Jerry Reinsdorf attempts to explain why the White Sox should get $1 billion for new stadium
The White Sox owner said Chicago will be at risk of losing his team if the government doesn't pay up
The Chicago White Sox want $1 billion from the state of Illinois for a new stadium. White Sox owner Jerry Reinsdorf would like you to hear his reasons.
It's nothing you haven't heard before.
The modern state of requests for stadium funding can pretty much be broken down into three statements:
1. "Our stadium will inject life and money into the area" (a standby going back decades)
2. "We want to own the real estate around our stadium" (the Atlanta Braves succeeded at getting this; the Baltimore Orioles did not)
3. "We might have to move if there's a better offer elsewhere" (the Oakland Athletics are in the process of messing this one up)
Reinsdorf unsurprisingly went 3-for-3 while speaking with Crain's Chicago Business, the outlet that broke the news that the White Sox were pursuing a 10-figure sum to supplement their proposal to replace Guaranteed Rate Field with a brand-new stadium at The 78 site in South Loop.
Jerry Reinsdorf: Giving the White Sox $1 billion will be good for Chicago and Illinois
On the first count, Reinsdorf claimed that the new stadium would "anchor" a property that would generate a projected $4 billion in economic impact and $200 million in tax revenue:
“At the end of the day, the benefit to the city and state are going to outweigh the cost,” Reinsdorf asserted. “This is not [just] a ballpark. This a development of which the ballpark is the anchor.”
Numbers such as those, conveniently provided by real estate developer Related Midwest, are a tempting prospect for a city and state. Unfortunately, economists have long been skeptical about these kinds of claims for a variety of reasons.
A stadium helping to bring in $4 billion sounds nice, but that money spent often comes from somewhere else in people's budgets. Think about a family choosing between a game or a bowling alley, or friends picking between a game and going to a bar. There's also the matter of opportunity cost, as it's quite likely that a lot of people have some other ideas about how Chicago could use $1 billion if it's up for grabs.
Jerry Reinsdorf: Shohei Ohtani's contract scares us
As for the real estate question, Reinsdorf said his team couldn't survive in a world in which the Los Angeles Dodgers are giving Shohei Ohtani $700 million:
“The economics of baseball have completely changed,” with top ballplayers signing contracts worth as much as $700 million, Reinsdorf said. “At the location we’re at now, we cannot generate the revenue needed to pay those salaries,” said Reinsdorf, referring to the team’s heavily-residential Bridgeport home. A new space in a livelier downtown area with shops, bars and other entertainment venues within walking distance should do better, he contends.
Reinsdorf denied that the real problem is poor performance by his team. Even after winning the World Series in 2005, “we didn’t crack the 3 million (attendance) mark,” something that Series winners routinely accomplish.
Perhaps at this point we should note that the largest contract Reinsdorf has ever given out as White Sox owner is Andrew Benintendi's five-year, $75 million extension. Reinsdorf is clearly implying that his team would be able to play with the heavy hitters if it had that real estate income, which is something you will have to just trust him on.
The Washington Nationals have also never cracked 3 million in attendance, but they've still paid out some massive contracts, such as those of Max Scherzer and Stephen Strasburg. The Houston Astros cracked 3 million for the first time since 2007 last year.
Jerry Reinsdorf: Chicago must be prepared for the death of Jerry Reinsdorf
Reinsdorf takes a somewhat original route on the point of possibly moving elsewhere, but that might be due only to the fact that he already played this card in the 1980s, when he was pushing for funding for what became Guaranteed Rate Field, the stadium he is now trying to leave.
You see, the reason the government should give Reinsdorf $1 billion is that Reinsdorf will likely die soon, and he just doesn't know what those other billionaires will do when he's gone:
Noting that he’s about to turn 88, Reinsdorf said that “when I’m gone,” his son Michael Reinsdorf, president of the Chicago Bulls, which the family also owns, “will have an obligation to do what’s best” for other investors in the Sox. “That likely means putting the team up for sale ... The team will be worth more out of town.”
And that's pretty much the game. The White Sox want more money and are offering the carrot of even more money going back to Chicago if they get it and the stick of becoming, let's say, the Nashville White Sox if they don't.
Whether that's enough to move the Illinois government is another matter. The White Sox are reportedly proposing that Illinois extend a preexisting 2% hotel occupancy tax past its planned expiration date of 2034, when it was supposed to have paid off the Chicago Bears' Soldier Field renovation in 2003. That tax was already struggling to cover the Soldier Field bonds due to the COVID-19 pandemic. The White Sox would also reportedly like to receive authority to claim sales tax generated in their new district (which might clash with the first point above).
We also can't forget the $551 million in infrastructure upgrades needed (CTA Red Line stop, street improvements, etc.) that Related Midwest will cover and get reimbursed by Chicago.
Making all these requests even more difficult is the presence of the Bears, who are currently pursuing their own attempt to get a new stadium subsidized by local government. Reinsdorf told Crain's that he has had "conversations" with the McCaskey family that owns the Bears, and he does not "want to be in competition with the McCaskeys."
Still, if it comes down to a choice, the Bears are Chicago's only team in the NFL. The same can't be said for the White Sox in MLB.
