The [Thursday] Papers
"Chicago Mayor Rahm Emanuel will announce Thursday the city has come to an agreement with the Blackhawks for the team to build its new practice facility and community ice center on the site currently occupied by Malcolm X College, which is just south of the United Center," the Tribune reports.
Missing from the article: Is taxpayer money involved?
"The cost of the project was not immediately announced, though sources close to the mayor and [team owner Rocky] Wirtz said earlier this year that a 105,000 square-foot facility would have a cost in the neighborhood of $50 million," Danny Ecker reports for Crain's.
"Also not announced yet is the location and cost of a parking garage for the building, which Wirtz has said would be a key to moving forward with the project.
"Terms of the Blackhawks' deal with the city were not disclosed, but Wirtz has long pushed for incentives from the city in return for further development in the blighted area near the arena."
"Most notably, he has asked for a commitment from Emanuel to not raise the city's 9 percent amusement tax, which is among the highest in the nation."
Love ya, Rocky, but you should in no way be in charge of the city's tax policy.
"The announcement of the new facility also comes less than a week after Wirtz and United Center co-owner Jerry Reinsdorf released an economic impact study they commissioned to quantify what the privately financed arena has paid in taxes during its 20 years of existence and what it has done to improve its surrounding neighborhood."
I knew there had to be an ill motive behind commissioning and releasing a bullshit economic impact study.
Also, I thought I just read that the neighborhood was so blighted Wirtz wanted incentives to build his practice facility there. But the report says the neighborhood has blossomed because of the United Center. Which is it?
And, you shouldn't get points for paying your taxes. Is that something we should be grateful for?
Besides, we paid those taxes. Costs always come back to the fans.
But I'm sure the media will be totally behind this project, because it's not like poor Rocky could afford to build his damn practice rink himself. The city kind of has other financial needs right now. But great PR for Rahm - and you can bet Rocky will do everything in his power to keep the mayor in office.
"For the Blackhawks, the new facility stands to be a moneymaker through rentals to youth and other hockey leagues."
Then why do they need public money?
"The team also stands to get a financial windfall from selling naming rights to the new building. Their fellow United Center tenant, the Chicago Bulls, opened a new practice facility east of the arena last year after selling naming rights to the building to Advocate Health Care for an estimated $1 million per year."
Then why do they need public money?
Question for Rocky: Do you feel even the slightest bit of shame demanding taxpayer subsidies when our schools are eliminating sports programs - and special education teachers - to meet budgets?
Now here comes the (predictable) story telling us why we should feel sorry for the Blackhawks, from Sun-Times beat writer Mark Lazerus:
"While the Bulls spent the past season practicing at the spacious, state-of-the-art Advocate Center, enjoying two courts, state-of-the-art weight rooms and workout facilities, expansive locker rooms and top-tier training facilities - all right next door to the United Center - the Blackhawks crammed into a cramped locker room at bare-bones Johnny's IceHouse West, a mile down the road on Madison Street."
Let me tell you something, Mark: This city's kids are crammed into bare-bones schoolrooms where the only thing state-of-the-art is the bullshit coming out of the Central Office.
"Providing a facility that can support youth hockey was a key facet of the project for Hawks owner Rocky Wirtz."
More like, providing a facility that can theoretically support youth hockey was a key PR facet of the project.
"Last year, the Sun-Times reported that Wirtz was 'reluctant' to green-light a practice facility - then planned to be about 70,000 square feet on the current site of Lot E, just northeast of the United Center - unless Cook County and the city agreed not to hike the amusement tax, which was at 12 percent. Wirtz has voiced his concerns over the amusement tax several times."
But I thought the new facility was all about the community?
I'd like to link to the story from last year that Lazerus references, but it doesn't appear to exist anymore.
I did find this January article from Fran Spielman. Note the tone and framing:
Though neither the office building nor the Blackhawks' practice facility is contingent on a property tax break or on the amusement tax freeze that Wirtz floated last year, he is counting on the city to help assemble the land.
First, it appears that maybe the deal was contingent on the amusement tax freeze! I guess we'll see for sure today.
