MEDIA WATCH: Crain's Chicago Business picks up CTU report on United Center tax ripoffs

Crain's Chicago Business on January 7, 2013 picked up the recent Chicago Teachers Union research report on the price of tax breaks to the United Center owners Jerry Reinsdorf and Rocky Wirtx, giving a balanced report on the latest CTU research paper. The paper, which has already been reported at Substance, has been ignored by the Chicago Sun-Times and Chicago Tribune. The report, entitled "Nothing but the net..." was released by the CTU on January 3, 2013 and has been available to reporters across Chicago since then. The URL for the full report is:

Chicago Blackhawks owner Rocky Wirtz (above left) at the United Center. Chicago has given tens of millions of dollars in tax breaks to the United Center, which benefit Wirtz and Chicago Bulls owner Jerry Reinsdorf. As reported earlier (and available on line) the CTU report is half footnotes explaining the complex methodology the researcher used to arrive at the report's conclusions.


For United Center owners Jerry Reinsdorf and Rocky Wirtz, one of the great things about the property tax break the arena has enjoyed since it opened in 1995 is that nobody really knows exactly how much the building is worth.

There are no comparable Cook County properties against which it can be measured, leaving plenty of mystery as to its true market value, and, therefore, what its owners ought to pay into public coffers.

But a new report commissioned by the Chicago Teachers Union sheds a little light on just how sweet of a deal they get. The report asserts that the arena's owners have unfairly saved nearly $30 million in property taxes during the past decade.

I spoke with the lead researcher on the study, Brown University Ph.D. candidate Sean Dinces, who explained his methodology in figuring the arena's tax savings.

He dug through tax records from the Cook County Board of Review, the county Assessor's office and the county treasurer to find the annual net income reported by the arena between 2002 and 2007, when its owners appealed their property taxes, making them public record.

What he found was that Messrs. Reinsdorf and Wirtz paid $8.5 million in property taxes during that time.

Without the benefits from the 1989 legislation granting them relief � things like a locked-in assessment rate and deductions of income taxes, maintenance costs and mortgage interest � he calculated that they would have had to pay $35.9 million or more in property taxes.

"They've paid what's required based on the legislation, but they've benefited from a huge market that has made them hugely profitable, and they owe the city and the city's residents (more) for that," said Mr. Dinces, whose dissertation "uses the history of the Chicago Bulls since 1980 as a case study for understanding the urban political economy of professional sport."

Keep in mind that the property tax deal was central to Mr. Reinsdorf and then-Blackhawks owner Bill Wirtz agreeing to build the West Side arena without public funding more than two decades ago.

More recently, an extension beyond its 2017 expiration date has been reported as the tradeoff for the owners to build a $75 million to $85 million, 260,000-square-foot retail development in the parking lot east of the arena.

For their part, spokesmen for the arena's owners continue to point to the lack of comparable properties in Cook County and the inability to really guess how much they would be paying without the tax break.

In a statement, they addressed only the report's assertion that philanthropy from the arena's owners has shortchanged public schools in favor of charter schools.

"Since opening as a privately funded and operated arena in August 1995, the United Center has generated more than $310 million in direct tax revenues for the city, county and state," a United Center spokesman said in a statement. "It is both disappointing and inaccurate to suggest that our charitable activities and long-standing support for public education in Chicago are in any way related to those taxes."

Charitable efforts aside, the big takeaway here is that the 1989 state law has worked out nicely for Messrs. Reinsdorf and Wirtz, and that Mayor Rahm Emanuel, whose office did not respond immediately to a request for comment, may have some numbers to double-check before agreeing to extend the tax break in return for the new retail structure that he hopes will spur economic growth.

The positive impact of the United Center to the Near West Side is tricky to measure, especially when trying to balance it with a complicated tax break that's largely tied to the performance of a private business.

The building draws about 1.5 million visitors each year (when the Hawks are actually playing � probably more like 1.1 million with this year's shortened season) and has helped gentrify the Near West Side, but the surrounding area still faces a dearth of restaurants and bars.

Of course, you'd be hard-pressed to argue that the neighborhood would be better off without it, and the list of sour deals over the past 20 years to publicly finance stadiums with bond issues is pretty long.

Check out Mr. Dinces' findings in the full report here:


January 8, 2013 at 11:35 PM

By: John Kugler

200% Increase in shootings -- so far this year!

Eight days into the new year and we stand at just under 50 shootings, an even dozen homicides. That's a 200% increase over the same time frame last year.

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