There is a lot being made of the Chicago Bears decision to tell the public that Arlington Heights is not their only focus for a new stadium. Watching the Bears from afar and the stadium debate in Nevada on the Oakland A’s makes me pop a lot of popcorn.
First, what this isn’t. It’s not strong-arming. The Bears aren’t trying to leverage anyone. It’s the politicians that are leveraging.
Democratic Machine Boss Toni Preckwinkle (Cook County Board) wants the Bears at Soldier Field to help her newly elected prince, I mean mayor. She may have, or may not have, given the order to socialist Cook County tax assessor Fritz Kaegi to significantly increase the assessment on land the Bears purchased from Arlington Racetrack. Kaegi instinctively knew what to do.
He politically raised taxes on the Bears with no regard to actual finance or data. It’s pure politics. Hence, the Bears started talking to Naperville in DuPage County. Preckwinkle would do all she could to kill that deal and has pals in DuPage. It’s not the Republican stronghold it once was.
If I were the Bears, I might be talking to Northwest Indiana. They should have known that doing the right thing in Illinois gets you nowhere. You need to pay homage and grease palms. This is Preckwinkle trying to get the Bears to take the knee and bend down to her.
Those who say they wouldn’t be racing at Arlington anyway are somewhat correct. There would have been horse racing there except politicians in Illinois killed it. They gave the owners of Arlington the choice between owning a casino, or selling the casino to put slot machines in the park. Why they couldn’t have both is beyond me. I go to a grocery store or drug store in Vegas and there are slot machines.
Here is what is crazy. The Bears are doing the exact right thing. They are building a dome that will bring the Super Bowl and many other consistent money-making events including conventions to Chicago. It’s by O’Hare, so that makes it easy in and easy out increasing the amount of out of town fans that might follow their team there. The most important point: They are funding this privately. The Bears will own the cash flows so they will have a substantial economic incentive to put a great team on the field.
Here in Nevada, it’s similar but also the opposite. The Oakland A’s have played in a dump for years. A pure dump. Same as Soldier Field. Oakland is a total armpit of a city. It’s been that way forever. Now that the woke pols have taken full control, crime is higher and it is a real issue. That is also similar to Chicago.
For decades the A’s tried to work a deal on a new stadium. The problem was the building costs in California are so prohibitively expensive. They also decided to go the Sugar Daddy government-funded route instead of doing it themselves.
They are moving to Las Vegas because they see a huge opportunity.
Unfortunately, the A’s are still pursuing the “government financing” route. They initially asked for $500MM and now are down to roughly $400MM. Nevada doesn’t really need the A’s, but the A’s totally need to get the hell out of Oakland and probably California. They need to do it by the time their lease ends in 2024.
I was at the Vegas Ballpark last night and the ballpark is 100% suitable for the A’s as they are presently built. Games for both the big league team and their Triple-A Aviators look more like batting practice than baseball. The A’s would draw 8-9k there and the ballpark would be practically full.
If the A’s sold a minority stake to a casino with MLB approval, they could build a stadium, hotel blah blah blah, and they’d have a gigantic incentive to stay in Vegas since they owned the stadium and cash flows. They’d also be economically incentivized to put butts in the seats by putting a great team on the field.
There is no guarantee the A’s would stay in Vegas with a government-run stadium. The legislature here is trying to give them a 30-year binding contract in exchange for government benefits, but those aren’t worth the paper they are written on. It’s too easy to buy them out and at the end of 30 years, is loyalty there or not? The A’s have been in Oakland for 50. They don’t own their own stadium there. Only owning their own stadium will make them loyal.
Boeing ($BA) isn’t a sports franchise, but they moved to Chicago from Seattle for tax benefits. As soon as the benefits ran out, they moved to another city.
Economist Allan Sanderson from the University of Chicago will tell you, privately funded stadiums for pro and college sports are the way to go. All you have to do is look at the White Sox and Cubs and see which organization and stadium operates better. Which organization has a bigger economic incentive to do better? Government-run stadiums are a money suck, and all taxpayers shoulder the burden for them despite what might be presented to them.
As we say in the venture and trading business, it’s always more meaningful when there is skin in the game. In pro sports, skin in the game is often owning your own facility.