Tax gimmick proposed for Wrigley deal
Tuesday, Feb 26, 2008 - Posted by Rich Miller
* Relaxing Wrigley Field’s landmark status is no big thing with me. It would be stupid for anybody to drastically change the look of the place, since the park is what really sells tickets, but if that’s what they want to do, then go for it. I care not.
But this new tax instrument idea is very troubling…
The Tribune Co.’s plan to have a state agency acquire and renovate Wrigley Field would require the city to relax the ballpark’s landmark status and forfeit for 30 years the sales tax growth generated by the remodeling, a top official said Monday.
More on the new tax thingy…
The Wrigley renovation would be financed by bonds retired by increased stadium revenues — everything from naming rights, sponsorships and concessions to clubs seats and additional skyboxes. The Tribune Co. would get a higher price for the stadium because ISFA can issue tax-exempt, longer-term bonds at a reduced interest rate.
Thompson described the arrangement as a sales tax version of tax-increment-financing (TIF). But, instead of freezing property taxes at existing levels and using the growth for business subsidies and infrastructure improvements within the district, the sales tax increment generated by the stadium renovation would be used to modernize Wrigley.
“The city would have to give up their share of sales tax increment for the next 30 years,” Thompson said.
Too cute by half. And, notice, there’s no estimate given for how much revenue the city would lose.
* Everybody keeps quoting Same Zell and Jim Thompson on this subject, but do you ever wonder how potential team buyers feel? Crain’s had a piece recently that suggested it wasn’t going down all that well…
Would-be owners fear being saddled with decades of rent payments to compensate Tribune for a ballpark they’ll never own. That would crimp cash flow that otherwise could be spent on signing All-Stars in pursuit of a long-elusive World Series championship, they say.
“That is money not going . . . for the benefit of the team or fans,” says a member of another bidding group who also requested anonymity. “It is just rent out of the team’s pocket (that could pay) for salaries that is being capitalized into a lump sum for Tribune’s benefit.”
No way. No freaking way.
- Leroy - Tuesday, Feb 26, 08 @ 6:54 am:
No freaking way?
Would you rather have the team move? A couple of not so savvy bean counters could probably make the case tearing down Wrigley or moving the Cubs will unlock value, and they will use this argument to get the dough to buy the team.
If there is anything we in Illinois fear, it is change. The aldermen and state reps are probably freaking that change is on the horizon. What are all those rooftop owners going to do? All the concessioners? All those parking lot owners? All those bar owners? Sales taxes are going to plummet if it makes economic sense to tear Wrigley down and replace it with condos and move the team to a more economically laden location. And if were potential owners, I sure as hell would use that to my advantage.
The cost of having the Cubs in the neighborhood is going up, Rich…just like the cost of everything else in Illinois. You want them to stay? Pony up the money to keep them there, or they will find another economical home. And don’t think of it as losing money….think of it as an investment. If you are too cheap to do that, someone else would probably gladly pick up the tab.
- Frank Booth - Tuesday, Feb 26, 08 @ 7:34 am:
Yeah, the Cubs are gonna move.
Call me when the shuttle lands.
Professional sports teams are like whiny kids. Give me this or I’m going to scream and cry. The problem is, Illinois gives in and merely encourages the behavior.
Perhaps you should scroll back a few weeks and see Rich’s post on the Daily Herald story about how the Red Sox and Fenway were sold, revitalized and have now won two World Series titles with essentially zero government help.
But of course, the Red Sox have committed to winning titles, not wild cards. And when your fans don’t know the difference …
- Ghost - Tuesday, Feb 26, 08 @ 8:34 am:
While were at it, the State could oick up a large number of rundown apartments and houses and rent them out as well; Since we are apparently getting into the rental business.
I think this is a good deal, ultra wealthy zell should not be deprived of access to govt bonds and low interest rates. After all, how could a wealthy person pay for a loan if it did not have really low interest. Fortunetly thousands of low income people have very very high ARMS, credit card and car loan interest rates. Yep we need to provide lower interest rates for the wealthy well having no usery or cap on interest rates for the poor. Good use of State resources.