Second, Wirtz is counting on the city to help assemble the land. What does that mean? Condemning properties? Displacing people/businesses? Is it really the city's job to do that for him? And then to throw in tax subsidies as well? Let business be business and government be government! Mixing the two is the very definition of fascism, though we think of that word as simply meaning authoritarian.
Of course, these sorts of deals are so de rigueur that journalists rarely challenge their very existence - just the Potemkin details.
Back to Spielman:
After forcing the Cubs to bankroll a $375 million renovation of Wrigley Field at their own expense with an influx of outfield sign revenue, Emanuel said he was not about to extend the property tax break granted to the United Center at a time when the Bulls and Blackhawks were "pioneers" on the Near West Side.
The city forced the Cubs, an immensely profitable private corporation (belonging to a socialist organization protected by immunity from antitrust laws) owned by one of America's wealthiest families, to spend their own money renovating a property they bought with their eyes wide open. And just to be clearer, the family isn't even spending their own money on the renovation; they're spending the money of their fans, adjusted for three seasons of losing on purpose while desecrating the golden goose and baseball temple that is/was Wrigley Field by plastering ads on every last blade of grass and ruining the best vista in sports - or maybe anywhere - with a Jumbotron or two.
But no, Rahm Emanuel, our hero, was not about to extend a benefit to the owners of the Cubs that was extended to the immensely wealthy owners of the Bulls and Blackhawks because the Cubs owners were not "pioneers" in the way that the Bulls and Blackhawks were, engaging in a courageous, selfless mission of building on the Near West Side with absolutely no benefit to themselves, outside of their money machines in a moat, and what the city granted in tax breaks that it would not grant the Cubs. Because of the Cubs' owners political beliefs.
"The mayor also took a political beating for his proposal to use $55 million in tax-increment-financing (TIF) money to build a DePaul basketball arena near McCormick Place that will double as an 'event center.' The financing was subsequently rearranged to use TIF money to acquire land for a hotel."
It's all through the frame of the mayor. Poor guy took "a political beating."
"To avoid a similar controversy in the middle of a mayoral campaign, the United Center tax break will now be allowed to expire in 2016."
So it was a campaign move. Or did Spielman just make that up in a theoretically objective news story? And does that mean the tax break will reappear now that the campaign is over?
"Like Wrigley Field, we're not giving tax assistance," the mayor said. "These are good, private-sector investments. We'll make an investment in improving the Blue Line. We'll make an investment in improving Malcolm X's campus. And because of those other investments, they have the confidence to make their own investment."
That statement appears to now be inoperative. Will reporters remember?
"Emanuel didn't miss a beat when asked whether an entertainment complex wasn't better than an office building.
"Three years ago, you weren't talking about a training center. There's now a new [Bulls] training center without tax assistance. . . . There'll be other training centers," he said."
Emanuel didn't miss a beat. He also didn't answer the question. Give them the old razzle-dazzle - they'll never catch wise.
Now let's look at that economic development study (three words that should make every journalist blanch).
First, the headlines, almost all like this: Study Shows Big Economic Benefits Of United Center, Plus Impact On Near West Side.
More truthful: Bulls, Blackhawks Begin PR Campaign For Tax Breaks.
Now, the coverage:
"If you went to an event at the United Center in 2014, the average price you paid for a ticket, about $98, was only a small part of your fiscal impact on the city and state, and benefit to the Near West Side," the Sun-Times reported.
"Of the 2.6 million people who attended a Bulls or Blackhawks game, concert or other event, according to a study commissioned by United Center ownership, you also spent an average of nearly $36 on transportation and parking, $54 in restaurants or bars, $16 for lodging and $32 in other retail shopping."
You know what that tells me? Only rich people go to Bulls and Blackhawks games.
"Visitor spending is not the only benefit to Chicago, Cook County or the state of Illinois from the UC, which opened its doors in August 1994 at a privately funded cost of $175 million.
"The venue supports about 21,000 jobs per year, including the Blackhawks and Bulls, and various other events, the study shows. About 12,500 of those jobs are supported directly by the spending of visitors to events at the venue."
