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Fire Stadium Burning Taxpayers

"Rising from the rubble of an old industrial site, the 20,000-seat Toyota Park was supposed to put a small suburb on the map," the Tribune reported over the weekend.

"Yet the soccer stadium also has become a model of what can go wrong when a little town takes massive development gambles in a state with loose borrowing and ethics laws: Politicians and insiders benefit, while taxpayers are stuck covering budget-busting losses.

"The blue-collar suburb of Bridgeview now suffers under the highest rate of debt in the Chicago region, a Tribune analysis of thousands of pages of state and local records found."


That's a far cry from the days in 2003 when south suburban business leaders wrote in a Tribune Op-Ed that "When it comes down to it, a stadium in Bridgeview makes the most sense from a soccer and business standpoint . . . This is a rare win-win situation that everyone in the Chicagoland community and the Chicago Fire can rally behind for the benefit of the entire region."

But then, it always is. Economic impact promises of stadium deals and events like the Olympics and NATO summits never live up to the hype. Yet, business and political leaders keep using the same rhetorical playbook to get what they want for their own reasons, while the media largely keeps believing them.

"The stadium could have a local annual economic impact of $18 million," the Tribune "reported" back then. That part is missing from their otherwise excellent current report - the part that the media played in not challenging the basic and familiar claims made by local leaders.


"To help make its payments, the village has nearly tripled the Bridgeview property tax bill in less than a decade for the town's mostly modest ranch homes and plans to boost that burden far higher," the Trib reports.

"[S]ince opening in 2006, it has come up millions of dollars short of making its huge debt payments. The yearly shortfalls are sometimes as big as the town's annual police budget, and they've helped sink the southwest suburb's credit rating to among the Chicago area's worst."

But here's the flip side:

"Still, not everyone in town is losing.

"The big borrowing created a torrent of cash that, in part, went to companies tied to high-level village employees, the town leaders' political supporters and even companies linked to the mayor's family.

"Plus, campaign contributions from those profiting at the stadium have helped bankroll a rarely challenged local political machine that recently elevated its leader, Mayor Steven Landek, to the Illinois Senate. The machine also has put thousands of dollars in rent payments into the mayor's pocket each year.

"Landek would not agree to an interview, but in e-mails, spokesman Ray Hanania blamed the economy for the stadium shortfalls and said nothing was done illegally or unethically. He chided the Tribune for questioning the project.

"'Toyota Park has been the best thing to ever happen to Bridgeview. It's brought a new spirit and pride and regional attention," he said. "The Fire is a remarkable team, far better than the Tribune's properties . . . "

Shame on Ray Hanania, who also posits himself as a journalist and recently ran for a seat on the Society of Professional Journalists' board of directors. He did not identify himself as a town flack when he did so.

First, the facts are the facts. Has the Tribune gotten them wrong, Ray? If so, prove it. Town "pride" doesn't pay the tax bill.

Second, the slam against Tribune properties is straight out of the Michael Madigan playbook. It's an irrelevant distraction ploy, a cheap shot, and really not even true.

But when you see a reaction like this to an investigative report, you can be sure of one thing: It's true.


"Village officials at first said the town would borrow up to $55 million to pay for most, but not all, of the stadium, and investors would assume much of the risk if the stadium didn't make money.

"But then the town borrowed more than $100 million, to pay for the entire stadium, and put taxpayers directly on the hook if it didn't turn a profit. And turning a profit would be harder: The final deal called for much of the revenue from soccer games to go to the Chicago Fire."

Cripes, is there a parking meter provision too?


"Landek wouldn't detail why the village chose to spend more and assume more risk. Via e-mail, he said 'fluid' negotiations led to a 'cutting-edge private and public partnership.'

"Through it all, officials told residents not to worry.

"Longtime trustee Michael Pticek told the Tribune that village-hired experts claimed in reports that, under a worst-case scenario, the town would break even: 'We were shown different scenarios, and there was no way we would lose on this thing.'

"Landek was quoted in the Daily Southtown as calling it 'ludicrous' to talk of a scenario in which property taxes would be raised to subsidize the stadium. 'Four years of nothing, of the stadium sitting empty, is when we would have to consider raising taxes,' he was quoted as saying.

"Exactly how those projections were made is unclear. The town did provide the Tribune hundreds of pages of requested records, but for perhaps the most key document - financial studies proving the stadium could make enough money - Landek and the village attorney insisted no such reports existed."

I wonder if any reporter requested such documents when the plan was hatched and sprung into action.


