The Capitol Fax Blog » We need a better explanation of Wrigley sale

We need a better explanation of Wrigley sale

Thursday, Jan 3, 2008

* I think it’s time somebody finally figures out just what the heck has really been proposed for the Wrigley Field deal. This is one of the stories we’ve been fed…

The Cubs would sell the park to the [state] agency for the nominal sum of $1, and the new owners would sign on to rent the park from the state for at least 30 years. In exchange the Sports Facilities Authority would issue bonds to cover reconstruction costs.

* But this nugget is from today’s Sun-Times. It’s buried in an article about how Mayor Daley has changed his tune and is now keeping an open mind about a potential state buyout of the park…

Since then, sources said the mayor and his staff have been fully briefed on a deal that would guarantee [Tribune Co. owner Sam Zell] a huge up-front payment for Wrigley — tens of millions higher than he might otherwise receive selling the stadium privately — by having the ISFA use its power to issue tax-exempt, longer-term bonds at a reduced interest rate.

The bonds would be retired by 30 years of stadium rent from a new owner who would sign an “ironclad commitment” to remain at Wrigley during that time.

A dollar would not qualify as a “huge up-front payment.”

* The Tribune had this brief explanation in a story last month…

Selling Wrigley to [the state] could be more profitable for the future employee owners of Tribune Co. because of the tax-exempt status of municipal bonds used to finance the purchase.

For a dollar?

* And then there’s the benefits of a state sale for the new Cubs owners…

In addition, if the state owns Wrigley Field, the new owners won’t have to pay property taxes on it. In 2007 the Tribune Company paid $1,151,487 in property taxes on Wrigley. This year the bill will go up to around $1.43 million. At the rate property taxes are soaring, the new owners are looking to save more than $50 million in property taxes over the course of the 30-year lease.

* And could a TIF district be involved? This is also from the Sun-Times…

[Jim Thompson] acknowledged that “there would have to be neighborhood improvements along with restoration of the stadium.”

But he said, “For the moment, I’m not looking at taxes. I’m looking at non-tax revenue” like the tax increment financing scheme now being used to bankroll a new $1 billion Yankee Stadium on a park across the street from the House that Ruth Built.

TIF Districts are tax revenues by another name, Thompson.

- posted by Rich Miller

27 Comments

- Ghost - Thursday, Jan 3, 08 @ 9:31 am:
So it sell for only $1, but the city loses 1.43mil in revenue minimium every year after the sale. The State picks up all renovation costs by using bonds? we have to pay those bonds back!!! Where is the money coming from for the State to pay the bonds….the rent. So the State is giving some ultra wealthy new owner a low interest renovation and a property tax free building. because the ultra wealthy struggle to make mortgage payments and property tax payments.

The State gets nothing beneficial from this deal! Make the ultra wealthy new owner pay for the repairs and tax just like the rest of us. For that matter lets pass some low interest bonds to help people facing forclosure.

- Doug Dobmeyer - Thursday, Jan 3, 08 @ 9:39 am:
A common thread among sports teams in the U.S. is to get the public to foot the bill for an arena. The teams then enjoy a deal that allows them to have a cheaper rate, with no long term risk and when they say they need a new arena, most cities do so again at the oublic’s expense and risk.

An example is Minneapolis that is going through it’s third incarnation of a baseball stadium in about 45 years. Nothiong waas wrong with the previous stadiums except the teams wanted a nicer place.

Wrigley exists because of nostalgia. Oh, it’s a great place to see a ballgame. But it is almost 100 years old, falling apart and no fancy skyboxes.

You can bet that if this deal goes forward, Wrigley will be gone in a few years. The Cubs will play somewhere else and over time Wrigley will be forgotten.

Maybe the Cubs will improve over time too - but I don’t recommend betting on that piece of it.

Doug Dobmeyer

- Bill - Thursday, Jan 3, 08 @ 9:41 am:
Its been a while but I think that the White Sox don’t pay rent unless their attendance exceeds 2 million. Shouldn’t the Flubs get the same deal? Maybe they should move the world’s largest Gay Kareoke Bar a little further south to Springfield. The Governor might stay at the mansion a little more during the summer. The Wrigleyville diehards could then just enjoy their Miller lites in a traditional watering hole without the distraction of a game(sic) going on.

- blagoman - Thursday, Jan 3, 08 @ 9:51 am:
Would it be better for the state to build the Cubs a new ball park. A new ball park could bring them luck and a championship?

