Chris Lamberti: White Sox Chatter

December 21st, 2012

The Chicago Tribune, recently ran a story by Jared S. Hopkins harping on an Illinois Sports Facilities Authority employee with a “$57,240 taxpayer-funded salary” spending time digging up White Sox tickets for Big Jim Thompson and other big wigs.

For those who are unaware, the ISFA was invented by the Illinois state legislature in 1988 for the purpose of giving Jerry Reinsdorf taxpayer money for his privately owned baseball franchise, Chicago White Sox, Ltd.

The argument sports franchise owners usually make is that they bring economic development and tourism to the cities in which they run their businesses.  And that means more jobs and a larger, richer, tax base.  For showering all of this good upon the community, team owners want a little quid pro quo.

It’s right there in the ISFA’s founding document, which declares that “professional sports facilities can be magnets for substantial interstate tourism resulting in increased retail sales, hotel and restaurant sales, and entertainment industry sales, all of which increase jobs and economic growth.”  As a result, the ISFA was founded to “materially assist the development and redevelopment of government owned sports facilities” because doing so “is in the public interest.”

Good for Daddy WARbucks?*  Good for Jane and John Q. Public?  Good for everyone!  Hooray!!

*esoteric joke for baseball nerds!

Only problem is, the entire premise upon which the stadium subsidy argument is built.

Economists paid to do studies by team ownership—the studies that are circulated to politicians and the media—make all sorts of economic projections based on soft data and economic theory.  Meanwhile, academic (i.e. independent) economists who have made calculations based on actual case studies over the past few decades find almost unanimously that sports stadiums have a negligible economic effect on the cities in which they are located; effects made adverse by public subsidies.

Hannibl Lecter loved a little quid pro quo….

 

 

I’ve read a few of these academic studies.  Oh, here’s one I found tucked away on my hard drive.  Let’s have a look see:

“A Tale of Two Stadiums: Comparing the Economic Impact of Chicago’s Wrigley Field and U.S. Cellular Field” from the International Association of Sports Economists….yeah, yeah, yeah…by Baade, Nikolova, Matheson, Department of Economics at such and such colleges…dated August 2006…yada yada yada… “U.S. Cellular Field…provides the classic case of the sports stadium as a ‘walled fortress’ that internalizes all economic activity in order to maximize revenues for the franchise at the expense of local economic development.”

Bingo.

So, instead of “increasing jobs and economic growth” around the stadium, the White Sox have done everything in their power to discourage it, in order to insure that fans spend every penny of their entertainment dollar at the park.

The ISFA serves as an enabler in this scheme, since it bankrolls White Sox operations, and gets virtually nothing in return.  The White Sox keep all revenue from parking and concessions.  They keep all revenues from taxpayer built restaurants inside and outside the stadium.

The White Sox put the Big Hurt on taxpayers….

 

The White Sox pay no property taxes because they “lease” their facility from the state.  Though the Sox pay no rent, so they’re more like corporate squatters.

Crazy huh?  Wait, it gets worse!

All the signage around the taxpayer built stadium—the advertisements you see around the park and on TV—the Sox get all of that money.  The $68 million U.S. Cellular paid for the naming rights to the park?  It all went to the White Sox.  And the revenue from media companies like Comcast and WGN, who broadcast the White Sox playing in the taxpayer funded stadium (the Sox deal with Comcast alone is worth a reported $450mil per season)?  The ISFA doesn’t see a dime of it.

According to the management agreement, the White Sox pay “Base Fees” of $1.5 million per year, and then a fee per paid attendance ticket over 1.925 million tickets sold for the season.  But this is a drop in the bucket.  According to ISFA annual reports, it doesn’t cover the yearly costs of park renovations, maintenance, and cleanup.  It doesn’t cover the principal or interest payments on the hundreds of millions of dollars in bonds issued by the ISFA, which the state is on the hook for.

This is the nature of the relationship between the ISFA and the White Sox, and the Tribune is worried about ticket giveaways?

I mean, yeah, it’s shady.  Especially because the White Sox are allowed to hawk 150,000 tickets per season for $3 or less, and those tickets do not count toward “paid attendance” as it is defined in the management agreement with the ISFA.  In other words, the White Sox have it built-in that they can give away tickets without paying fees to the state.

In 2011, the White Sox drew 2,001,262 in “total paid attendance,” according to the ISFA’s auditor’s report.  That’s 76,262 fans over the 1,925,000 threshold.  Without the complimentary ticket clause in the management agreement, the White Sox would have paid $228,786 in fees to the state for those tickets.  But the team gave away or enormously discounted 137,755 tickets and so it paid no ticket fees at all.

The Tribune doesn’t disclose any of this.  Instead it focuses on a middling ISFA staffer, probably just doing what she’s told.

The relationship between the IFSA and the White Sox requires closer scrutiny by the media, but giving umbrage to a low-ranking employee for doling out free tickets to some folks with clout ignores larger transgressions. Like an agreement drafted by a government body that greatly favors private over public interests, binding until the year 2028.

Larger transgressions, that is, unless your definition of “wasteful government spending” is middle-class public employees “wasting time” on the job and not hundreds of millions of dollars going to prop up private companies owned and run by wealthy executives.

Just a slight disagreement over semantics, I guess.

Editor’s Note: Chris‘ last post for The Third City was Marvin Miller….

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