Making Sense of the Chicago Bears' New Stadium Announcements: 7 Things to Consider

The Chicago Bears presented their proposal for a new stadium on Wednesday. A lot of words were said with big numbers and vague details on how this all might go down. After reviewing the details on the Bears website and listening to the press conference, I formulated some of my takeaways here.

1. No New Taxes, According to Mayor Brandon Johnson

No new taxation is a good place to start! At least if you live in the Chicago area. It almost sounds too good to be true, though. Usually, when something is deemed to be "no cost," it just means that the cost is hidden. We'll get into where this money will specifically come from a little bit later. But for now, the point is that there will be no new income or sales taxes imposed to get this project completed.

2. Sources and Uses

What are the sources and uses for the project? By that, I'm asking two questions. Where is the money coming from, and what's it specifically going toward? The Bears gave a quick breakdown of the sources and uses in their presentation.

I have many more questions about the fund use breakdown, but this stuff is usually pretty straightforward. It's important in any construction project to nail down the specific uses. This figure gives us as brief of a budget as possible, with just one line item. The uses of the proposed moneys will need to be nailed down sooner or later. But until then, we just have to wait and see.

3. Where Is the $900MM Coming from if There Will Be No New Taxes?

This is my understanding of the proposal, but some of the details are still hazy. The Bears are proposing that the ISFA take out $900MM in new debt, secured by the Illinois Sports Facilities Authority's portion of future collections on the 2% city hotel tax (roughly $59MM in FY2023).

The new debt will (likely) be repaid with those future hotel tax collections by which the debt is secured. Within the new debt issuance, the ISFA will take out and refinance other existing debt, amortizing the total across a fresh 40 years (as proposed).

4. What Is the ISFA and Where Does Their Money Come from?

The Illinois Sports Facilities Authority (ISFA) is a government entity created by the Illinois Public Assembly for the purpose of constructing and renovating professional sports stadiums in Illinois. I pulled up their financial statements and gave them a quick review. The group's revenues break down as follows:

• $10MM per year from the Illinois General Assembly, 50% of which roots back to State Level Hotel Taxes in the City of Chicago and the other 50% of which roots back to State Treasury Local Gov Distributive Fund
• 2% Hotel Tax Collections in the City of Chicago ($59MM in FY2023)
• Other Appropriations ($8.7MM in FY2023)

There are a few other line items including fees from the White Sox, interest income, and special events revenue. Revenues in FY2023 totaled $82.1MM with an excess after expenditures of $3.3MM. Expenditures included roughly $50.5MM in debt service in FY2023.

This is a heavily leveraged shell entity, which makes sense since its balance sheet purpose is to hold and service debt. Their full financial report can be found online.

5. Economic Impact

The Bears claim the finished project will have an $8.4B economic impact across the region. I have no idea what the timeline is to generate that number. The economic impact will increase local tax collections (assumed to be sales tax and hotel tax dollars) by 37%. The annual economic impact is projected to be $456MM, but there's no real data included to back that number up.

Based on the numbers presented, it seems like a great investment for the city. Returning $456MM of annual economic impact on a $900MM investment is HUGE ROI! But it's important to remember that this is a sales pitch, and the picture isn't clear yet. I don't believe that the economic impact number is the same as projected future tax dollars collected, as only a percentage of that impact will actually be collected to fund government operations.

Meanwhile, a smaller, more specific portion will be collected to repay the specific debts. We just need more details to better understand the full financial picture here. It could be a good deal for the City and taxpayer, but it could be a bad deal. More specifics need to be released to really understand that better.

6. Friends of the Park

Getting this through Friends of the Park will be interesting to watch. Friends of the Park is an advocacy group known for protecting lakefront land and parks in Chicago. The group has represented hurdles for lakefront development in the past and will likely play a role in how this entire plan plays out. In the past, the group successfully sued to prevent George Lucas from building a museum along the lakefront and has recently voiced opposition to the construction of a stadium project on the Museum Campus.

7. But Can't the Bears Finance the Entire Thing Themselves?

If the Bears are able to raise the money to cover 72% of the project, as they've stated, I'm sure they can raise the rest of the money if needed. However, they have reasons to remain on the lakefront. It's an attractive location, and they need in order to do that. They won't be able to purchase Park District land. From a pure dollars and cents standpoint, I'm sure they want the City to have some skin in the game to get things done. But the greed factor is also likely at play.

I'm not sure whether we have enough information to fully assess the proposal, yet. But remember, anything they do will be public information and you have access to the financial statements and disclosures to ANY and ALL of these entities. Knowledge is power. Be informed when the powers that be are potentially talking about things that impact you, your wallet, and your community.

Related: Bears Release First Renderings and Plans for New Stadium in Chicago

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