Corporate welfare -- brass tacks

Sam Zell and John Canning's little scam of the state of Illinois actually made it's way into the national media today. The Washington Post ran an article today about the potential sale of Wrigley Field to the state of Illinois. Here is a link to that article. There is very little new in the article. Some bullshit from ISFA spokesman Doug Scofield is laughable though:

"Potentially, the benefits of public ownership are an ironclad guarantee of keeping Wrigley as the Cubs' home, which is good for the state and the city," Scofield said.

LMAO. Where are the Cubs going people? Anyways.

The best comment in the whole story comes from the author Kari Lyderson:

The arrangement would probably raise the Cubs' asking price significantly. That is because the buyer would not be stuck with the field renovation, which is expected to cost hundreds of millions of dollars.

That my friends is the brass tacks of this whole thing. Zell will sell the Cubs at a premium if this deal goes through. That is why this deal is so important to Zell, Canning and the politicians that want their money and support.

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Corporate Welfare is little series for the crappy/unpopular. If you wanna see the past rants on this proposed idea and why it is bad for the taxpayers, here they are:

Corporate welfare -- December 21, 2007
Corporate welfare (continued) -- December 23, 2007
Corporate welfare -- Daley changes his tune -- January 3, 2008

Corporate welfare -- Ald. Tunney's two cents -- January 4, 2008

Corporate welfare -- Ald. Tunney's two cents

This is becoming the little story that won't go away. Yesterday it became clear that Mayor Daley was on board with the state of Illinois buying Wrigley Field. Apparently somebody got to Daley over the holidays, and he changed his mind. Well that person forgot to talk to 44th ward Alderman Tom Tunney. Now Tunney has chimed in with his displeasure:

"The key is why [government would] get involved in Wrigley if there are private people willing to step up to the plate," he said.

That is a great question and one this blog has been asking for days. The answer is real simple the reason the state gets involved is so Sam Zell and the Tribune can pocket a premium for the Cubs, John Canning and his group (or another new ownership group) get the benefits of a new stadium and the revenues that come with it.

Tunney has been closer to the Cubs than any politician since he inherited the ward from Bernie Hansen back in 2002. He has worked well with the Cubs, negotiating deals that would be good for both the Cubs and the neighborhood. Since Tunney took office the Cubs have added seats, added nightgames, expanded the bleachers. Tunney has worked well with this team and the Tribune. He realizes that the Cubs don't always follow up on their end of the bargains on these deals (remember the corner building that was part of the bleacher expansion project?). So he brings up several factors related to the neighborhood:

Beyond that, the alderman said he is concerned that Wrigley issues settled in recent years after lengthy and sometimes painful negotiations could resurface. They include the park's landmark status, a limit on the number of night games and a plan approved by the city calling for construction of a five-story building containing a garage and commercial space on land just west of the park.

A real estate developer has assembled property for a proposed project that would include a hotel near the park at Clark and Addison Streets, and a Cubs official commented in passing that if a development of that size were permitted, "why not do [a hotel] as part of the ballpark" and redesign the already-approved Cubs commercial project, Tunney said.

"Everyone is thinking out loud," he said, adding that he is concerned about preserving the character of the neighborhood and the quality of life of local residents.

Anyone who has read this blog for some time knows that I have not always supported the neighborhood wackos who try to hold up the Cubs on any of the projects they plan to improve Wrigley Field. Again, I am not against the new owner rebuilding the grandstand. I just don't want to see it done on state funds.

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Corporate Welfare is little series for the crappy/unpopular. If you wanna see the past rants on this proposed idea and why it is bad for the taxpayers, here they are:

Corporate Welfare -- December 21, 2007
Corporate Welfare (continued) -- December 23, 2007
Corporate welfare -- Daley changes his tune -- January 3, 2008

Corporate welfare -- Daley changes his tune

Apparently over the holidays hizhonor changed his mind. That's all that I can figure. Or maybe, just maybe Sam Zell, John Canning, Andy McKenna and all of the billionaires that will benefit from the rebuilding of Wrigley Field on the taxpayers dime got to Mayor Daley. So not even a month after saying this:

“We can’t even get any money for the CTA and they’re worried about the Chicago Cubs? They’ve made money every year. It’s very profitable and some way, we’re supposed to bail them out? I’ve never heard [of that] . . . I don’t think they’re leaving. They just increased the price of tickets,” Daley said.

