The owner of the Chicago Cubs will ask the state to borrow up to $300 million in a bond offering to make extensive renovations at Wrigley Field that would ensure the team can play at the historic ballpark for another 50 years.
Anticipating questions about the propriety of a financially distressed state helping a privately owned stadium, Cubs Executive Chairman Tom Ricketts said Thursday that the Wrigley preservation plan would not hurt Illinois taxpayers. The deal would not require new taxes or an increase in existing taxes, Ricketts said. Instead, the Cubs would like to shift money from expected growth in ticket-tax revenue to the 96-year-old stadium.
Some government officials expressed initial support.
"This is the economic engine of my district," said Rep. Sara Feigenholtz, D- Chicago. "I'm very excited at the prospect of improvements."
Others, including former Gov. James Thompson, who heads the state authority that would issue the bonds, were reserving comment until they see details of the plan.
The Cubs' proposal calls for the Illinois Sports Facilities Authority, which owns U.S. Cellular Field, to float $250 million to $300 million in bonds. The bonds would be paid over 35 years through amusement taxes that Wrigley Field customers pay. Ricketts and his family also pledge to match the state's investment in the ballpark with their own investments in redeveloping land outside the stadium.
In 2009, the Cubs paid $16.1 million in amusement taxes to the city of Chicago and Cook County through a 12 percent levy on each ticket. The team proposes that the city and county would be guaranteed this amount for the duration of the bonds. But the incremental growth in amusement taxes beyond $16.1 million, either through increased ticket sales or increased ticket prices at Wrigley, would pay the bonds over time, Ricketts said.
The Cubs owner, though, is seeking a safety net in case the amusement tax does not cover the bond payments. Ricketts would like the bonds to be backed by revenue streams that are assigned to the facilities authority, including a 2 percent hotel tax.
The financing plan requires the approval of the Illinois General Assembly. Senate President John Cullerton, D-Chicago, will sponsor the legislation and plans to move it forward in the veto session that begins next week, said his spokesman, John Patterson.
"The state has no credit risk here," Ricketts said. "No one is losing anything. It's not a new tax, and it's not increasing taxes. It will allow us to keep some of the growth in a tax."
Gaining legislative approval won't be easy. Wrigley Field may not be an immediate priority for legislators, with the state facing a projected $15 billion deficit going into fiscal 2011.
"The Civic Federation would urge caution before embracing any plans for $300 million in borrowing by a state agency if it does not relate to the overall financial stability of the state," said President Laurence Msall. "The state of Illinois faces an enormous financial crisis and will be needing all of its borrowing power just to pay its bills and to continue to operate."
Gov. Pat Quinn said Thursday that he had no knowledge of the plan. "I haven't been briefed at all. It's news to me."
A spokesman for Quinn's office said staff members have had "preliminary" conversations with the Cubs organization about the idea.
Asking the city and Cook County to forgo any future increase in amusement taxes from Wrigley Field may be a tough sell with each dealing with mounting budgetary woes in a tough economy.
"I know it's important for Wrigley; it's something to look at," said Cook County Board Finance Committee Chairman John Daley, D-Chicago. "However, the concern could be if there's any loss of money to taxpayers. How do you make the difference up? … Like everyone else, we are facing very serious financial issues."
Ricketts, whose family wealth comes from the online brokerage TD Ameritrade but who runs a Chicago bond underwriter, argues that any loss of amusement tax revenue for the city and county would ultimately be recovered with other tax collections. Refurbishing Wrigley inside and out would draw more people to the neighborhood to spend more money on everything from souvenirs to better food, generating more tax revenue.
Ricketts said the state borrowing would do more than pay for Wrigley improvements that might otherwise take years to complete without help. It also would allow Ricketts to invest in the neighborhood.
If the legislation is passed, Ricketts and his family have promised to invest about $200 million in redeveloping the Lakeview neighborhood outside the stadium, such as the long-talked-about "triangle building" just west of Wrigley.
The Wrigley Field campus development, as Ricketts called it, would happen simultaneously with the ballpark renovations. He did not provide details of the renovations or neighborhood development.
"If we don't do something like this, we're spending $10 million a year every year doing little pieces and parts, and we never get a real renovation done," Ricketts said.
The Cubs and Wrigley Field are one of the state's top attractions. The team estimates that 37 percent of those who attend games come from outside the state. The team contributes more than $600 million to the state's economy, Ricketts said.
When the Ricketts family acquired the Cubs last year in a transaction valued at $845 million, it knew Wrigley would need a significant upgrade. Parts of the stadium, especially the concourses beneath the field, are dilapidated. There are not enough bathrooms. The stadium also lacks many of the amenities of modern stadiums, such as kitchens to prepare food.
The previous owners, Tribune Co., parent of the Chicago Tribune, tried to sell Wrigley to the facilities authority in 2008, but the talks fizzled. Tribune Co. has retained a 5 percent stake in the Cubs and related assets.
"The problem is the resources to build the triangle building are pretty substantial, as well as the resources to renovate Wrigley," Ricketts said. "You're not going to build 'triangle' unless you know Wrigley is going to be there. I don't think (the family) can afford to do both of those things at once."
Wrigley needs more than $200 million in renovations because the steel, concrete and electrical systems have to be upgraded, Ricketts said. No increase in the stadium's 41,000 capacity is planned.
Cubs fans would see greater amenities, while players would receive better facilities. Above all, the renovations would preserve the historic character of the stadium, Ricketts said.
The family's proposal would keep the Cubs in Wrigley during construction, which could take three to five years. Ricketts said he would like to begin renovations after the 2011 season. If the state approves the financing plan, the Cubs plan to ask Major League Baseball to host the 2016 All Star Game.
