Thanks to the recent agreement between the Cubs and the Chicago municipal government, Wrigley Field will finally get the treatment it deserves. No, Lance Berkman, they won't be blowing it up. Instead, a $500 million renovation will give Wrigley the polish and modernization that a ballpark that attracts over three million visitors a year warrants. Goodbye, protective netting that's been keeping chunks of concrete from falling on fans. See you later, randomly scattered pieces of plywood that have been holding together the 99-year-old ballpark.
It's been long overdue, but new stadium deals take time. Stadium capital improvements are a good thing in theory, but implementation is always difficult. In the case of the Cubs, not only will the renovations remove some of the blemishes on an aging ballpark, they will improve revenue and provide jobs. Still, new stadiums and renovations tend to make people nervous, because the first question is always, "Where is the money coming from?"
Most of the 24 ballparks built or substantially renovated over the last 21 years were at least partially funded by taxpayer money. Though studies have shown that stadiums don't need public incentives to generate enough revenue to pay off debt service, they often rely on public financing and tax breaks to lessen the burden on the organization's finances. Each new stadium deal leaves taxpayers clenching until the sources of funds are clearly outlined. That's the best part of the Cubs' $500 million renovation plan that was approved by the City of Chicago on Sunday: The development project will be completed with private funds.
After nearly a year of contentious discussions about improvement plans, the Cubs released a six-page announcement on Monday that details the development plans for not just Wrigley Field, but the surrounding block. The improvements are ambitious and include ballpark renovations, a 175- room hotel, a mixed-use building for office space and retail, a pedestrian bridge, a plaza, and additional off-site parking. In addition to new structures, the Cubs plan to move outfield walls and add a 6,000 square foot Jumbotron to left field. The Cubs also got approval for other revenue generators, including more night games, more concerts, street fests, more off-season events, and even the ability to sell beer later during night games. The Ricketts are willing to pay all of the development costs, which are estimated at $200 million for the ballpark and $300 million in other projects, out of the family's collective wallet.
The details are subject to change throughout the development approval process. It's subject to public hearings and must clear typical development hurdles like building plans, zoning changes, and permits. It won't be an easy process for the Cubs, who have received a lot of grief in negotiations with Chicago Mayor Rahm Emanuel and ward Alder Tom Tunney, but the $500 million plan yielded most of the items on the team's wish list. While the Cubs will have to make some community concessions like offering free off-site parking, a $1 million commitment to fund a new park and playlot in Lakeview, and $3.75 million in community infrastructure to appease the neighbors who are concerned about traffic, safety, and noise in the area, but that's a small price to pay to build the baseball complex the Ricketts have dreamed of since purchasing the Cubs in 2009.
In their original proposal, the Ricketts family was seeking $150 million in public financing, but the city denied that request. Some say it was the amount of money, or because Emanuel was livid that Joe Ricketts was linked to anti-Obama campaigns during the election, but whatever the reason, the taxpayers are better off for not assuming the debt on the renovation project.
In Chicago, there are already two publicly funded stadiums: U.S. Cellular Field and Soldier Field, totaling $767 million in construction and renovation costs. Both projects are subsidized by Illinois' hotel tax, but since the bond financing that pays for these stadiums is subject to market volatility and changes in economic trends, the ongoing recession created a deficit that the state of Illinois was forced to cover with funds from the state income tax. While the hotel tax has now been raised by one percent to alleviate that burden in the future, adding the Cubs to the public payroll was never an option politically given that the city has an unbalanced budget, too many TIF districts (a method of using future gains in taxes to subsidize current improvements), and is in the process of closing schools as a cost-savings measure.
The Ricketts are still seeking pushing for some public assistance. The Ricketts want Wrigley Field to be granted landmark status. This would give them Class L tax designation, under which they would receive property tax breaks for the next 13 years. In the first 10 years, the property would be assessed at 10 percent of its value, which would escalate through year 13 before reaching 100 percent of assessed value in year 14. That would be an estimated tax break of roughly $30 million dollars. The Ricketts also want the City to foot the bill for the sidewalk expansions on Waveland and Sheffield Avenue, and they also want the fees for the airspace for the pedestrian walkway waived. Those types of concessions are incredibly common in Chicago development, and while the money that isn't collected is still the equivalent of some public assistance, it's a lot easier to stomach the idea of a small tax breaks that will probably be less than $40-50 million when compared to the public debt service obligations of other stadium deals, which leave taxpayers burdened for decades.
