As construction at Soldier Field advances, 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.
The bottom line is that the new Chicago Bears stadium will get one of the largest government contributions in the history of professional sports, a fact obscured by a public-relations strategy that tried to divert attention from the public costs. Among the Tribune's findings:
- City officials have said the public bill for the project won't exceed $406 million; in fact, another $26 million in public costs is buried in bond documents. That money brings the total public tab to $432 million.
- While Mayor Richard Daley praised the Bears' $200 million contribution to the project as "unheard of" for a publicly owned stadium, neither the mayor nor anyone else involved in the project noted that the city's contribution also might be unprecedented.
- Officials with the Chicago Park District, which owns Soldier Field, have called the renovated stadium a good deal for the agency. But an internal Park District analysis shows the agency will make $900,000 less the first full year the stadium is open, figures that officials now dispute. Meanwhile, the new stadium is expected to double the value of the Bears franchise, experts said.
- Proponents of the stadium renovation pointed to the creation of 19 acres of parkland for Chicagoans. But officials counted landscaped medians and sloped berms beside a parking garage as part of the acreage, according to one of the project's architects, Dirk Lohan.
In reality, only about 10 acres of usable parkland is being created, according to an analysis by Friends of the Parks, which is suing to stop the renovation. The lawsuit could be decided at a hearing Thursday.
"You're not able to play on a slope or on the middle of a roadway," said Erma Tranter, the group's president.
The strategy to sell the Soldier Field renovations, mapped out in a 1999 memo by the Bears' public-relations firm, was based on emphasizing the new stadium's amenities, such as new parkland and expanded lakefront parking in an underground garage, while downplaying public costs for the Bears facility.
"The problem with the current debate is that it is too often about the Chicago Bears and not about the future of Chicago and its prized lakefront," according to the memo, crafted by the firm, Burson-Marsteller. The public-relations advisers recommended a strategy that includes changing "the conversation from `public funding for the Chicago Bears stadium needs' to a civic-led discussion" about such things as preserving Soldier Field as a landmark and "doing things right, the Chicago way," said the memo, a copy of which was obtained by the Tribune.
The Soldier Field deal contradicts previous public statements from the mayor and Gov. George Ryan, who had balked at government financing for the stadium.
It also ran counter to a trend in the NFL in which teams in lucrative markets such as the Washington Redskins and the New England Patriots are paying most of the costs for their privately owned stadiums, the Tribune analysis found.
Meanwhile, in nearly every other city where government subsidies were used for a publicly owned NFL stadium in the last decade, a referendum was held to ask voters whether they approved of the idea. In Chicago, the city went to court to stop a proposed referendum on the plan.
Daley on Saturday defended his support for the Soldier Field project, saying the $200 million private contribution was unprecedented and the public portion was paid for by taxes on hotel rooms, not property taxes.
Had the city not proceeded with the stadium deal, the mayor said, "Soldier Field, what are you going to do with it?"
Daley appeared to confirm the Friends of the Parks allegation that the project would only create 10 acres of usable parkland, not 17. "They're building 10 acres of open space and another seven acres of landscape in all of that. That's what you need to make it environmentally friendly."
The city's longtime point man on the Soldier Field deal, Edward Bedore, a former city budget director who now is a lobbyist for the city, Park District Supt. David Doig and other Park District officials declined to be interviewed.
Bears Chief Executive Officer Ted Phillips and former Bears President Michael McCaskey declined to comment.
Barnaby Dinges, a public relations consultant for the project, said the Park District will save money in the long term by not paying the increasing costs of maintaining an old, deteriorating stadium.
"There are tremendous benefits to this project," Dinges said. "After 30 years of trying, the Park District, the Bears, the city and the state finally found a plan that does right by taxpayers, park and Museum Campus users, the lakefront, sports and entertainment fans and the people of Illinois."
In written responses to questions, Park District officials said that the Bears' contribution to the project far exceeds what most other teams have chipped in for stadiums. Park District officials also stood by their estimate for new parkland, which was revised from 19 acres to 17 acres after the deal passed the state legislature and more precise calculations were made.
"This figure includes the planted medians, which amount to just a fraction of an acre," the statement says.
Lohan, the architect, said, "A berm can have plants on it, and isn't that part of a park?"
