Ghosts of stadiums past haunt Bears' quest for a new stadium deal

CHICAGO — As lawmakers consider helping the Chicago Bears build a new stadium, the ghosts of past stadium deals still haunt the present.

Soldier Field, Rate Field and even Lucas Oil Stadium in Indianapolis loom over the landscape, marking steel and concrete warnings and justifications for a new stadium deal. Critics and boosters alike say we should learn from those lessons when considering whether a new deal will be a boon or a boondoggle.

“The big lesson is, read the fine print,” said Neil deMause, author of “Field of Schemes,” a book and website that analyze stadium subsidies. “A lot of deals in the past have gotten approved without legislators or the public examining all the different line items, and it ends up costing a lot more than you expect.”

In the Bears’ case, Illinois lawmakers are weighing whether to let the team negotiate a long-term property tax break with local governments in suburban Arlington Heights. The team would pay $2 billion to build the enclosed stadium at its own cost, but wants the state to pay up to $855 million in infrastructure costs such as roads and utilities.

Across the border, Indiana lawmakers have already authorized building a new domed stadium. As proposed, the Bears would kick in $2 billion, while the state would pay $1 billion.

Funding for the new stadium in Hammond would come from a property tax in a special zone around the stadium, plus a 10% admissions tax, 1% food and beverage tax in Lake and Porter counties, and 5% hotel tax in Lake County.

To reassure residents, officials say the funding mechanism would be similar to that of Lucas Oil Stadium, home of the NFL’s Indianapolis Colts.

But Indianapolis has a couple of advantages that northwest Indiana does not. It has a state convention center that helps pay expenses and imposes a 5% rental car tax and an extra 1% food and beverage tax originally instituted for the old RCA Dome, which was imploded in 2008.

State officials point to Lucas Oil as a great success story, since the state has never had to pay for the original $666 million debt. However, taxpayers still are on the hook to pay off the remaining $463 million debt through 2037.

Economic research repeatedly has shown that public subsidies for sports facilities are a bad investment, largely because they reallocate spending from other businesses and forms of entertainment. University of Indianapolis finance associate professor Matt Will agrees with that, but says the Hammond stadium could be an exception, in part by benefiting from lower construction costs in Indiana.

“It’s going to be a game changer we’ve never seen in a publicly financed stadium, because Indiana is going to move money from Illinois,” he said. Beyond the economic cost, he said, “There is a huge intrinsic value to have an NFL franchise in your city, and Hoosiers have been willing to pay for it.”

Other economists are not so optimistic. Geoffrey Propheter, an associate professor at the University of Colorado Denver School of Public Affairs, has estimated that a new stadium in Indiana could cost closer to $4 billion by the time you include interest costs, a likely mid-lease renovation, and lost opportunity costs from how that money could be used for better investments.

The scenario he paints isn’t much better in Illinois. Propheter has estimated the tax breaks in Arlington Heights could be worth at least $2 billion over 30 years, and could end up costing other property owners in the area.

“People who don’t care about the Bears or the stadium are going to be paying higher taxes so that their town can host the Bears, and be partly responsible for the maintenance and capital repairs to the stadium over its life,” he wrote.

That lesson became abundantly clear with the renovation of Soldier Field in 2003. The team kicked in $200 million toward the $632 million project. The public still owes $467 million for the job, which, once it was completed, drew widespread criticism.

The debt for that construction was supposed to be paid by annual payments of $5 million each from Chicago and the state, plus a 2% Chicago hotel tax. But those payments have fallen short in recent years, forcing the city to pay about $51 million extra in recent years. The annual amount due will go up through 2032.

Another lesson in taxpayer costs has come from the home of the Chicago White Sox baseball team, Rate Field. After the team threatened to move out of state, that stadium cost about $137 million to build when it opened in 1991. But after people were alarmed by the height of the upper deck, it cost another $118 million in renovations in the 2000s — all of it paid by taxpayers.

The public still owes another $45 million for the ball field — even as the White Sox are looking to build a new stadium again on a better site, closer to downtown.

In contrast, the 1994 construction of the United Center, where the Bulls and Blackhawks play, was privately financed, though it received tax breaks. Now, the Wirtz and Reinsdorf families that own the facility are seeking $55 million in tax incentives for the proposed $7 billion “1901 Project” mixed-use development around the arena.

The $740 million in recent renovations in and around Wrigley Field, home of the Cubs, was also paid by its owners, the Ricketts family, with a relatively small $8 million tax incentive.

And two new stadiums are planned to be built with private money: Ryan Field in Evanston, and a Chicago Fire Stadium in the South Loop, which would be likely to receive tax increment financing, or TIF, funds from the city for infrastructure.

So when the Bears propose to pay for their Arlington Heights stadium themselves, that is a welcome investment, said Dennis Coates, professor of economics at the University of Maryland in Baltimore County.

But since the Chicago metropolitan area has a gross domestic product around $900 billion, estimated by World Business Chicago, even a $2 billion splurge amounts to far less than 1% — making a small dent in the region’s economy, Coates said.

The Bears would avoid Chicago’s 9% ticket tax in Arlington Heights, but still pay at least Cook County’s 3%, which Coates said brings up another lesson of good stadium economics.

“As a matter of principle, people attending the games ought to pay the subsidy, not the little old lady who’s a fan of the opera,” he said. “In the same way, Bears fans shouldn’t pay for the little old lady to go to the opera.”

Every dollar that goes to a sports team, he emphasized, is a dollar that doesn’t go to schools, libraries or transportation. And any shortfall in public funding will likely leave taxpayers on the hook.

Despite the inequities of public financing for stadiums, perhaps the greatest lesson is that while voters often vote them down, they continue to get approved by state lawmakers.

The lesson there, Coates said, is: “People who want the stadium are more politically influential generally than the people in opposition.”