It has also been reported by the Chicago Tribune that the Cubs have filed the required paperwork to put Wrigley Field on the National Register of Historic Places. If the stadium qualifies, which it should given it's age and status, the Ricketts would be eligible to receive 20 percent of the rehabilitation costs for Wrigley Field in tax credits. While the other development projects and improvements outside of the stadium wouldn't qualify for a tax break, it's likely the Ricketts could get around $60 million in federal tax subsidies.
Of all of the publicly financed baseball stadiums, Marlins Park has become the textbook study for all things that can go wrong. It's easy to paint owner Jeffrey Loria as a monster -- I'd consider him more of a genius gone rogue -- but the Marlins did need a new stadium. The Marlins were sharing Sun Life Stadium with the Miami Dolphins and Miami Hurricanes, and the onerous lease cut them out of sources of revenue like luxury suites, which teams rely upon heavily since they are not subject to revenue-sharing. That was enough to convince Miami-Dade county that a new stadium in downtown offered limitless possibilities and revenue potential for the city, but in hindsight, it is much easier to feel that Loria was most interested in exploiting the public financing system than building a South Florida baseball empire.
Marlins Park, which opened in 2012, was a development project that included a new ballpark and parking structure. The city is paying 80 percent of the $639 million project, an amenity-laden park that would attract visitors, or so the city thought, especially since Loria promised to ramp up payroll and field a better team.
That $639 million, which already seems like a lot, isn't the full picture - there is nearly $3 billion in interest expenses related to the construction, and the $91 million that was financed through bonds will cost the taxpayers over $1.2 billion because of the repayment schedule. That's a lot of debt to swallow, made even worse by the current reality: Loria slashed payroll and attendance has plummeted. Worse yet, there are no performance incentives built into the deal, so while it will be a long time before taxpayers can pay off the stadium, it may be even longer before Loria decides to invest more money in the team. In an interview this week on HBO's "Real Sports with Bryant Gumbel," Marlins team President David Samson said that Loria has no plans to sell the team, so the team and the city could be stuck with each other indefinitely.
The Wrigley Field and Marlins Park deals differ in that the Cubs are renovating instead of building a retractable-roof stadium from scratch, but the moral of the latter seems not to have been lost on the former, as the plan for the Cubs seems comprehensive enough that the City will realize returns on its investment quickly. According to Crain's Chicago, since 1990, "125 of the 140 teams in the five largest sports leagues have built or refurbished home stadiums -- most using public subsidies - [and] evidence shows that the facilities rarely, if ever, live up to their ‘measurable economic boost' billing." But where other clubs have failed, the Cubs could succeed, since they already are one of the biggest draws in baseball and their capital improvements like office space and a hotel that will generate revenue, even during the offseason. The renovation plan also cements their presence in the city, removing the possibility of relocation to the suburbs.
The biggest potential snag in the renovation plan are the rooftop owners. With the proposed 6,000 square foot Jumbotron in left field, undoubtedly some of the views from the rooftops will now be obstructed in violation of the revenue-sharing agreement between the owners and the Cubs, who receive 17 percent of the rooftop's revenue. The rooftop issue won't be enough to kill the deal completely; however, it could cost the Ricketts more money.
In his press conference on Monday, Tom Ricketts set up an easy equation: Renovations + Revenue = World Series. In a lot of ways, that seems like the sort of cheerleading you'd expect to hear from a team chairman as he embarks on an expensive project, but the Cubs will undoubtedly see increased revenues from the renovation. Of course, there's no timetable for how quickly that money will be reinvested back into the ball club in the form of talent on the field, but they already have a capable front office with Theo Epstein and Jed Hoyer to make it happen. It's been baby steps, but they all lead towards turning the Cubs into the sort of baseball dynasty so many have longed for. And as a Chicagoan, if they can accomplish all of that without using reaching into my wallet? Even better.