The Chicago White Sox want $1 billion from the state of Illinois for a new stadium. White Sox owner Jerry Reinsdorf would like you to hear the reasons why.
It’s nothing you haven’t heard before.
The modern state of stadium funding discourse can pretty much be broken down into three statements:
“Our stadium will inject life and money into the area” (a standby going back decades)
“We want to own the real estate around our stadium” (the Atlanta Braves succeeded at getting this, the Baltimore Orioles did not)
“We might have to move if there’s a better offer elsewhere” (the Oakland Athletics are in the process of messing this one up)
Reinsdorf unsurprisingly went 3-for-3 while speaking with Crain’s Chicago Business, the outlet that broke the story that the White Sox were pursuing a 10-figure sum to supplement their proposal to replace Guaranteed Rate Field with a brand-new stadium at The 78 site in South Loop.
Jerry Reinsdorf: Giving the White Sox $1 billion will good for Chicago and Illinois
On the first count, Reinsdorf claimed the new stadium would “anchor” a property that would generate a projected $4 billion in economic impact and $200 million in tax revenue:
“At the end of the day, the benefit to the city and state are going to outweigh the cost,” Reinsdorf asserted. “This is not (just) a ballpark. This a development of which the ballpark is the anchor.”
Numbers like those, conveniently provided by real estate developer Related Midwest, are a tempting prospect for a city and state. Unfortunately, economists have long been skeptical about these kinds of claims for a variety of reasons.
A stadium helping you bring in $4 billion sounds nice, but that money spent often comes from somewhere else in people’s budgets. Think about a family choosing between a game or a bowling alley, or friends picking between a game and just going to bars. There’s also the matter of opportunity cost, as it’s quite likely a lot of people have some interesting ideas about how Chicago could use $1 billion if it’s up for grabs.
Jerry Reinsdorf: Shohei Ohtani’s contract scares us
As for the real estate question, Reinsdorf said his team just couldn’t survive in a world where the Los Angeles Dodgers are giving Shohei Ohtani $700 million:
“The economics of baseball have completely changed,” with top ballplayers signing contracts worth as much as $700 million, Reinsdorf said. “At the location we’re at now, we cannot generate the revenue needed to pay those salaries,” said Reinsdorf, referring to the team’s heavily-residential Bridgeport home. A new space in a livelier downtown area with shops, bars and other entertainment venues within walking distance should do better, he contends.
Reinsdorf denied that the real problem is poor performance by his team. Even after winning the World Series in 2005, “we didn’t crack the 3 million (attendance) mark,” something that Series winners routinely accomplish.
It is maybe at this point we should note the largest contract Reinsdorf has ever given out as White Sox owner is Andrew Benintendi’s five-year, $75 million extension. Reinsdorf is clearly implying that his team will be able to sit with the heavy hitters if they get that real estate income, which is something you will have to just go ahead and trust Reinsdorf on.
The Washington Nationals have also never cracked 3 million in attendance, but have still paid out some massive contracts, like those of Max Scherzer and Stephen Strasburg. The Houston Astros cracked 3 million for the first time since 2007 last year.
Jerry Reinsdorf: Chicago must be prepared for the death of Jerry Reinsdorf
Reinsdorf takes a somewhat original route on the point of possibly moving elsewhere, but that might only be due to the fact he already played this card in the 1980s when he was pushing for funding of what became Guaranteed Rate Field, the stadium he is now trying to leave.
You see, the reason the government should give Reinsdorf $1 billion is that Reinsdorf will die soon, and he just doesn’t know what those mean other billionaires will do when he’s gone:
Noting that he’s about to turn 88, Reinsdorf said that “when I’m gone,” his son Michael Reinsdorf, president of the Chicago Bulls, which the family also owns, “will have an obligation to do what’s best” for other investors in the Sox. “That likely means putting the team up for sale. . . .The team will be with more out of town.”
And that’s pretty much the game. The White Sox want more money, and are offering the carrot of even more money going back to Chicago and the stick of becoming, let’s say, the Nashville White Sox if they don’t.
Whether that’s enough to move the Illinois government is another matter. The White Sox are reportedly proposing that Illinois extend a preexisting 2% hotel occupancy tax past its planned expiration date of 2034, when it was supposed to have paid off the Chicago Bears’ Soldier Field renovation in 2003. That tax was already struggling to cover the Soldier Field bonds due to the COVID-19 pandemic. The White Sox would also reportedly like to receive authority to claim sales tax generated in their new district (which might clash with the first point above).
You also can’t forget the $551 million in infrastructure upgrades needed (CTA Red Line stop, street improvements, etc.) that Related Midwest will cover and be reimbursed by Chicago.
Making all these requests even more difficult is the presence of the Bears, who are currently pursuing their own attempt to get a new stadium subsidized by local government. Reinsdorf told Crain’s he has had “conversations” with the McCaskey family that owns the Bears and that he does not “want to be in competition with the McCaskeys.”
Still, if it comes down to a choice, the Bears are Chicago’s only team in the NFL. The same can’t be said for the White Sox in MLB.
Source Agencies