A deal is struck
Although most of the principals would not comment, others familiar with the deal suggested that the decades-long logjam over a new Bears stadium was broken because of a confluence of several key points. There was a flash of inspiration by the Bears' architect about how to squeeze a new stadium into a historic landmark, an infusion of cash from the NFL and a change of leadership in the governor's office and the Bears' executive suites.
At the same time, the deal created a huge public-works project with plenty of hefty contracts for friends and political allies of City Hall and Springfield. For instance, the bond work went to former proteges of Bedore's, security for the construction site is provided by an alderman's brother's firm and the local partner for the construction team is a major Ryan contributor whose vice president was chairman of the governor's inaugural ball.
The Soldier Field project was sold to the public, in part, because of the $200 million contribution by the Bears, which is the largest private contribution for a publicly owned NFL stadium. But the Bears are contributing only about $30 million of their own money. The remainder comes from $100 million from the NFL and the sale of personal seat licenses to season-ticket holders.
The public portion, $432 million, is being financed by an extension of a 2 percent city hotel tax originally levied by the Illinois Sports Facilities Authority to pay for Comiskey Park.
On its face, the city's portion of the Soldier Field project is the largest public contribution in the NFL, in which stadiums are larger and generally more expensive than those in other professional sports.
The next-biggest public contribution for a football stadium is in Cincinnati, where taxpayers paid $400 million for Paul Brown Stadium, the Bengals' new $449 million home, according to a Tribune analysis of NFL stadiums built in the last decade.
Precise comparisons are difficult because some stadium deals, including the deal for Soldier Field, provide amenities outside of the stadium. Similarly, some stadiums include costs for land acquisition. Some, like Soldier Field, do not because they are on publicly owned property.
The cost of building just the stadium at Soldier Field is estimated at $383 million, prompting the Park District to claim that the Bears will pay more than half the cost of the new facility. But critics say that calculation is imprecise because it does not include the cost of amenities that will primarily serve the stadium, such as the parking deck south of Soldier Field and landscaping on stadium access roads.
Marc Ganis, president of the Chicago-based sports consulting firm Sportscorp Ltd., said the high cost of the stadium and the public contribution reflect a decision to keep the Bears playing on the lakefront in a historic landmark rather than building a new stadium elsewhere.
"A 61,000-seat open-air football stadium on a clean site would likely cost less than $400 million," Ganis said.
Officials have pegged the public cost for the project at $406 million, but the actual amount is $26 million higher, thanks to some financial moves designed to skirt a legislative limit on the value of bonds sold to pay for the deal, the Tribune found.
Soon after the legislation was passed, it became clear that the project's costs, including the cost of issuing the bonds would exceed that limit, documents and interviews show. The funding problem worsened after Sept. 11 because a sudden drop in Chicago tourism threatened to erode the hotel tax revenues that would be used to pay off the bonds. Shortfalls would require the city to tap its share of state income taxes.
The solution involved a financing device that allowed the Illinois Sports Facilities Authority to raise $425 million on the bond sale in October while keeping the original value of the bonds at the legislative limit of $399 million. This was done by setting such low prices on some of the bonds that investors were willing to pay extra to buy them; the extra amount, or premium, wasn't included in the value of the outstanding bonds.
The total public bill comes to $432 million after adding $7 million in interest income on the bond proceeds.
While the public costs of the deal are higher than advertised, the benefits to the Park District appear to be lower. The agency's claims that it will make more money from the new Soldier Field are belied by its documents.
"Neighborhood park users win because a renovated Soldier Field will generate at least $10 million in net annual revenues for neighborhood park programs," Supt. Doig said in a 2001 letter published in the Tribune.
According to a city memo last year to Chicago aldermen, the Park District's profit from Soldier Field had been about $9.5 million a year. That figure will drop to $8.6 million in 2004, the first full year the new stadium will be open, a Park District forecast shows.
But even the $8.6 million profit forecast is inflated because it includes an annual subsidy from the Illinois Sports Facilities Authority that was wrapped into the Soldier Field legislation, meaning that one public agency essentially will be funding another. That subsidy, which will come from Chicago hotel taxes, will total $3.6 million in 2004.
