OCTOBER 27, 2011 5:17PM
Bad Sports: Giving Taxpayer Wealth to the Already Wealthy
There is an interesting sports story in the Chicago Tribune today. As it turns out, Illinois taxpayers have been soaked to the tune of $3.2 million to build a restaurant for the benefit of the Chicago White Sox. An additional $3.7 million in taxpayer money was used to makes upgrades to infrastructure to make the restaurant, Bacardi at the Park, possible. The deal stipulates that the White Sox will keep all profits from the restaurant, which is available to people both inside and outside the stadium. The 10,000 square foot restaurant boats dozens of flat screen televisions, a beer garden and a private patio.
In April, 2010, the IRS granted former owner of the Indianapolis Hollywood Bar & Filmworks, Ted Bulthaup, a substantial refund on payroll taxes he had paid when they decided that the opening of the nearby Conseco Fieldhouse, home of the Indiana Pacers, had constituted a “catastrophic event” for Mr. Bulthaup’s business due to the increase in parking rates in Downtown Indianapolis.
In October, 2010, Indianapolis passed a 2011 budget described as “lean.” The budget was $25 million less than the previous year’s budget and called for a 3% cut in all departments except for “public safety.” Contained in this “lean” budget was $73 for an entity known as the “Capital Improvement Board,” first created in 1965 to manage the construction and operation of the Indiana Convention Center. The Capital Improvement Board expanded its purpose to the Hoosier Dome, later renamed the RCA Dome at around the same time RCA was moving manufacturing jobs from Indiana to Mexico. Of this $73 million, $10 million dollars each year for the next three years will go towards subsidizing operating costs for Conseco Fieldhouse and the Pacer’s owner, billionaire real estate mogul, Herb Simon. Another bundle of taxpayer dollars, between $3.5 and $3.7 million, has been pledged for “capital improvements” to Conseco Fieldhouse.
The month before, in September, 2010, Indianapolis transferred $8 million in taxpayer dollars to the CIB for promotional efforts. The CIB is funded by a 10% tax on hotel rooms, car rentals and ticket sales, as well as a food and beverage tax on restaurants in Marion and seven surrounding counties thus taking food out of the mouths of average citizens to further gorge the ultra rich in the same year that the Indianapolis Public Schools had to cut $26 million from their budget.
In 1984 the Colts moved to Indianapolis from Baltimore like thieves in the night. Literally. The Colts showed up in a convoy of Mayflower vans after Baltimore refused to build them a new stadium and Indianapolis threw open the gates of the brand new, $477 million Hoosier Dome. By 2002 the Colts were once again rustling their sabers and threatening to leave for greener pastures if Indianapolis did not build then a newer and better stadium.
Proving how green they are, officials in Indianapolis and the State of Indiana agreed to fork over $620 million to construct a new stadium. The Colts ponied up $100 million that they raised by selling the “naming rights” to the old Hoosier Dome to Lucas Oil for $120 million thus becoming, in a slap in the face to the people who actually built the place, Lucus Oil Stadium. Taxpayers also paid $48 million for the Colts to break their lease with the RCA Dome which, when demolished, taxpayers found they still owed $70 million on as the CIB had diverted money that was supposed to pay off the original construction to other purposes.
Lucas Oil Stadium opened in August, 2008. By 2009 it announced that it needed a taxpayer funded bailout and the city of Indianapolis raised taxes and took out a $27 million loan from the State of Indiana. The CIB pays an estimated $27.7 in operating expenses for Lucas Oil Stadium, or about 36% of the CIB’s budget. The Colts gained around an additional $41 million in revenue when they moved into Lucas Oil Field with luxury boxes and club seats alone bringing in an additional $25 million. In addition, the Colts keep all stadium revenue generated on game days and half the revenue generated by any other event held at Lucas Oil Stadium while merchandising brings in another $20 million. When asked if the Colts would be willing to kick in an additional $5 million, owner Jim Irsay, a billionaire drug addict, refused, stating, “A deal’s a deal.”
Despite all the trumpeting of professional sports franchises being an economic boon to a community, a recent study commissioned by the CIB found that home games generated just $175,300 annually for the city through food and beverage taxes. A study commissioned by the Indianapolis Bond Bank refutes this figure and states that the city would lose $18 million in tax revenue if the Pacers were to leave Indianapolis and that the Pacers and the WNBA’s Indiana Fever generate an additional $55 million a year to the Indianapolis economy. Reputable studies have found that stadiums and arenas have a “statistically negative impact on the retail and services sectors of the local economy, including an average net loss of 1,924 jobs.”
Back in Chicago, former Governor Jim Thompson, who was Chairman of the Board of the Illinois Sports Facilities Authority at the time the restaurant deal was approved, claimed to have spoken with the multi-millionaire co-owner of the White Sox, Jerry Reinsdorf, “We said to Jerry, ‘Jerry, can we have part of the profits?’ and he said no.”
“I’ve known Jerry for 52 years,” stated Thompson, the former chairman and CEO of Chicago’s legal powerhouse firm, Winston & Strawn, “He’s tough.”
The Chicago White Sox, whose other co-owner is multi-millionaire Eddie Einhorn, who made his fortune broadcasting college basketball games from his TVS Television Network, already gets a sweet deal from Chicago. The $167 million cost to construct U.S. Cellular Field, which took the place of the old Comiskey Park after U. S. Cellular paid $68 million for the naming rights, was covered through a 2% tax on Chicago hotel rooms. The Sox pay the Illinois Sports Facilities Authority $1.5 million a year in rent and the Sox keep all profits from tickets, concessions, parking and merchandise. The Sox also pay the ISFA approximately $1.2 million for maintenance, a figure arrived at partly through attendance numbers.
Former Governor Thompson argues that Chicago is being compensated by the tax revenues generated by people who eat at Bacardi at the Park, which currently operates only during baseball season, but the restaurant, along with an expanded merchandising store set to open in the Spring of 2012, are exempt from property taxes because they operate on land owned by the Illinois Sports Facilities Authority. No word, as of yet, on how much Bacardi paid for the naming rights to the restaurant.