So? The Blackhawks and Bulls are immensely profitable organizations. You know where their revenue comes from? Overcharged fans. I don't feel the need to be grateful.
"Overall, it generates about $2 billion annually in economic activity and more than $1 billion in labor-related activity, according to the study."
I'm so tired of typing this, but every journalist ought to know a few years into their career that these kinds of estimates never hold up to scrutiny and are, in effect, simply made up.
Sadly, most reporters write up the press release without vetting the actual study. And most editors let them.
"It also paid about $35 million in state, county and city taxes (amusement, operating, sales and real estate) in 2013, a total that has risen 257 percent since the opening year, and reached over $334 million over the building's lifespan.
"The study also estimates that the economic activity created by the UC generates another $115 million a year in tax revenues."
This is supposed to impress us, but should it? You should (almost) never cite statistics without citing a standard or baseline to compare them to. In this case, we have no idea how that compares to other businesses; we're just supposed to be awed by the numbers standing alone. Further, it would be interesting to note all of the tax benefits the owners of the United Center - Reinsdorf and Wirtz - receive from the taxpayers before congratulating them on their civic largesse. To wit.
(And how much tax avoidance are they doing on their personal filings? How much revenue goes untaxed because it is shifted to other businesses, like Rocky's liquor distributorship?)
As you read through the rest of the Sun-Times account, note that there is not a single source outside of the "study." Neither Reinsdorf or Wirtz is there to answer questions; not a single economist is quoted. I can tell you that Allen Sanderson, one of the nation's leading authorities on these matters, is very accessible!
The Tribune used the report as a jumping off point to examine life on the ground around the United Center. The report, in fact, isn't even mentioned until the fifth paragraph.
"Hawks Chairman Rocky Wirtz and Bulls Chairman Jerry Reinsdorf, who together co-chair the group that operates the United Center, sent Mayor Rahm Emanuel and other city and state officials a report titled The Economic Impact of United Center, touting the arena as a job and opportunity creator. The report, compiled by accounting firm KPMG, had been in the works for more than a year, and it was released publicly to coincide with Wirtz's appearance before the Chicago Tribune Editorial Board."
I doubt it takes more than a year for a crack firm like KPMG to put together a report like this. More like it was released publicly to coincide with Wirtz's appearance before the Chicago Tribune Editorial Board.
Even that isn't entirely accurate. It's not so much that the report was released to coincide with an editorial board appearance - typical Tribune self-importance - but that the report and the editorial board appearance (which apparently you can get just by asking for one, if you're one of the city's chosen) were coordinated as part of a PR campaign to maximize media exploitation.
"There was no hidden motive behind the report, Wirtz's representatives said. It is meant to underscore the value of the arena to the city and the surrounding community, which the report says generates $2 billion in economic activity annually."
No hidden motive. We just decided to do it!
(Greg Hinz in Crain's:
("The owners of the United Center today released a glitzy report contending that the facility generates more than $2 billion a year in economic activity and pays $34 million annually in taxes.
("They insisted that they had no ulterior motive - even though the 97-page, four-color document was delivered to every elected official in city and Cook County government, as well as the Illinois General Assembly.")
Back to the Trib:
When fans came to the neighborhood 25 years ago, Wirtz said, "being a blighted area might have been an understatement. No one talks today of going to the United Center and talking about your safety." Today, Wirtz said, families bring their children to games, free of concerns.
Again, that's great for people going to games now, but that doesn't mean the lives of those displaced have changed for the better.
"Those in the community tend to agree that the neighborhood is on the upswing but said the trickle-down effect of hockey success has its limits. Gone are the liquor stores and grimy fast-food restaurants that populated the area around the old Chicago Stadium, before the United Center was completed with private money in 1994.
"A new sports apparel shop has opened near the area, and the corner of Madison and Ashland and Ogden avenues has seen a resurgence. Madison and Damen Avenue, however, are still a far cry from business meccas."
Agreed. The "renaissance" indeed is more limited than the impression given. Madison was basically paved in gold in an westerly direction until the United Center - an effort openly made by the formerly awesome Mayor Richard M. Daley in preparation for the 1996 Democratic National Convention. Beyond that, not so much.
