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.

3 Responses

  1. Ben,
    Do you think that toyota Park is unique in the particular problem? For example, do you think Rio Tinto and PPL Park will face this problem? PPL might be a little different in that there is some significant industry in Chester, PA to support the tax base.

    Also, it would be interesting to hear your thoughts on the topic of tax payer supported stadium deals in general.

    As a DC United fan, I have often wondered why DC United’s ownership feels that they should go through the City Council to get funding. If they have the means, just buy the land and build the stadium, there are lots of places to put it and frankly it needs to be done. I think DC United could operate in the black if it were not for the RFK rental.

  2. Good question Matt. I wrote about Philly a while back. In Philadelphia, the Inquirer is asking slightly different questions. Chester, PA is the home to shiny PPL Park and offers fans of the Union a fantastic river-side venue to watch their team. Yet the marriage between club and city is not worry free. In its look at the status of PPL Park in year three, the Inquirer notes that Chester residents have yet to see the benefits of the new stadium. The City remains a dangerous place and the occasional soccer matches do little to improve security in the area. The stadium was intended to be part of a $500 million development which hasn’t come to fruition. Now the City is considering levying a tax against events at the stadium and the Union fret that the financial burden will be crushing.

    I think most experts agree that there is little economic value in stadiums for most communities. Other areas of value are more difficult to value. For those who have jobs at the stadium it means something, sane for cops earning extra time, parking lots, etc…

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