“We have a crisis at the CTA right now. It’s hard to believe . . . that people are now talking about taxpayers helping out the Cubs. The Cubs are not gonna move. It’s a gold mine. . . . If you’re gonna start holding this issue over the heads of passengers of the CTA and this crisis we’re in and they want to start talking about whether or not taxpayers are gonna buy [Wrigley Field] — that’s hard to believe.”

The mayor has changed his tune. He is now 'open-minded' to the deal that will allow Zell and a potential new owner of the franchise to benefit from the state buying Wrigley Field. In today's Bright One reporter Fran Spielman reported on Daley's change of mind. Think some of this has to do with the fact that Zell is a supporter of Daley?

"I have an open mind. . . . I always have an open mind on an issue. And why not? You should have it," the mayor said.

Daley was cagey when pressed to explain his change of heart about the deal being pushed by new Tribune Co. CEO Sam Zell, a longtime Daley supporter.

"Well, I think they realize it's much more complicated . . . and that's very, very important. We have a crisis at the CTA, and we have to get that crisis over with for both the CTA and Metra for long-term funding. That is the priority we should have," he said.

But, if that's solved?

"Well, we'll see," Daley said.

That change of opinion didn't take long. Never underestimate a politicians ability to help out those who can help him maintain his clout.

Crane Kenney (how long is this guy gonna be part of Zell's Tribune?) is happy the Mayor has changed his tune:

Crane Kenney, the Tribune Co. senior vice president who oversees the Cubs, said company officials "appreciate" the mayor's about-face.

"Our goal from both the Tribune and the Cubs end is to do a transaction which preserves the field, ensures the team stays in Chicago and is an appropriate transaction for our employees who are now shareholders of the Tribune. If we can accomplish all three of those things, it would be a wonderful thing," Kenney said.

Crane, the goal of this transaction is to make the most money possible period. Stop with the rest of the bullshit please. Man, I think I liked it better when you were the man behind the curtain.

So we go from Daley and Crane to an unnamed source who seems to give alot of info, including the fact that no tax dollars will be used in the deal. The money will come from revenues generated by Wrigley Field:

"They now understand what it is that's been proposed. There's a lot of positives here for the city and state," said a source familiar with the deal.

"You get a 93-year-old landmark restored, the Cubs to agree to play on a long-term basis with terms determined before the sale of the team. The land and the stadium are almost entirely owned by the public. And money to renovate the stadium comes out of revenues generated within the building itself. No restaurant tax. No hotel tax. No property tax being diverted."

The old phrase used to be "If you believe that, I've got a bridge to sell you" apparently now it's not a bridge but a stadium, in this case a 93 year old decaying ballpark. As this plan actually begins to get a head of steam the truth is there is no such thing as a free lunch, one way or another Illinois taxpayers will foot the bill.

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Corporate Welfare has become a little series for the crappy/unpopular. If you wanna see the past rants on this proposed idea and why it is bad for the taxpayers, here they are:

Corporate Welfare -- December 21, 2007
Corporate Welfare (continued) -- December 23, 2007

Corporate welfare

Last week it was revealed that the State of Illinois (which cannot figure out how to tie it's own shoes) was considering the idea of buying Wrigley Field. Of course, it was said that no tax money would be used, yada, yada, yada... When politicians say things like this, I wait for the other shoe to drop and the real story to come out. I think alot of the story came out earlier this week in Fran Spielman's Sun-Times report from City Hall:

The 1 percent tax on downtown restaurant meals that helped expand McCormick Place could move north to the area surrounding Wrigley Field to finance either renovation of the landmark stadium or improvements in the neighborhood, officials said Monday.

In the article the Cubs current caretaker Crane Kenney says:

"The city and state could say, 'Let's leave Wrigley Field as is.' But to the extent they do want to make improvements -- and we believe there's a real need for that -- they have talked about a variety of ways, including extending the food and beverage tax to include the Wrigley Field area. Those monies would go to support bonds issued for renovation," he said.

