The Cubs A-TIF: Amusement Tax Increment Financing | Bleader

Friday, November 12, 2010

The Cubs A-TIF: Amusement Tax Increment Financing

Posted By on 11.12.10 at 06:02 PM

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In 2009, the Cubs paid $16.1 million in amusement taxes to the city of Chicago and Cook County through a 12 percent levy on each ticket. The team proposes that the city and county would be guaranteed this amount for the duration of the bonds. But the incremental growth in amusement taxes beyond $16.1 million, either through increased ticket sales or increased ticket prices at Wrigley, would pay the bonds over time, Ricketts said.

Emphasis mine; I knew that structure sounded familiar.

Here's how the math looks to me, though feel free to correct me if I'm wrong, because it's entirely possible, and I'm not saying that just to be modest:

$250m at, say, 3% over 35 years would be about $11.5m a year to pay off the low end of the proposed offering; Ameet Sachdev discusses how the streams would be backstopped in the article. That seems like a lot to count on in incremental revenue if you're starting at $16.1m at 12% of revenue—a ~70% increase between more sales and higher prices.

Which seems like an ambitious mark, though increasing the amount of non-baseball use like concerts—and ski jumping!!!—could help.

As would, uh, making the playoffs. If the Cubs went as far as the [JINX REDACTION] that could increase the number of games played by 10%, with obvious gains in ticket price and attendance. Now, the Cubs have a less than stellar record on that count, and the state needs to protect its investment, and the Cubs don't have a lot to bargain with—particularly since their timing on this idea really couldn't be any worse. So we should really work them hard on that count. A provision that would force the Cubs to kick in more money if a signee exceeded, for example, a set contract-value/on-base-percentage ratio, would go a long way towards reducing waste.

Well, I guess they have some leverage: "We don't have a Plan B," Mr. Ricketts said. Meh; we're used to that from the Cubs. Someone tell John Cullerton to hold out for Carl Crawford, at least.

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