- If It Walks Like a Duck... - Thursday, Jan 3, 08 @ 10:05 am:
Whom in their right mind would enjoin into a deal with a facility that caused the “Curse of the Billy Goat?”

Also, Zell didn’t make his billions by his good looks.

- downstate hack - Thursday, Jan 3, 08 @ 10:07 am:
Truly absurd for any State involvement in any Cubs deal. Why subsidize billionaires and then watch ticket prices explode to the point where no average fan can attend. Look at St. Louis, public subsidies for a new stadium and ticket prices up thirty percent.

- Lee - Thursday, Jan 3, 08 @ 10:19 am:
Doug — The “nostalgia” and “100 years old” bits are a bit of an oversimplification. People flock to Wrigley as much for the neighborhood as for the stadium. You can verify this by going to the neighborhood when the Cubs have an away game — people still come to Wrigley just to sit in neighborhood bars across the street from the stadium, even though nobody’s playing baseball inside. On game days, neighborhood restaurants and bars are packed to the extent that many local residents learn the Cubs schedule so they can avoid the crowds. Compare this to the White Sox stadium — surrounded by fields of asphalt. People don’t stick around there — they get in their cars and go home. There’s more to the baseball game experience than just a fancy new stadium with skyboxes. That’s why Wrigley consistently has higher attendance than the Sox. If the Cubs make a move to another placeless stadium like the Sox, you can bet their attendance will take a dive.

- jerry 101 - Thursday, Jan 3, 08 @ 11:06 am:
tif districts for the cubs?

because the first thing I think when I get to wrigleyville is god darn, this place is such a ghetto. All these empty storefronts, and vacant lots. What a hellhole.

- Six Degrees of Separation - Thursday, Jan 3, 08 @ 11:20 am:
Jerry 101

Wrigleyville is far more blighted than some of the places that have been declared TIF districts. Like the farm fields in the Western outer burbs that are “blighted” because they lack side streets, water mains and sewers.

- plutocrat03 - Thursday, Jan 3, 08 @ 11:25 am:
Speaking of dim, how smart can a politician be to buy this ‘deal’ from the dealmakers. Does precedence justify another bad deal for tax payers? Big Jim Thompson should be a roommate of Gov Ryan for that back room Sox deal alone. (At least there was a credible threat to move the team at that time!)

There is no shortage of bidders for the Cubs. Let’s get the pols hands off the deal and let private enterprise do it’s thing. The price the Cubbies will bring the Tribune Corporation is what it is.

Meddling in the deal is the worst form welfare for the rich.

- cashflowpro - Thursday, Jan 3, 08 @ 11:28 am:
if the state owns this “historic” facility, can the state use its powers of condemnation to aquire land for parking, a new ballpark, and other amenities of the modern game?

- Squideshi - Thursday, Jan 3, 08 @ 12:53 pm:
Are there any good studies out there which show how much of a public benefit the field actually provides?

- Yellow Dog Democrat - Thursday, Jan 3, 08 @ 1:34 pm:
The only way Sam Zell makes money on this deal is if the taxpayers lose money. Its really that simple.

Anyone who thinks the Cubs are going to move to the suburbs has their head up their arse. Move the Cubs to Schaumburg and they’ll finally get the attendance they deserve.

- Hugh - Thursday, Jan 3, 08 @ 2:15 pm:
The Cubs are not going anywhere. The PARK is the franchise, not the team. After Ald. Joe “foie gras” Moore did a TIF for Loyola he told constituents he was keeping Loyola in Rogers Park.

- Hugh - Thursday, Jan 3, 08 @ 2:44 pm:
A Better Explanation of Wrigley Sale

” … Zell, a longtime Daley supporter … ”

-Sun-Times

Samuel Zell Revokable Trust
Two North Riverside Plaza
Chicago, IL 60606
Occupation: Chairman
Employer: Equity Group Investments

$100,000.00 11/21/2006 to Richard M Daley Campaign Committee

Zell, Samuel
Two North Riverside Plaza
Suite 600
Chicago, IL 60606
Occupation: Chairman
Employer: Equity Group Investments

$10,000.00 2/21/2003 to Richard M Daley Campaign Committee

$5,000.00 6/11/2002 to Richard M Daley Campaign Committee

any other questions?

- Hugh - Thursday, Jan 3, 08 @ 2:46 pm:
“I have an open mind” the mayor said.

