Report: Reinsdorf seeks $1 billion in help for new Sox park

*Video above is from a WGN story on new renderings of the White Sox proposed new stadium before this article was published.

CHICAGO — A new report Friday revealed that not only will Chicago White Sox owner Jerry Reinsdorf pursue roughly a billion dollars in funding from the City of Chicago and State of Illinois for a new baseball stadium in “The 78,” he’s confident the team will get it.

According to Crain’s Chicago Business, Reinsdorf and Related Midwest President Curt Bailey, the developer behind The 78 site where the stadium would be built, have had meetings with a number of elected officials and leaders in the Chicago business and labor world to gauge interest before meeting with Governor JB Pritzker to propose a deal, which Crains said is bullish on being able to sell the argument stadium subsidies will bring billions in private investment, while also being structured so that no new or increased taxes are required.

Crains said the stadium itself would be subsidized through a $500 million city TIF district that already covers the site, but the White Sox and Related Midwest have stressed the importance of additional private investment — mixed-use buildings that would feature affordable housing, bars, restaurants and shops, as well as an underground parking garage and parks, hence the intended ask of nearly $1 billion in total public funds from the state, which includes the $500 million TIF subsidy from the city.

While the combined ask from the state and city is nearly half of the White Sox’s current valuation ($2.05 billion in 2023, according to Forbes), Crains said the proposed deal would also get Chicago off the hook for being the guarantor of the current debt arrangement between them and the Illinois Sports Facilities Authority (ISFA) to pay for the remaining balance on the Chicago Bears’ 2003 renovation of Soldier Field.

The ISFA is a government entity created by the Illinois state legislature in 1987 for the purpose of constructing and renovating sports stadiums for professional sports teams in Illinois. As a part of business dealings since, the ISFA became the owner and developer of the White Sox’s current stadium, Guaranteed Rate Field, and financier of the Chicago Lakefront Development Project, which included the 2003 renovation of Soldier Field.

The ISFA issued $150 million in bonds in 1989 to build Guaranteed Rate Field and later issued $399 million in bonds to pay for the aforementioned renovations to Soldier Field.

To pay for the new Sox Stadium planned in The 78, Crains said Reinsdorf is seeking to lay claim to the revenue from a 2% hotel occupancy tax, which is currently used to pay for the ISFA’s annual debt service, for decades after when all outstanding bonds are currently meant to be paid off in 2034.

Extending the ISFA bonds over 30 years while adding a new line of revenue back to the debt, Crains said, would provide the upfront capital to begin work on the stadium in The 78.

Crains said Reinsdorf is also seeking to create a tax overlay district surrounding the proposed stadium in order to capture the state’s portion of sales taxes generated around it, which is estimated at around $400 million over an undisclosed period, which would be set aside to subsidize the stadium and back the news bonds created by the deal.

With the sales tax revenue included in said deal, that would allow the ISFA to borrow more money, according to Crains, which a source told them would get to roughly $1.2 billion in assistance sought by Reinsdorf to build the ballpark and retire the current ISFA debt.

This is all dependent on state approval though.

“While Related Midwest and the Chicago White Sox have assured us the existing Chicago hotel tax that funds sports facilities, along with other revenue sources, would be sufficient to fund the ballpark, our priority is protecting the hospitality and visitor industry,” said Michael Jacobson, president of the Illinois Hotel and Lodging Association, in a statement provided to Crains.

Does this put the Bears in a pickle?

Crains said another interesting factor is that the deal could oust the Bears from tapping into the ISFA to pay for a new stadium, if they continue to pursue staying along the lakefront in the city.

Crains said a source familiar with both teams and their stadium plans told them the two are not working together to find stadium deals, but are in competition for Illinois’ limited amount of public dollars dedicated to new stadiums.

Since the ISFA issued the $399 million in bonds for the Soldier Field renovations, Crains said $384 million in principal still remains outstanding, meaning the ISFA has — for the most part — only made interest payments the last two decades and faces a tricky road toward repaying the debt on those bonds.

The ISFA’s main stream of revenue comes from the previously mentioned 2% hotel occupancy tax and annual $5 million payments from the city and state.

With hotel tax revenue seeing a steep decline over the last three years — due to the global pandemic and subsequent recovery efforts not reaching pre-pandemic levels — the state has provided advanced payments to the ISFA to cover annual debt service, which the ISFA then repaid from its tax revenue later on, if possible.

Over the last three years when that process didn’t cover the repayments needed, the difference was taken from Chicago’s share of state income taxes.

Add in the fact that, according to Crains, Chicago could be on the hook for increasingly large payments to compensate for the debt service shortfall — subsequent refinancing is set at $55 million this year, with it set to rise to $90 million by 2033 — it could likely become increasingly hard to find funds for Soldier Field maintenance and improvements because no matter whether the Bears stay at Soldier Field, move to Arlington Heights, or build a new stadium along the Chicago lakefront, the ISFA will still be on the hook for the debt service.