"Once Bridgeview started borrowing the cash, millions flowed to those who contribute to political funds controlled by town leaders.

"The Tribune found that people and companies profiting from the stadium have given the mayor's campaign and related funds more than $170,000 since 2004.

"The contributors included construction companies, lawyers, security firms and food vendors. They also included the financial team that made hundreds of thousands of dollars to consult on the stadium and assist the heavy borrowing.

"One of the financial advisers, Daniel Denys, declined an interview but said in an e-mail that his firm's donations came 'without any expectation of reciprocity.'"

Another key indicator is when the key players all refuse to answer questions. That usually means it's even worse than the reporters know.


"Buried deep in Bridgeview's financial records are acknowledgments that the stadium has never made enough money to cover its loan payments.

"Village officials say the stadium has come up about $11.5 million short of making its debt payments from opening day in 2006 to 2010. A Tribune analysis of the village's audited financial reports shows the shortfall could actually be more than double that amount, depending on which expenses and debt payments are attributed to Toyota Park."


"The Tribune called or left messages with every village trustee. Only two spoke with reporters. One, Claudette Struzik, said she thought the losses weren't yet a major concern. Another, Pticek, the finance committee chair, said he was sure the stadium would become profitable once the economy improved.

"The village wouldn't provide the Tribune any study or detailed projections to support that optimism.

"Records show the stadium lost money even before the recession began. It has lost money, year after year, despite often hitting broad benchmarks that were originally touted as a baseline for breaking even: a soccer team, four international soccer events and four concerts a year.

"In a statement to the newspaper, Bridgeview officials broadly said the stadium's 'collateral benefits have been obvious' and said 'our long term prospects are bright.'"

So one trustee doesn't think the losses are a problem yet; another mistakenly - according to the facts - attributes the problem to the economy.

And here's the only collateral benefit I've heard: Soccer fans in the city who would love to attend Fire games but don't want to go to freakin' Bridgeview to do so. It's not as if the town has burnished some sort of reputation.

Finally, as far as long-term prospects:

"But in its recent conversations with S&P, the village suggested it could raise property taxes by as much as $7 million by 2016 to help cover future stadium losses, according to the rating firm's report."

Better for town officials to say: "We screwed up. We're sorry. We resign."


The real collateral benefits:

"Democrats were gathering to pick an appointee to replace retiring state Sen. Louis Viverito.

"Presiding over the meeting was longtime House Speaker Michael Madigan, a South Sider who represents much of Bridgeview. He helped Mayor Landek lobby the Fire to come to the south suburbs and joined Landek at one of the first games as the pair stood in the middle of the field, greeting Fire players in front of the home crowd.

"Now, Madigan took a quick vote of local party leaders and announced Landek the new senator.

"He became senator over parts of more than a half-dozen suburbs, vowing to do for the region what he had done for Bridgeview. With the new role came a $67,000-a-year-paycheck on top of his $39,000-a-year job as Bridgeview mayor."


Remember when taxpayers weren't going to be on the hook for the 2016 Olympics? Then they were.

Soldier Field?

"As construction at Soldier Field advances," the Tribune reported in 2002, 'a Tribune analysis of the $632 million project shows that the public bill for the stadium renovation is higher than city officials have said it would be while benefits to taxpayers - in terms of promised parkland and additional park revenues - fall short of what was promised."

U.S. Cellular? Taxpayers covering shortfalls.

Now comes Wrigley Field.

Will anyone learn?


"A study by economists Dennis Coates and Brad Humphreys in Econ Journal Watch in September of 2008, which assessed twenty years of academic research on public subsidies for sports stadiums, found that:

"No matter what cities or geographical areas are examined, no matter what estimators are used, no matter what model specifications are used, and no matter what variables are used, articles published in peer-reviewed economics journals contain almost no evidence that professional sports franchises and facilities have a measurable economic impact on the economy." (h/t: Ham N Egger)

To the contrary: Taxpayers subsidize the glory of enormously wealthy jocks and their even more enormously wealthy owners.


Trib report sidebars:

* "As for the contracts awarded by the town, the Tribune asked Bridgeview for records to show if any were competitively bid before the vendors were picked. The town said there were no such records."

That's because there weren't any. Nothing was competitively bid.

"Instead, the village has acknowledged, it entered into key contracts without seeking competitive bids - with many given to companies with political connections."

* The Landek building: Where all roads lead.


I've swiped a fair amount of the Trib's main story here for highlighting, commenting and added Beachwood value, but I encourage you to go read the whole package.


Comments welcome.


Posted on June 11, 2012

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