"To John Spence, the longtime custodian and member at Greater Union Baptist Church, on West Warren Boulevard nearly in the United Center's shadow, the biggest difference is the trash and discarded beer bottles on the ground outside."
Meaning there is more of it now due to sports fans or less of it now due to . . . gentrification?
The success of the city's hockey team is generally good for the neighborhood, and many church members in the nearly all-black congregation who previously didn't pay attention to hockey now sport Hawks gear, Spence and the Rev. Willie Morris Jr. said. But what's good for the United Center - more parking lots, more restaurants catering to suburban fans, luxury accommodations for millionaire players and owners - isn't necessarily a good thing for the neighborhood, they said.
Thank you. The Tribune actually visited the neighborhood in question and talked to people.
"What the neighborhood needs, Spence said, are more service-oriented businesses like laundromats or cleaners that benefit residents going about their daily lives."
Neighborhoods where people live have different needs than neighborhoods that become entertainment destinations. I watched that happen in Wicker Park as laundromats and hardware stores were replaced by restaurants and bars and more restaurants and bars.
Mike Quinlan, who lives a few blocks from the United Center, said aside from a few shops, the Hawks' winning ways haven't had much of an impact.
And income based.
"And with public transportation access to the area spotty - the nearest 'L' stop to the United Center is three-quarters of a mile away - Spence said 'it's designed for you to come to the United Center, then you get in your car and you go home.'"
Just like the Cell.
"The Hawks and Bulls tried to change that. But a proposed 'entertainment district,' like those found near sports arenas in cities like St. Louis and Detroit, never got off the ground. Plans were scaled back to include the emerging office complex, scheduled for completion in a year and a half, and an atrium for fans."
The aforementioned. The Trib fails to mention that the Hawks and Bulls wanted tax breaks (during an election year) to build such a district. Still, a better answer is to build a better neighborhood with residents in mind first. But the very structure of the United Center (like the Cell) isn't designed for that.
"In the report released Thursday, Wirtz and Reinsdorf said the United Center supports 21,000 jobs each year and in 2013 paid $35 million in city, Cook County and Illinois taxes. The arena, they said, generates about $115 million in additional tax revenue for the city, county and state.
Wirtz said a new practice facility would be used sparingly by the Hawks, who usually practice only a few times a week during the season when the team is not on the road. The remainder of the time it could be used by community members.
"'For all intents and purposes, it's a community rink that the Hawks will occasionally practice at,' Wirtz said."
Love ya, Rocky, and I love the idea of a community rink, but don't try to make it sound like you're doing everyone a favor.
One element too often missing in these stories is the deep well of research (beware the mythical multiplier!) showing that tax subsidies for stadiums, arenas and other sports facilities (as well as events like the Olympics and, well, draft towns) are not only not worth it, but huge losses for taxpayers. Chicago journalists in particular should have some expertise in this area, given that the world's foremost experts in it live here.
It's a story that could have been told in almost any American city over the past two decades. Owners of teams in the "big four" sports leagues - the NFL, MLB, NBA and NHL - have reaped nearly $20 billion in taxpayer subsidies for new homes since 1990. And for just as long, fans, urban planners and economists have argued that building facilities for private sports teams is a massive waste of public money. As University of Chicago economist Allen Sanderson memorably put it, "If you want to inject money into the local economy, it would be better to drop it from a helicopter than invest it in a new ballpark."
What will it take for this reality to sink in?
I couldn't find a copy of the actual study on the Web. I'd like to vet the fuck out of it.
But the graphs supplied in this Crain's article are sorely lacking in context. A business publication should know better.
Take Figure 7: Amusement Tax.
Of course the arena is paying more in amusement taxes today than it 10 years ago; prices at the arena have skyrocketed, while the Blackhawks have packed in more fans. (The biggest jump coincides with the current Stanley Cup run by the Hawks.) Also, does this report include events such as concerts and so on? Have those increased? What the graph doesn't show is if the tax burden has increased - and even if it has, it has for everyone. Because the city was busy selling its parking meters and train stations to nowhere. Somebody's got to make up the difference.