He also states that this is just one of several ideas for the old ballpark. Making me suspicious that this is simply leverage.

But Kenney stressed that having the authority that built U.S. Cellular Field acquire and renovate Wrigley was just "one of eight transactions" the Tribune Co. was reviewing. The other seven involve "private transactions" involving groups that would purchase the stadium and lease it back to the Cubs.

"It's an idea more than anything else. It may go nowhere. We're not even in the bottom of the first inning," Kenney said.

I suggested a week ago that this was a leverage move by Sam Zell so he can get a premium for the team and ballpark. I still believe some of that. I think most owners would want control of the historic ballpark. Apparently I am wrong on John Canning and his group. This from Michael Sneed's column last week:

Tipsville II . . .
Hmmm. Here's a little dugout dirt.

• • To wit: Sneed hears rumbles the John Canning group, which is vying to buy the Chicago Cubs and includes Tribune insiders like Andy McKenna, were well briefed about the possible sale of Wrigley Field to the state -- and may have been trying to push it along because it would benefit them as possible future owners of the Cubs.

• • Isn't it true other groups vying for the Cubs had to wait to hear about it in the News? Questions. Questions.

When you start to connect the dots it looks like this is just another form of the corporate welfare system that baseball owners have benefited from over the past 20 years in town after town. Yeah the team is owned by billionaires and the players are millionaires, but the taxpayers should pay for the stadium. LMAO. Makes perfect sense.

Yesterday Sam Zell fresh off his pulling off the Tribune Deal stated this about the sale of Wrigley Field to the state of Illinois:

"We believe that transaction, when completely vetted, is very beneficial for the city of Chicago, is very beneficial for the Cubs, and for the future of a Major League Baseball team in this city," Zell said. "[Illinois Gov. Rod Blagojevich] originally approached us on this. We studied it; we thought it was an interesting concept. We started meeting with [Chicago Mayor Richard Daley's] people on it. We'll see where that goes."

In the best interest of the city? WTF. Yeah, this deal is in the best interest of Sam Zell and the next ownership group. Think about this, Sam Zell buys the Tribune. His first order of business is selling the Cubs. Playing in a decaying ballpark this club is not worth nearly as much as if they were playing in a brand new remodeled Wrigley Field.

Enter Cub fan and dumbass Governor Rod Blagojevich. Blago it seems has more interest in the Cubs than he does in his current job and his responsibilities to the taxpayers of Illinois. Blago proposes that the state finance a "$350 million" (wink, wink. you can't get a stop light at Clark and Waveland for under $half a million. How are you gonna rebuild the grandstand for $350 mill?). So once Blago proposes this, you can't blame Zell for being interested. Suddenly he could sell the Cubs at a premium because he has a ballpark renovation in place that will be financed by the state. You can't fault Canning and McKenna because they won't have to pay for the new stadium. You CAN fault any politician in Springfield that thinks this is a good idea.

Study after study has shown that publicly financed stadiums do not benefit the taxpayers. Back in 2003 the DC Fiscal Policy Institute released this study as their Mayor tried to attract an MLB team to the District of Columbia:

Publicly financed stadiums do not pay for themselves. A study of 25 stadiums built between 1978 and 1992 found that none of them generated a net increase in tax revenue for the host city. Even Baltimore’s Camden Yards, which is considered a highly successful stadium, is a net loser for the state.

As a matter of fact according to the 2003 book Public Dollars, Private Stadiums: The Battle over Building Sports Stadiums it has become accepted that stadiums provide little economic benefit to the communities they serve:

Nevertheless, there has lately been a noticeable shift away from economic promises and toward promises of social benefits. We believe this is not just random but reflects conscious strategic decisions by stadium proponents in each city. Proponents have realized that the path to publicly financed stadiums will be less problematic if they downplay the tangible economic benefits and accentuate the intangible social goods that might accompany stadiums. But like the existence and strength of local growth coalitions just discussed, these decisions are largely patterned by the unique structural landscape of each city. Stadium advocates certainly have some discretion about which strategies to employ, but certain cities lend themselves to making certain arguments about why it is in the community's best interest to build new sports stadiums with public dollars.

