mayor and the governor.

The ISFA built and maintains U.S. Cellular Field in return for very little from the White Sox.  The government agency contributed handsomely to the renovation of the Bears’ Soldier Field as well.  Both stadium projects, with costs in the hundreds of millions, were financed through the issuance of bonds, backloading most of the government’s expenses.  Debt service payments on these bonds was $6.3 million in 2002 but will increase to $88.5 million in 2032.  Read up on it in this report from the Institute for Illinois’ Fiscal Sustainability.

The Sox re-upped with the ISFA in 2008, and from Jerry Reinsdorf’s perspective the deal is, well, sweet.  How sweet?  Consider that the risk-averse owner calls contracts with major league pitchers lasting more than a year “sticking your neck out” and four-year pacts with pitchers “suicide,” and then that Reinsdorf’s agreement with the ISFA is binding through 2028!

The Bulls and Blackhawks enjoy a more clandestine system of government appropriations.  The teams covered the costs of the United Center’s construction, but they cut a deal with the state for property tax relief.  The way the tax system works is that the less corporations pay in taxes, the more of the burden gets shifted to homeowners and small business owners, limiting the city’s resources for public services like education.

Tax information is not part of the public record, so little is known about the extent of the UC tax break.  But through a judicial anomaly, tax forms provided by operators of the United Center made public revealed that Bulls and Blackhawks ownership saved at least $30 million (likely much more) in property taxes between 2002 and 2007 (again, check out CTU’s detailed report).

Incidentally (and unsurprisingly), currently Jerry Reinsdorf is looking to extend the United Center tax deal beyond 2016.

Hundreds and hundreds of millions of debt and taxes squandered—like I said, stadium subsidies are a bad idea.  But based on antiquated justifications for taxpayer investment (increased tourism, hotel and restaurant sales, etc.), the Cubs in their antiquated park have the closest-to-viable case for taxpayer subsidies among sports teams in Chicago.

So, saying “No” to the Cubs makes it tougher to justify saying “Yes” to anyone else.

That’s why this is so big.  And why I’m willing to entertain the hypothetical notion that there are other forces at work here besides my pithy electronic form submission to the mayor’s office.

I can only hope that Mayor Emanuel’s decision was influenced by a groundswell of public sentiment that can no longer be ignored by our elected officials, against the subsidizing of the sports entertainment industry.  That it might reflect an ideological shift within the political culture.

Because that’d be a good thing.  It’d be a start.  Hypothetically speaking.

 

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