The Chicago Bears New Downtown Stadium Is Nowhere Close To A Done Deal
The Chicago Bears are asking for one of the most generous stadium financing deals ever. But is it really just a negotiating tactic to get what they want in the suburbs?
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Last month, Chicago Mayor Brandon Johnson held a joint press conference with the Chicago Bears leadership team, including President and CEO Kevin Warren. The 90-minute presentation unveiled an ambitious plan to knock down the NFL’s oldest stadium, Soldier Field, and replace it with a $4.7 billion, state-of-the-art facility.
The 70,000-seat lakefront stadium would have a translucent dome, similar to SoFi Stadium and Allegiant Stadium. It would allow the city to host major events like the Super Bowl, Final Four, and big concerts. And Bears President Kevin Warren even talked about how the 14 acres of youth athletic fields would be “critical for those from underserved neighborhoods who may not have these areas in their backyards.”
Objectively speaking, it’s a beautiful project. The Bears would instantly go from having one of the league’s oldest and worst stadiums to one of the newest and nicest.
It seems to make sense for the city, too. The Chicago Bears say they will use a combination of debt and equity to fund 72% of the stadium’s construction cost, calling it “one of the largest private investments into an NFL stadium in NFL history.”
The Bears also say that the new stadium project would create 43,000 construction jobs, have an economic impact of $8 billion, and generate billions more in tax revenue.
The only problem? Several comments in the press conference were misleading, and it’s unlikely this stadium project will get finalized, at least not in its current form.
For starters, the Chicago Bears aren’t offering to fund 72% of the project. They are offering to fund 72% of the stadium, with the difference being that the infrastructure outside the stadium would cost the city an additional $1.5 billion (on top of the $900 million in public money that the Bears are asking for in stadium construction costs).
But that’s not all. When you add in the cost to retire existing debt, interest on the new 40-year bonds, and the previous $1 billion that was already spent on stadium renovations for Soldier Field and the White Sox’s Guaranteed Rate Field, the actual cost of the project grows from $4.7 billion to nearly $7 billion.
The Bears say that issuing new debt won’t be a problem because it would be funded by simply extending the existing 2% hotel tax, rather than having taxpayers front the bill. However, the problem is that when hotel tax revenue fails to grow at 5.5% per year, Chicago taxpayers are required to make up the difference, which has happened twice in the last three years and most recently required a $27.3 million payment in 2022.
To make matters worse, the Chicago Bears also want to fundamentally change how the venue’s revenue is shared. For example, rather than paying the city seven figures in rent each year, like they do today, the Bears have reportedly put together a proposal that would award them revenue from non-NFL events, too, like a Taylor Swift concert.
Still, perhaps the weirdest part of this announcement is that Chicago’s progressive Democratic mayor, Brandon Johnson, is not only on board with this project but is actively pushing for it to happen. Johnson was backed in the election by the Chicago Teachers Union, a very liberal and progressive organization. He opposed the use of public funds for a private stadium while campaigning but has now switched sides.
Everyone has their own theory on why Johnson is pushing the project, but it’s really not his call. Any state funding must be approved by the state, and Illinois Governor JB Pritzker has already issued a statement calling the current proposal a “non-starter.”
Illinois House Speaker Chris Welch (D-Chicago) also told the press, "If we were to put this issue on the board for a vote right now it would fail miserably." President of the Illinois Senate Don Harmon says “There’s next to no appetite to fund a new stadium with taxpayer dollars.” And 32nd Ward Alderman Scott Waguespack of Chicago even publicly questioned Mayor Brandon Johnson’s motives, saying, “I think [Mayor Johnson] needs to work on behalf of the taxpayers and not on behalf of the Bears.”
The other red flag is that the Chicago Bears haven’t even met directly with Governor JB Pritzker. They have met with his team, sure. But Pritzker wasn’t in attendance for the meeting and later released the statement saying it was a non-starter, which seems like a problem considering an extension of the 2% hotel tax requires his approval.
So what will happen next? Well, it’s not clear. Chicago certainly wouldn’t be the first city to allow a professional sports team to privatize profit after socializing costs.
However, I like to think taxpayers (and government officials) have gotten smarter over the years, as it’s not a coincidence that three of the last four public subsidy votes — New Mexico United, the Arizona Coyotes, and the Kansas City Chiefs/Royals — have failed.
Chicago’s mayor is incentivized to keep the team within his district. But this feels more like a vanity project just so he can say the Bears didn’t leave downtown on his watch, as Johnson’s 21% approval rating indicates he’ll be a one-term mayor.
Chicago is also the country’s third-largest TV market, so any talk of the Bears relocating to a different state (that pays for a new stadium) is just an empty threat.
Instead, the more likely scenario, which I mentioned in March, is that the Chicago Bears and Kevin Warren are using this deal as leverage against Arlington Heights.
The Bears have already paid nearly $200 million for a 326-acre plot of land in Arlington Heights, a suburb 25 miles northwest of the city. The new stadium would have thousands of additional parking spaces and less traffic, and the Bears could even build their own mixed-use development, potentially capitalizing on the NFL’s upcoming rule to allow private equity investments to make even more money.
This isn’t just speculation, either. When the Bears initially announced that they were moving forward with a downtown stadium last month, Arlington Heights released a statement saying they had spoken with the team and received assurances that the Bears’ interest in building a new stadium in Arlington Heights had not changed.
The only problem with this option is that the Bears have been negotiating with Arlington Heights for months on property taxes. The TLDR is that the Bears think the land should be valued at $60 million for tax purposes, while Arlington Heights says it should be valued at $125 million — a $65 million difference in opinion.
The Bears’ argument is that the Arlington Heights property is not operational or commercially viable in its current state, and the property taxes should reflect that.
Regardless, this is the way professional sports is headed. Teams like the Atlanta Braves, Dallas Cowboys, and Milwaukee Bucks make tens of millions of dollars annually of their mixed-use development projects. This money isn’t subject to revenue-sharing agreements in the league’s collective bargaining agreements (CBA), meaning it provides an even bigger multiple to the team’s bottom line (and valuation).
So, the question is simple: Does it seem more likely that the state of Illinois will hand the Bears billions of dollars in free money, foot the ongoing bill for infrastructure upgrades and maintenance, and allow them to privatize all the venue’s profit? Or, are the Bears using the mayor’s desperation to their advantage, leveraging the downtown deal to negotiate a better (and more lucrative agreement) in Arlington Heights?
I don’t know about you, but the latter makes more sense to me. Chicago Bears President Kevin Warren has built a reputation as a shrewd negotiator, playing a central role in the construction of U.S. Bank Stadium as Minnesota Vikings COO and the expansion of the Big Ten Conference as the league’s former commissioner.
This deal is right up Warren’s alley and precisely why he was hired in the first place.
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