Money Troubles in Chicago

chicago-fireIn Bridgeview, Illinois, Toyota Park stands as one of the early examples of MLS building stadiums outside major city limits.  Last Summer, Chicago Tribune recently provided an outstanding expose of what can go wrong with a small suburb dives into the stadium game.  Now that issue is back in the fore thanks to recent developments.  The original article suggested that tiny Bridgeview now owns the Chicago area’s largest debt burden as it struggles to pay off more than $200 million debt.   Not surprisingly, those involved blame the economy for the project’s failure to meet its goals. In what may be a “special to Chicago” twist, the article also suggests that many political figures and their cronies have benefited despite the negative impact on municipal finances.

Whatever the sport, it is axiomatic that team owners and leagues lean heavily upon municipalities to fund construction, infrastructure improvements and a myriad of other costs associated with building a new home for the local franchise.  These efforts to obtain government open often start as thinly veiled threats to leave for greener pastures, yet after a deal is struck, smiling politicians and team representatives wax about job creation, tax revenue, mixed use development and urban revitalization.    Yet, any number of economic studies reveal that sports stadiums typically fail to create the financial opportunities promised before contracts are signed and dirt is moved.

Last week, the Chicago Tribune again looked at finances of the Bridgeview/Toyota Park project.  According to the article, Bridgeview needs to borrow another $27 million in order to keep abreast of its debt obligations.  According to the Tribune, “Bridgeview taxpayers face about $227 million in general obligation debt that will cost about $420 million to pay off over the next three decades.”  The risk is that local residents will bear the burden in the form of increased taxes in order to satisfy the banks and bondholders.   The additional risk is that this type of press will sour communities against similar project and sour local residents against the team.