In the written responses, Park District officials said that the $8.6 million forecast for 2004 didn't include another contribution from the Illinois Sports Facilities Authority--a $1.5 million annual payment for Soldier Field improvements--and a projected $500,000 fee from the Chicago Fire.
The soccer team, which played at Soldier Field before the renovation, plans to play at the new stadium in 2004 but has made no commitments beyond that year, a Fire official said.
Documents obtained by the Tribune did not include revenue forecasts beyond 2004. Park District officials said they are optimistic that revenues will continue to grow but declined to provide specifics.
Friends land contracts
The Park District may be coming up short at Soldier Field, but some political supporters of Daley and Ryan are not.
Bedore, who retired from City Hall in 1993, has served as the city's consultant on Soldier Field for years. A former budget director for both Daley and his father, Bedore lists Michael Daley, the mayor's brother, as an attorney for his consulting business, records show.
The lead bond underwriter for the Soldier Field bonds was George K. Baum and Co. of Kansas City, Mo., which beat out several Wall Street companies for the work. Though the financial advisers for the Illinois Sports Facilities Authority ranked at least two other firms ahead of Baum, sources familiar with the deal said City Hall demanded that Baum get the assignment.
Baum's Chicago office is headed by two former city budget officials and Bedore proteges, Anthony Fratto and Albert Boumenot. Baum also had been selected to sell bonds for Millennium Park, another project that Bedore launched for Daley.
When Baum was selected for the Soldier Field work in March 2001, the firm never had been lead underwriter on a deal for more than $350 million, according to the information service Thomson Financial. Baum collected fees of at least $1.3 million for the deal, bond documents and interviews show.
Jerry Blakemore, the sports authority's chief executive, declined to comment on the bond deal, as did the authority's financial advisers. Fratto and Boumenot could not be reached for comment.
The prime contractor for the Soldier Field renovation, selected without competitive bidding by the Bears, is a joint venture that includes two national firms with stadium-building experience and Kenny Construction, a Wheeling firm whose principals are campaign contributors to both Daley and Ryan. The company's vice president also was chairman of Ryan's inaugural ball.
Security at the construction site is being provided by Monterrey Security, a 3-year-old firm that is partially owned by Santiago Solis, the brother of Ald. Danny Solis (25th), one of Daley's closest allies on the City Council.
Breaking the logjam
Despite decades of squabbling over a new stadium for the Bears, the football club's fortunes began to change in late 1998.
That fall, the Bears' architect, Benjamin Wood, raised the possibility of renovating Soldier Field, an idea that had always fizzled because there didn't seem to be a way to fit enough seats along the sidelines without ruining the stadium's historic charm.
During a visit to Chicago, Wood measured the distance between the colonnades of the stadium and thought he might be able to squeeze a stadium into Soldier Field by positioning all the skyboxes and club seats on one side.
The result: a narrower field that would fit within the stadium's colonnades while positioning most of its seats between the 20 yard lines. Seats in that area offer better views and higher prices.
In January 1999, George Ryan became governor, replacing Jim Edgar, who had fought with Daley for years over stadium deals. Ryan vowed to work with the mayor and the Bears to resolve the stadium issue "short of spending taxpayers' dollars on a new stadium."
A month later, McCaskey, who had openly feuded with Daley over stadium proposals, was ousted by his mother as Bears president and replaced by the more amiable Phillips.
With a new design for a stadium in the works, Phillips got a crucial funding boost in March 1999 when the NFL approved a program to help big-city teams build arenas by offering to match a team's contribution to a stadium project.
Daley and Phillips later used the NFL money to pressure state legislators to pass the stadium deal during the fall veto session in 2000, saying the money could disappear unless it was used quickly.
The way the legislation was rushed through Springfield infuriated some legislators.
"It came out of left field carried by a Hall of Fame bevy of lobbyists and lawyers who told us that the sky is falling, the world would come to an end, civilization would end as we know it, unless we did this deal in the next 72 hours," state Rep. William Black (R-Danville) told his colleagues.
But late last week, NFL spokesman Greg Aiello indicated the legislative rush may have been unnecessary to land the NFL's $100 million commitment to the Bears.
"There wasn't a specific time frame," he said.Copyright © 2014, Los Angeles Times