Contrary to what the owners will tell you, these billionaires can actually fund their own ballparks. In September 2006 a blog by U of I College of Law students published this:

A study done just two years ago contends that sports franchises can build their own stadiums without public subsidizes. [17]. The study reported that teams could recover half the construction costs within five years, and the entire cost within twelve years. [18]. Furthermore, within twenty years, a franchise’s revenues from the stadium could exceed construction costs by $100 million and $200 million in thirty years. [19]. Under this scenario, not only does the team get its new stadium, but the team has a continuous revenue stream that does not subject taxpayers to the burden of covering the stadium’s costs. Thus, if sports stadiums are really supposed to provide a boost to the economy, then they should do it without first imposing costs upon the community.

So what is going on here is Zell and Canning are using the state for their own welfare. While I am in full agreement that the Wrigley Field grandstand needs to be rebuilt, I cannot in any way shape or form say that it would be alright for the state of Illinois to foot the bill. Rebuilding the grandstand should be the responsibility of the new owner. They can finance it however they want. Sell the naming rights, advertising, or $15 beers in the bleachers. Whatever. Just not with taxpayer dollars.

I am not always on the same page as Hizhonor. But for his part, I have to give Mayor Daley some credit for his take on the whole idea:

“We can’t even get any money for the CTA and they’re worried about the Chicago Cubs? They’ve made money every year. It’s very profitable and some way, we’re supposed to bail them out? I’ve never heard [of that] . . . I don’t think they’re leaving. They just increased the price of tickets,” Daley said.

“We have a crisis at the CTA right now. It’s hard to believe . . . that people are now talking about taxpayers helping out the Cubs. The Cubs are not gonna move. It’s a gold mine. . . . If you’re gonna start holding this issue over the heads of passengers of the CTA and this crisis we’re in and they want to start talking about whether or not taxpayers are gonna buy [Wrigley Field] — that’s hard to believe.

Ahhhh, has there ever been a more sensible yet corrupt politician than Daley? For all of his faults when he says things like that, it's hard not to agree.

Back to the Zell/Canning/Blago plan. The plan behind the whole idea is that the state will take over Wrigley Field for $1 and be responsible for the upgrades including a new grandstand. Because you can count on the state of Illinois to do things right! Take a look at the crumbling CTA system.

Remember 'no tax dollars will be used'. Former Governor Jim Thompson who heads up the stadium authority tells us that's the plan, for now:

The former governor 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.

Spoken like a true politician: "For the moment".

Maybe Blago's wife can get her hand into the cookie jar. At this point nothing would surprise me.

Tribune Report: State could buy Wrigley Fd.

More news on the upcoming Cubs sale in this mornings news. The $1 billion mark continues to be floated. This from Bloomberg:

The sale may fetch more than $1 billion, according to John Puchalla, an analyst at Moody's Investors Service. Tribune reiterated today its going-private buyout will close by year-end, in a deal that will leave it with about $12 billion in debt.

You have to hand it to Sam Zell. The scare tactic that he might sell Wrigley Field seperately from the Cubs might work to get a premium on both. According to this mornings Chicago Tribune the state of Illinois is discussing buying the historic ballpark.

City and state officials have had discussions with Cubs executives about possibly selling historic Wrigley Field to a state government entity that currently owns and operates the White Sox's home, U.S. Cellular Field, sources close to the Cubs told the Tribune.

The talks with state and city officials centered on selling the 93-year-old facility to the Illinois Sports Facilities Authority, the government unit the Illinois General Assembly created in 1987 for the purpose of building new Comiskey Park, now U.S. Cellular Field.

Now as an Illinois taxpayer, what I wondered how the hell would they pay for it?

It is unclear how the state and ISFA would raise funds for such a purchase, which would fetch hundreds of millions of dollars if consummated. One possible way the state could underwrite a purchase, or pay for major renovations to the ballpark that any buyer would have to fund, would be to sell naming rights to the park, according to sources with knowledge of the discussions. These sources said that even if naming rights were sold, the park likely still would retain the name Wrigley Field as well.

This all seems rather far-fetched to me. In a day where Springfield can't get a transit bill through they can buy a ballpark? What? Hmmmmmmmmm. I guess anything is possible.