- He makes Ryan Look like a Saint - Tuesday, Feb 26, 08 @ 8:46 am:
I think the state would be good buying Wrigley, Heck look at what they have done for the State Fairgrounds!!!
- Snidely Whiplash - Tuesday, Feb 26, 08 @ 8:55 am:
Hmmmm… why don’t all our local governments just identify all their local multimillionaires and billionaires, discuss these poor souls’ cash flow problems in detail, then help them out by buying each of them their dream house? Not wishing to be a burden on the state, these poor but noble souls would be more than willing to have their real estate taxes waived by all the taxing authorities, and the tax savings could be used by them to repay the governments’ generosity over the next, say, 2,000 years? After all, charity begins at home.
- plutocrat03 - Tuesday, Feb 26, 08 @ 9:01 am:
Yet another example of the twisted mindset of the political elite. Government does not know how do make money outside of taxation. Do we need to start a list of failures starting with that debacle of the hotel/convention complex in Springfield?
What happened to the Democratic Party who pretend to be champions of the poor? Talk about welfare for the rich!
Rich owners, rich fans (cost of tickets and refreshments are already through the roof).
Potential buyers are already complaining about the deal. They want maximum control over their investment and this would put a major crimp in any of their plans. No buyer combine has come out to claim that this abuse of the taxpayers is considered to be a benefit, so who is the major beneficiary? That money trail should prove interesting…..
Cubs leave Wrigley on their own? Puhleeeease. The full stadiums depend on the financial market employees and the proximity to the public transportation system. Put the games anywhere else and that portion of the market dries up and blows away.
- jerry 101 - Tuesday, Feb 26, 08 @ 9:16 am:
the Cubs won’t leave wrigley. Wrigley is what keeps the cubs from being the white sox. A team the draws reasonably well when playing well, but rather poorly when the team stinks.
The rooftop owners wouldn’t be happy if wrigley got torn down, but the rest of the neighborhood would be ok. Its still a popular place to live, and would still be without wrigley. Good public transit access, lots to do, close to the lake, it’s still going to be a prime neighborhood.
There is no way the state should pay the Tribune god knows how much money for their sale of the Cubs. No freaking way. That’s what this amounts to. The State handing over a hundred million dollars or more to the Chicago Tribune. For what? So that the Tribune can make even more money on a transaction that will probably net the company close to a billion dollars already?
- Truthful James - Tuesday, Feb 26, 08 @ 9:17 am:
The key issue for mr. Zell is how to maximize the price he can obtain for Wrigley Field. For Jim Thompson and the investment banking community it is how the fees (to be paid indirectly from the incremental sales taxes) to these poor fellas can be — within market based limits — maximized.
For the City of Chicago on the other hand there are two prongs. Economically, how to optimize the tax take over time. The political constraint on that is to satisfy the demands (if any) from the taxpayers for the continued presence of baseball team in Chicago..
If I had been Mr. Zell, I would have made the the seller place a certain amount of money in escrow to offset a loss of the agreed value on the sale of the team and the Ballpark.
Sales Tax Increment Bonds are interesting vehicles. They require evidence of the likelihood that the increment will be annually on the order of at least 150% of the debt service on the Bonds. The costs of ball park renovation make it highly possible that the necessary increment would have to be from either a much wider “District” than just the ballpark itself or a new sales tax levied on the “District.” The latter would hit all those casual shoppers, tavern denizens and others seeking goods and services but not attending ballgames. An interesting political sell.
- jerry 101 - Tuesday, Feb 26, 08 @ 9:19 am:
actually, come to think of it…maybe the state should buy wrigley.
It could tear down Sox Park then, and make the Sox play at Wrigley also, thus maximizing the value of the investment. Sox Park has never lived up to its potential. So, move the sox to Clark and Addison.
