Whether the Chicago Bears leave or not, taxpayers are on the hook for growing Soldier Field debt payments
As the Chicago Bears make plans to build a new stadium, taxpayers still are on the hook for the old one. A big bill is coming soon —and the primary method of paying for it may not be enough.
Whether or not the team leaves for its newly acquired site in Arlington Heights, the public is obligated to pay for the 2003 renovation of Soldier Field that was meant to keep the team there.
Due to refinancing and years of primarily paying interest instead of principal, the debt owed for Soldier Field has ballooned from the original $399 million to $631 million, according to the Illinois Sports Facilities Authority, or ISFA, which manages the debt payments. The increase in the debt alarms experts who work in stadium financing.
“No sane person would have agreed to this deal,” said J.C. Bradbury, a professor of economics at Kennesaw State University in Marietta, Georgia, who has studied sports stadium financing.
Recently, due to the COVID pandemic crushing travel and tourism, the 2% portion of the overall 17% city hotel tax that was supposed to pay for the deal has fallen short. As a result, Chicago was forced to pay $27 million last year from its share of the Illinois income tax, which otherwise helps pay for basic services such as road repair and garbage pickup.
With payments rising to $55 million this fiscal year and $90 million by 2032, the bills only get bigger, with real doubts about whether the hotel tax will be enough to pay it off. State officials estimate the hotel tax will fall about $10 million short this year, forcing the city to pick up the tab again.
Regardless of the Bears’ home in the years ahead, the debt must be paid. While the team pays about $6.5 million year in rent, that goes to the Chicago Park District, not to pay the bonds.
When the bonds for the stadium were issued through the Illinois Sports Facilities Authority in 2001, they were “backloaded,” with repayment of most of the principal left for later, so most of the early payments were for interest. Then, when the bill was due to increase, the state refinanced the debt to push the bigger payments further out.
By 2019, annual hotel tax revenues had roughly doubled to $52 million, and were able to cover expenses every year except 2011, when the city paid $111,000. But revenues dropped precipitously during COVID, and the debt was refinanced again and reserves spent to cover a $22 million shortfall in 2021.
The hotel tax revenue rebounded last year only to $39 million. But about one-third of hotel rooms remain empty. Occupancy rates are not expected to return to pre-pandemic levels until 2026, though higher room rates could make up the difference before then, said Michael Jacobson, president of the Illinois Hotel & Lodging Association.
As a result, Sarah Wetmore, acting director of budget analyst The Civic Federation, said the Illinois Sports Facilities Authority may seek yet another restructuring of the debt as soon as next year, though extending the time for repayment would require a change in state law.
If hotel tax revenues recover to $52 million this year — which is unlikely — the 7% growth in revenue that prevailed before the pandemic would be enough to cover the increasing payments. But both outgoing Mayor Lori Lightfoot and former Mayor Rahm Emanuel have over the years suggested looking at an alternative beyond the hotel tax.
Illinois lawmakers created the Sports Facilities Authority in 1987 to build a new Comiskey Park for the Chicago White Sox, whose ownership had threatened to move the team out of town. The state agency owns what is now named Guaranteed Rate Field, and still owes about $51 million for that as well. The Sox pay about $2 million a year in rent.
The Soldier Field deal originated with Mayor Richard M. Daley, but the Emanuel and Lightfoot administrations increased the debt by refinancing it three times, in 2014, 2019 and 2021. The state and city pay $5 million a year to the fund aside from the hotel tax. By the end of the deal, the total amount paid will have grown to $743 million.
Lightfoot’s office emphasized that under state law, the state is required to repay the city of Chicago for the income tax funds the city paid if hotel tax revenues increase enough to do so.
But Frank Bilecki, director of the Illinois Sports Facilities Authority, said the repayments have never been made and are very unlikely in light of the lagging revenue compared to increasing expenses.
On top of the current debt, Lightfoot also proposed a $2 billion plan to put a dome on Soldier Field to keep the Bears, but didn’t identify any funding to pay for it in a $16 billion budget.
As for the Bears, whose lease runs through 2033, they would have to pay a penalty of $84 million if they left in 2026. The team noted in a statement to the Tribune that the state has controlled how the bonds were issued and managed.
“The Bears negotiated upfront payments of more than $200 million, in addition to assuming all cost overrun risks for a publicly owned building that we do not operate,” the team said. “We also continue to pay one of the highest annual rents for an NFL team as a tenant of Soldier Field, totaling over $118 million since 2003.
“Paying off the bond debt is not the Bears responsibility and has never been contingent upon the team’s home games at Soldier Field. Any suggestion that leads people to believe the Bears are responsible for any portion of the repayment of bonds, or the bond debt payment is dependent on the team’s home games at Soldier Field, is completely misleading.”
So what lessons are to be learned from the Soldier Field financial debacle?
The debt shows the need to independently vet government borrowing, and having more varied revenue sources, said The Civic Federation’s Wetmore. With a recession possible, the city may have difficulty generating more revenue from the hotel tax, she said.
From the hotel operators’ point of view Jacobson said, the situation shows the importance of promoting and restoring the tourism and convention industry.
Sports financing consultant Marc Ganis said the delayed payments are not typical of most stadium financing.
“The financial engineering has blown up in their faces,” he said. “It keeps pinstripe patronage running in the city.”
Numerous financial institutions have had a hand in issuing bonds for the debt. Ambac Financial Group provides the debt service reserve fund surety bond and bond insurance on the original 2001 Bonds. The state’s trustee for the bonds is U.S. Bank, with an annual fee of $21,800. But most of the cost is the interest paid to the bondholders, which include institutional investors such as pension funds, unions, and other private and foreign investors.
Ganis believes the Bears’ plan for Arlington Heights is different, because the team plans to pay for its new stadium itself. The team is seeking public investment for surrounding infrastructure such as roads and drainage, which are costs that municipalities often negotiate to help pay for in any development.
“That’s reasonable,” Ganis said. “It’s a completely different scenario than for Soldier Field.”
Bradbury, the economist, disagreed. Stadiums typically have trouble paying themselves off, he said. Whether it’s a hotel tax or a tax break, he said, it detracts from other public investments.
“I think the thing that people need to remember is that subsidies going to stadiums are NEVER a good deal,” Bradbury wrote to the Tribune. “Supporters always promise large returns, and then they are unapologetic when they don’t happen. This happens over and over again. Expecting a stadium to generate a revenue windfall for the community is like expecting Charlie Brown to kick the football. It’s not going to happen.”
