Bears take a major step towards leaving Chicago

Bears take a major step towards leaving Chicago

Bloomberg -. The Chicago Bears took a major step towards leaving their hometown on Wednesday with an agreement to buy a suburban horse-racing property, a move that a fiscal watchdog says threatens the tourism-reliant city s finances.

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Churchill Downs Inc. has agreed to sell a 326 - acre farm in Arlington Heights, Illinois, the site of Arlington International Racecourse for $197.2 million to the National Football League team, according to a statement Wednesday.

The closing is expected to be in late 2022 or early 2023. The transaction isn't a surprise, but does still concern the city of Chicago, which is still trying to claw back from the economic and pandemic downturn that slammed revenues from entertainment venues, hotels and restaurants.

It s another challenge to Mayor Laurence Msall and her administration, Lori Lightfoot, the president of the Civic Federation, said in an interview. This is a much longer-term issue than the immediate interruption of the pandemic and the reopening. Soldier Field, opened in 1924, is the oldest stadium in the NFL. While the Bears call it home since 1971, Chicago Park District owns the property and rents it to groups including the team. The park district has already been hurting financially from the pandemic. Revenue for the stadium in 2020 plunged from an initial budget estimate of $40.2 million to $14.8 million, according to bond documents.

Lightfoot, who is trying to close a $733 million budget deficit, has said she remains open to working with the Bears but is trying to do what's best for the economic interest of taxpayers to generate revenue. The administration cited contracts with the Chicago Fire soccer team and Soldier Field events such as the Shamrock series, a football game between the University of Notre Dame and University of Wisconsin this month, as examples of the stadium’s appeal.

We also have to make a business decision here in Chicago, Lightfoot told reporters. I also need to make sure that first and foremost I am doing what is best for taxpayers. Bears President & Chief Executive Ted Phillips called the finalization of the sale agreement the critical next step in the team s exploration of the property and its potential.

Much work remains to be completed, including working closely with the Village of Arlington Heights and surrounding communities, before we can close on this transaction, Phillips said in a statement. Our goal is to chart a path forward that allows our team to thrive on the field, Chicagoland to prosper from this endeavour, and the Bears organization to prosper a strong future. S&P Global Ratings analysts Scott Nees and Jane Ridley say it is unclear what would be the effect of a departure by the Bears on the city, which has a broad economy. They added that they see the potential to recover lost revenues at Soldier Field from other events. The direct fiscal effects would be limited, they said in an interview Wednesday.

The Bears pay approximately $6.5 million annually in lease payments through an agreement that runs through 2033, and the district mainly benefits from parking fees at Bears events, according to S&P.

Msall said the issue is bigger than simply revenue from the lease or finding replacement events. It s difficult to see how the Bears are having a negative impact on the city's tourism, marketing and reputation. The issue affects the state as the Illinois Sports Facilities Authority sold bonds for Soldier Field renovation years ago and then refinanced that debt, Msall said.

If this is a win for Chicago, there will be another loss to Arlington Heights in Chicago financially and reputationally, Msall said.

Amid the furor over the Chicago Park District, the Chicago Bank District plans to issue $143.56 million in bond payments for capital projects and refinancing the week of Oct. 5.

It would not be a positive for the credit if the Bears move into the suburbs, but it has to be taken in context with the full amount of revenue coming into Park District, said Dan Solender, director of tax-free fixed income investments for Lord, Abbett Co.

While revenue growth is important to the credit outlook, the major focus for park district has been dealing with their pensions, he said.

The district pension fund has raised the 2020 tax charge to 15.3% and it is preparing for higher contributions in the coming few years, according to S&P. The funding is on distressed levels, according to the ratings firm.

Lord Solender holds Chicago debt as part of its $36 billion in muni assets and its interest in the park district sale will depend on pricing, Abbett said.

The Bears taking this step is not a positive for the credit, but they still should be able to get a good market reception for their deal if they value it appropriately, he said.

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