When the team that is now the Chicago Bears took up residence in Chicago in 1921 after a brief stint in Decatur, their NFL-precursor American Professional Football Association rivals included the Green Bay Packers and the then-local Racine Street Cardinals (later of St. Louis and now of Arizona), but also such forgotten franchises as the Dayton Triangles, the Tonawanda Kardex, the Hammond Pros, the Pottsville Maroons, and the Evansville Crimson Giants. The Staleys, as they were known before rechristening themselves the Bears (they perceived themselves as bigger than baseball’s existing Chicago Cubs), have been in Chicago ever since. At least until now.
On Wednesday, team president Kevin Warren floated the possibility of moving the franchise to Northwest Indiana, amidst ongoing negotiations around a new home and a new stadium for the team.
The Cardinals, founded as the Morgan Athletic Club in 1898, left Chicago 65 years ago. The Bears have remained, and with the Packers (founded in 1919 and joining the NFL’s precursor league a year later), are one of the NFL franchises with the longest tenure in a single city. Now, the team is threatening to go elsewhere as they negotiate over taxes and public financing.
The Bears have two asks: (1) $855 million in public funding for new infrastructure (roads, utilities, commuter line adjustments) to support a stadium in the suburbs, and (2) legislation exempting construction materials from the sales taxA sales tax is levied on retail sales of goods and services and, ideally, should apply to all final consumption with few exemptions. Many governments exempt goods like groceries; base broadening, such as including groceries, could keep rates lower. A sales tax should exempt business-to-business transactions which, when taxed, cause tax pyramiding. for, and freezing property taxA property tax is primarily levied on immovable property like land and buildings, as well as on tangible personal property that is movable, like vehicles and equipment. Property taxes are the single largest source of state and local revenue in the U.S. and help fund schools, roads, police, and other services. assessments on, megaprojects like their proposed stadium.
Public financing of stadiums tends to be a raw deal for taxpayers, and state officials are right to balk at an $855 million price tag. There can be good-faith debates about whether state and local governments should pick up some share of the cost of additional public infrastructure necessary to serve a large new project like a stadium or whether the team itself should proffer the funds to cover all these services, but there’s no reason that taxpayers should shoulder the entirety of these costs. (At least the team isn’t asking for assistance with actual stadium construction costs.)
Then there are the taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. incentives. The team championed legislation earlier this year (H.B. 4058) that would have made “megaproject property” eligible for an exemption from use tax on construction materials and for an assessment freeze that would restrict their assessed value for tax purposes to the value of the land before major construction begins.
Illinois’ sales tax arguably shouldn’t include business inputs like materials used in the construction of commercial structures. But that should be true for all business taxpayers, not just certified megaprojects, and it’s important to note that Indiana’s sales and use tax baseThe tax base is the total amount of income, property, assets, consumption, transactions, or other economic activity subject to taxation by a tax authority. A narrow tax base is non-neutral and inefficient. A broad tax base reduces tax administration costs and allows more revenue to be raised at lower rates. also includes construction materials. Meanwhile, allowing the stadium site to be assessed at vacant lot values for decades is a clear tax giveaway, one that lawmakers are prudent to avoid.
The Bears do have a point, though: Illinois, and specifically Cook County, taxes are very high. The proposed stadium itself carries a reported price tag of about $2 billion. If we assume that the fair market value of the broader campus, which will also include other retail spaces, runs $3 billion, then the unabated property tax burden in Arlington Heights could easily run about $210 million per year. If the team moved to Northwest Indiana, the property tax burden would probably fall to $50-75 million a year, depending on where the team chose to locate.
In Arlington Heights, Illinois, moreover, the combined sales and use tax rate is 10 percent. In Indiana, which only has a state-level sales tax, the rate is 7 percent. If we assume that a $3 billion construction project includes $1 billion in materials, locating in Indiana provides a further $30 million savings on use tax—meaningful, though modest compared to the roughly $150 million a year the team might save in property tax liability.
Illinois lawmakers are right not to play ball on special tax treatment for the Bears. But the team is also right that, under ordinary tax treatment, it’s hard to operate in Illinois. Chicago and the state of Illinois have long sought to patch over an uncompetitive tax code with targeted incentives, but when those aren’t available, even a Chicago institution as venerable as the Bears will be tempted to stray.
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