To reporter Danny Ecker's credit, he notes: "The Blackhawks' amusement tax payments have skyrocketed along with the team's ticket prices, which went up by more than 33 percent during the period measured in the KPMG report. The average price of Hawks tickets next year will have gone up by 80 percent since 2009."
Figure 9 shows the real estate taxes are just about the same as 10 years ago. Lucky ducks.
Sales taxes? See amusement taxes.
Total tax history? See sales taxes.
My guess is the UC has gotten off easy.
"Reinsdorf and Wirtz enjoy a cap on the building's property taxes granted when the owners agreed to finance construction of the arena out of their own pockets more than two decades ago. The incentive allows deductions of income taxes, maintenance costs and mortgage interests."
"In what a spokesman for the owners deems purely a 'statement of fact' after 20 years of operating the building - and not an effort to bargain for future tax breaks - the UC commissioned consulting and accounting firm KPMG to put together a study measuring the arena's economic impact on the city."
Look, we know that's a lie. We don't need to keep repeating it. In fact, I would ask that spokesperson if they would swear to that statement under oath just to shut him up.
"Forbes recently published its annual list of the most valuable sports franchises in the world, and Chicago teams were well represented in the top 50," Rick Morrissey recently noted for the Sun-Times (link not available because this story too appears to have been disappeared.)
"The Bulls ranked 14th at $2 billion, the Cubs 17th at $1.8 billion and the Bears 20th at $1.7 billion. The Blackhawks and the White Sox didn't make the cut, but I wouldn't cry for Hawks owner Rocky Wirtz, whose family reportedly is worth $4.4 billion, or Sox chairman Jerry Reinsdorf, who also controls the Bulls."
I wasn't able to determine this morning if Wirtz and Reinsdorf have donated money to Rahm Emanuel's campaigns. In other words, I came up empty, which surprised me. Either they didn't, or I missed it.
Finally, why do public officials spend taxpayer money so eagerly on stadiums, arenas, sporting events and so on? First, because it makes them popular with people who don't know any better - like rabid fans. Second, because they want to attend sporting events in new facilities. Third, because they want to be popular with sports owners and athletes. Fourth, because life is like high school, and the jocks always get what they want while everyone else sacrifices at their altar. Fifth, because the media laps it up, too.
1. From Tom Chambers:
On a minor note, I wonder if the "primitive," cramped conditions at Johnny's Ice House helped create and maintain the Blackhawks' team camaraderie. It was the same boo-hoo for the Cubs players facilities. As for the restaurants and bars near United Center, bunched on Daley's Madison Street, they must be like farmers. Watching their sales and receipts in a big-picture kind of way because of the roller coaster of business of nights with UC events and "dark days" of no UC events. I know, I go over there from time to time. A player lockout or dip in attendance would be like a drought or locusts to some of those places.
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In Wicker Park.
"So you remember in 2008, when the whole economy was crashing, we could have gone into a huge depression, mostly because of the banks and their corruption and so on. But there was one huge insurance company, AIG, the biggest international insurance company, which was collapsing. If they would have collapsed, they would have brought down with them Goldman Sachs and a whole bunch of big investment firms, so the government wouldn't let them collapse.
"So they were bailed out, a huge bailout. And it was really malfeasance, if not criminality, on their part that led to all of this, but they were bailed out, and Timothy Geithner had to keep the economy going. Right after that, right at that time, the executives of AIG got huge bonuses. That really didn't look good, so there was some publicity about it, bad publicity. But Larry Summers, the former secretary of treasury, a big economist, said, you have to honor the contracts. And the contract said that these guys have to get a bonus.
"Right at that same time, the state of Illinois was going bankrupt, it claimed. And so they had to stop paying pensions to teachers. Well, you didn't have to honor that contract. So yeah, for the gangsters at AIG who practically brought the economy down, you got to honor that contract, because they got to get their multimillion dollar stock options. But for the teachers who already paid for the pensions, you don't have to honor that one."
The Beachwood Tip Line: Dead or alive.
Posted on July 30, 2015
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