Instead of 81 games a year, then Wrigleyville will have 162 games a year. It’ll be a bonanza for the neighborhood, with all those extra people coming into the neighborhood, and the sporting goods dealers in the area would make a lot of money selling sox merchandise to local bars.
- jerry 101 - Tuesday, Feb 26, 08 @ 9:21 am:
the best way for the city to maximize it’s revenue take from Wrigley Field is to send Houlihan’s office out there to re-assess the value of that piece of property, which is way undervalued, and smack it with the proper level of tax.
The cost of renovating the park is an issue between the buyer and the seller, not the state. The seller has neglected upkeep on the park for a decade or more (hence the crumbling structure), thus the buyer has a right to demand that the seller reduce the price so that the buyer can pay for necessary repairs.
- What planet is he from again? - Tuesday, Feb 26, 08 @ 9:31 am:
Jerry101 - I think you have something there, but you didn’t go far enough…make the Bears play there again too, so now you’re up to 178 games/year, one less stadium to maintain and yet another team’s merchandise for the neighborhood businesses to sell! Now all you need to do is figure out how to get the Bulls and the Hawks there.
- the Patriot - Tuesday, Feb 26, 08 @ 9:34 am:
Blago is indicted, public official “A” is out of the bag. Wrigley field along with a hundred other hair brained schemes of the Gov are dead in the water. Time to move on.
- Levois - Tuesday, Feb 26, 08 @ 9:55 am:
Don’t let the state buy Wrigley!!! It looks like a bad idea! Whoever suggested it should be horsewhipped!
- Leroy - Tuesday, Feb 26, 08 @ 10:01 am:
>Talk about welfare for the rich!
Tell that to the people who work the concession stands, the people who run/own the parking lots, the people who own and work in the bars, the ushers….
Those people aren’t exactly millionaires, Pluto.
- The Doc - Tuesday, Feb 26, 08 @ 10:02 am:
One word - goodwill. Wrigley Field has it. A lot of it. There’s no legitimate rationale for selling it to the state - unless you consider subsidizing the platinum-laced pockets of cranky billionaire reasonable.
It’s a power play with the intent of striking fear into the hearts and minds of Tunney, Daley, and Blagojevich, the latter two each have long histories of being reactionaries and often playing fast and loose with taxpayer-collected funds.
No private owner would risk the citizen backlash and uncertainty of displacing Wrigley. It would be a PR nightmare, and a risky financial endeavor, at best.
- plutocrat03 - Tuesday, Feb 26, 08 @ 10:32 am:
Lets not be dim Leroy
The people who are working there will continue to work there. Whether they are employed by the team or but the support structure. The people who own the parking lots could if needed find better things to do with their property, after all they cannot make a living on 82 games a year.
It would cost the state and city less money over time to give each of those worker a million dollars and let them retire wealthy. This is a rich man’s bail out, period
- Rich Miller - Tuesday, Feb 26, 08 @ 12:47 pm:
===Would you rather have the team move? ===
Heck, they can move to Montreal or DC as far as I’m concerned. lol
- PCC - Tuesday, Feb 26, 08 @ 1:06 pm:
Hey, weren’t we promised “no public money” for this deal? And, um, for the 2016 Olympics, while we’re at it?
- andre dawson - Tuesday, Feb 26, 08 @ 2:17 pm:
the state should only agree to buy wrigley if the tribune agree’s to go into bankruptcy & never return
- BannedForLife - Tuesday, Feb 26, 08 @ 2:46 pm:
Although IL law allows TIFs to capture sales tax increments, Daley has done 150-some TIF districts and has yet to get into the sales tax game. Daley TIF’ed downtown twice w/o a sales tax grab. I don’t see him signing off on something like this for the Cubs.
- Captain America - Tuesday, Feb 26, 08 @ 4:48 pm:
Just say no to Sam Zell’s desire for corporate welfare. Sell to an owner who can afford to purchase the Cubs lock,stock, and barrel, including the renovation and maintainance of Wrigly filed. The Cubs franchise is a goldmine despite their historical ineptitude. There is no need for public sector involvement!