- Hugh - Thursday, Jan 3, 08 @ 3:04 pm:
“The State picks up all renovation costs by using bonds? we have to pay those bonds back!!! Where is the money coming from for the State to pay the bonds … ”

Equity Group Investments LLC
Two North Riverside Plaza
Chicago, IL 60606

To: Democratic Party of Illinois
Michael J Madigan, Chairman
Michael J Kasper, Treasurer

$4,000.00 9/30/2006
$4,000.00 9/16/2005
$4,000.00 9/15/2004
$4,000.00 9/25/2003
$4,000.00 10/4/2002
$4,000.00 8/23/2001
$4,000.00 9/18/2000

like clockwork

- Wumpus - Thursday, Jan 3, 08 @ 3:04 pm:
BIll-”Worlds largest gay karaoke bar? LOL!

Tear it down.

- Hugh - Thursday, Jan 3, 08 @ 3:07 pm:
Rich, i think the $100K might be the huge upfront you’re looking for.

- VanillaMan - Thursday, Jan 3, 08 @ 3:47 pm:
What I would tell Zell, Thompson and Blagojevich is this:

When the Cubs win the World’s Series, we’ll talk!

- Truthful James - Thursday, Jan 3, 08 @ 4:31 pm:
Tif Revenues come from the tax rates being charged against the increase in EAV after a frozen base year. So if Wiggily Field’s valuation drops to zero that is the time to freeze.

But the kicker here is that if the valuation stays zero there never is any incremental revenue coming from the largest (former) taxpayer in the would be District.

Two solutions.

1. amend and extend the existing District to envelop Wrigleyville. Also get the legislature to change the TIF from 23 (the standard term) to 35 years. creating an incremental revenue flow to immdiately pay for the reconstruction. And refund the existing TIF Bonds to combine the old bonds which were sold to pay the costs for the old District with the new cash proceeds for rehab. That way the underwriters, advisors and attorneys make the most moolah — their fees being tied onto the size of the issue.

The second way would be to put Wiggily back on the tax rolls in the year after the valuation was frozen at zero — making all taxes collected incremental taxes to be diverted from the the general tax revenues. In essence, the property taxes pay for the rehab and all those luscious fees.

Neat-o, eh, bruddah.

Either way the City. the schools and everybody on the tax bill will collect what they need to make the budget but the taxpayers must pay higher bills to account for the incremental revenues.

And — Bill — when the South side Reinsdorfs did not make the base attendance nut, from where did the make-up for the zero lease revenues come from to pay the Bonds?

- Hugh - Friday, Jan 4, 08 @ 11:33 am:
What I would Tell Daley to Tell Zell

Thanks for underwriting my re-election, but how about opening up that checkbook again and bailing out the CTA, the schools, and the parks, then we’ll talk about Wrigley.

- Hugh - Friday, Jan 4, 08 @ 12:22 pm:
“Tif Revenues come from the tax rates being charged against the increase in EAV after a frozen base year.”

good mumbo-jumbo!

TIF revenues are property tax revenues. TIF revenues come from the same place all property tax revenues come from - from property tax payers.

- Hugh - Friday, Jan 4, 08 @ 12:27 pm:
“Two solutions. 1. amend and extend the existing District to envelop Wrigleyville….”

the nearest TIF to Wrigley is over a mile away at Irving & Ravenswood. Extending it or another TIF district or creating a new TIF district to include Wrigley would involve snaking through some of the hottest boomtowns neighborhoods in Chicago in terms of appreciation in recent years. It might be beyond even the prodigious numbers-juggling abilities of Daley’s stable of TIF consultants.

- Truthful James - Friday, Jan 4, 08 @ 1:31 pm:
Hugh —

Re mumbo jumbo — I believe I covered that later when I said that the taxing bodies would have to find additional money and the taxpayers would have to pay higher bills.

Incidently, given the 7% solution on residential. property it is the commercial taxpayers who will take it hardest.

I understand exactly that in your second comment. Thanks for emphasizing it. I did not mean to be clever or obtuse. It will burden a lot of taxpayers getting no benefit. The politically connected underwriters and attorneys will be happy, though.

Pingback Cubscast.com · Soft-Sell or Buy: Tribune Co. Wrestles Cubs, Wrigley from Evil Grip of Suburbs - Monday, Jan 21, 08 @ 2:39 pm:
[…] Selling the stadium, as Jeff Gordon calls it, to the ISFA is only a way for Sam Zell to get a bigger bang for his buck, one way or another. […]

Pingback Why Does Jim Thompson Care? at A Chicago Blog - Thursday, May 1, 08 @ 11:16 am:
[…] There’s good background on the financial benefits of the deal at CapitolFax. […]

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