Monday, January 2, 2012

The Cross-Town Classic: ChiSox versus Cubs on Taxes and Renovations

The Illinois Sports Facilities Authority (“IFSA”) was created in 1987 by the Illinois General Assembly to create and reconstruct sports stadiums for professional teams in Illinois. The IFSA owns and operates U.S. Cellular Field and receives annual debt payments for bonds related to renovations of the stadium. In 2001, the IFSA also contributed to the renovations made to Soldier Field. The IFSA has relied on hotel tax revenue from the state to pay back these payments, but this past year it was forced to turn to a different source of revenue to pay back this debt: Chicago taxpayer money.

Prior to 2011, the Illinois government would provide an advance to the IFSA so it could pay for any work conducted on the stadiums. The IFSA would later pay back those advances with hotel tax revenues. In 2010, though, hotel tax revenue was deficient by over $1.1 million, so the state turned to Chicago’s portion of state income tax to pay the bill. This is the first time that tax revenue fell short since 2001, which is when a new law was enacted that allowed the IFSA to issue bonds for renovations to Solider Field.

Besides receiving scrutiny over this incident, the IFSA has also been criticized for the new restaurant it built right outside U.S. Cellular Field. Taxpayers, again, ultimately paid for the expenses for this restaurant. Furthermore, the IFSA allowed the White Sox to retain all the restaurant profits.

Unfortunately, for the National League team across town, similar benefits from public funding do not exist. There have been recent discussions about renovating privately-owned Wrigley Field, one of the oldest stadiums in American professional sports. Rumors swirled about who would finance the possible restoration. In 2010, Chicago Cubs owner Tom Ricketts developed a complex plan which ultimately asked for $200 million in public money, specifically additional ticket taxes, for the restorations. In September of this past year, sources stated that Mayor Rahm Emanuel was willing to contribute all $200 million using the City’s money. All of these rumors were put to rest, though, when on November 2, 2011, Emanuel announced that the proposed plan was not something he was going to incorporate into the 2012 budget, and the City would not be contributing extra tax money for construction on Wrigley Field.

One obstacle that the Cubs have to overcome in order to raise more money for renovations is getting its restrictive landmark status lifted. If the Cubs were to obtain permission from the City to lift Wrigley’s restrictive landmark status, as the City did for Solider Field so renovations could be done to it in 2001, then not only would construction on Wrigley be allowed, but the Cubs could possibly generate more revenue. Outside of additional seating and expansion of luxury boxes that would surely take place in renovations, removal of the landmark status could allow additional advertisement signage at Wrigley that would generate more revenue to contribute towards the proposed renovations.

With a government entity “overseeing and funding” the renovations to U.S. Cellular Field, which have occurred recently and often, and with Wrigley Field enduring so many restrictions, conspiracy theorists (i.e. Cubs fans) suspect that The Cell is being favored over the Friendly Confines. Keep in mind, though, that the Cubs are one of only five Major League Baseball teams that play in a privately-owned stadium, and do not directly see benefits like renovation monies returned from payment of amusement taxes (12% combined City and County taxes per ticket). Further, while Wrigley’s unique historical significance (only two years junior to Fenway Park) and neighborhood setting certainly brings fans and tourists through the turnstiles, this bears some consequences as well. From objections of the slope of bleachers to not impede rooftop club neighbors to night game restrictions (Wrigley is restricted to a maximum of thirty night games, twenty-four fewer than the MLB average), Wrigley is losing out on direct monies from expansion of seating as well as prime-time television appearances.

If Wrigley Field was sold to the City, it may be renovated, but there is a possibility it may not be done in the way that Cubs’ owners envision. However, as it stands now, Chicago taxpayers are left to pay off the renovations done to U.S. Cellular Field, and the Cubs’ organization is left to explore different financial avenues in order to support its restoration aspirations, such as privately purchasing adjacent property to bring more of the Wrigleyville dollars to the Cubs.