$300 mill. arena for DePaul? And we argue about expanding the Rent

[UConnJim]

They are talking about spending $300 million for a new arena in Chicago for DePaul basketball. The proposal calls for a 12k seat arena with the cost to be funded by $100 million from DePaul, $100 million from taxpayers, and $100 million from naming rights.

Well, DePaul has been averaging ~8k fans the last few years, so sell outs aren't the excuse for building a new arena. It does show that DePaul is committed to basketball.

The Rent cost just under $100 million, and we can't find $30 to $40 million to expand the Rent even though we need to show commitment to football to get a better conference invite? Interest rates are at historical lows and naming rights for the Rent are coming up in the near future. Make it happen!

One last point. From a business perspective, if expanding the Rent with $30 to $40 mill. brought in bigger name opponents and possibly lead to a conference invite with media rights $20 to $25 million per year more than UConn is making today, you expand the Rent!!!!

 

[J187Money]

Basketball arenas have many other uses. Football stadiums far less (except for domes). Worth more taxpayer money.

 

[UConnJim]

Basketball arenas have many other uses. Football stadiums far less (except for domes). Worth more taxpayer money.

Read the article. It doesn't sound like there are too many uses as there are already convention centers and basketball arena in Chicago. And, DePaul passed up a free rent arena for 10 years.

 

[upstater]

The only thing I can think of is that it ties into a casino. So, even though you have arenas for big shows, the casinos like to have entertainment. 12k is a bit much for that though. I don't know what's crazier--DePaul finding $100m or the City of Chicago finding $100m. Chicago just shut down 50+ schools and expanded classes to 40 students per class.

 

[frankthetank]

Read the article. It doesn't sound like there are too many uses as there are already convention centers and basketball arena in Chicago. And, DePaul passed up a free rent arena for 10 years.

Actually, Chicago is one of the most underserved markets for multipurpose arenas in relation to its size in the country (if not #1 on the list). The United Center makes a *killing* because it has a de facto monopoly on any event that comes into town that needs modern amenities. That's why they offered DePaul the free rent in the first place - it was worth it if they could kill off a new separate arena deal that would have created competition for events within the city. Allstate Arena is the only one that has enough seats to compete with the United Center at all, but it's old, dilapidated, in the flight path of O'Hare (literally speaking - you will duck your head in the parking lot there because the jet planes are coming in for landings a few hundred yards away), without amenities, and nowhere close to Chicago's nightlife... which is why DePaul badly wants to get out of there. Allstate's only real value proposition is that there aren't any other viable options besides the United Center and they can compete on pricing. There are several markets that are smaller than Chicago (e.g. San Francisco Bay Area, Phoenix, Detroit, DC) that have better arena competition. So, that's the whole reason why this DePaul arena project can get off the ground - there very easily a backlog of non-DePaul events that will fill that place up, which makes it financially viable. I went to DePaul for law school and I'd be the first to tell you that Blue Demons basketball could never support a $300 million arena on its own.

 

[UConnJim]

Actually, Chicago is one of the most underserved markets for multipurpose arenas in relation to its size in the country (if not #1 on the list). The United Center makes a *killing* because it has a de facto monopoly on any event that comes into town that needs modern amenities. That's why they offered DePaul the free rent in the first place - it was worth it if they could kill off a new separate arena deal that would have created competition for events within the city. Allstate Arena is the only one that has enough seats to compete with the United Center at all, but it's old, dilapidated, in the flight path of O'Hare (literally speaking - you will duck your head in the parking lot there because the jet planes are coming in for landings a few hundred yards away), without amenities, and nowhere close to Chicago's nightlife... which is why DePaul badly wants to get out of there. Allstate's only real value proposition is that there aren't any other viable options besides the United Center and they can compete on pricing. There are several markets that are smaller than Chicago (e.g. San Francisco Bay Area, Phoenix, Detroit, DC) that have better arena competition. So, that's the whole reason why this DePaul arena project can get off the ground - there very easily a backlog of non-DePaul events that will fill that place up, which makes it financially viable. I went to DePaul for law school and I'd be the first to tell you that Blue Demons basketball could never support a $300 million arena on its own.

Thanks, Frank. Good insight.

 

[HuskyJJ]

DePaul is a private college. If i was a taxpayer in Chicago, I would be PISSED.

 

[FfldCntyFan]

Is there anything anywhere that claims the taxpayers (of Chicago or Illinois) would be willing to fork over $100, much less $100,000,000 for a private school? Is there any reason to believe (considering the fact that an NFL stadium with two tenants was only able to get $20mm for naming rights less than two years ago) that the naming rights for this arena could come in anywhere near $100,000,000?

Someone may be trying to build momentum by spinning this story but the odds are better for the Bulls end up winning this year's NBA title than DePaul getting $200,000,000 ($100mm each) from naming rights and tax dollars.

 

[UCFBfan]

Are they looking to build the arena downtown? I know Allstate is right by O'Hare like Frank said. A downtown arens would serve many purposes abd be used a lot more. Also, I know I've passed DePaul fields on the L on my way to Wrigley. Is DePaul located in that end of Chicago or is it outside the city? Having an arena located on or near the campus might draw more students, thus upping the attendance numbrrs?

Sent from my SCH-I535 using Tapatalk 2

 

[zls44]

$100m from naming rights LMFAO

 

[frankthetank]

Is there anything anywhere that claims the taxpayers (of Chicago or Illinois) would be willing to fork over $100, much less $100,000,000 for a private school? Is there any reason to believe (considering the fact that an NFL stadium with two tenants was only able to get $20mm for naming rights less than two years ago) that the naming rights for this arena could come in anywhere near $100,000,000?

Someone may be trying to build momentum by spinning this story but the odds are better for the Bulls end up winning this year's NBA title than DePaul getting $200,000,000 ($100mm each) from naming rights and tax dollars.

There are a bunch of technical and legal issues here, but at a high level, there's untapped bond money that's allocated for "McPier" (the agency that runs McCormick Place and Navy Pier that's proposing this DePaul arena) that can't be allocated anywhere else. So, it's not quite as simple as saying that there's $100 million being spent here that can be used elsewhere in the city. This is money that can only be used by McPier under law.

 

[frankthetank]

Are they looking to build the arena downtown? I know Allstate is right by O'Hare like Frank said. A downtown arens would serve many purposes abd be used a lot more. Also, I know I've passed DePaul fields on the L on my way to Wrigley. Is DePaul located in that end of Chicago or is it outside the city? Having an arena located on or near the campus might draw more students, thus upping the attendance numbrrs?

Sent from my SCH-I535 using Tapatalk 2

DePaul's main location is in Lincoln Park, which is on the North Side of the city. Probably the best comparison for East Coast people is that DePaul is the equivalent of St. John's (right down to the Vincentian order) as an institution that's plopped into Georgetown's neighborhood (meaning *extremely* expensive real estate with yuppies, yuppies and more yuppies). Distance-wise, it's not really "close" to the proposed arena (6 or 7 miles), but in a place like Chicago, the more critical piece is that it would be easily accessible by students on the L. DePaul also has a South Loop campus (the southern edge of downtown Chicago) that's about 1.5 miles away from the proposed arena - that would actually be a very quick L ride for the students that live in that area. The arena is still technically in the South Loop, but it's really the southern edge of that neighborhood (whereas the DePaul South Loop Campus is on the northern edge), so the average student wouldn't be walking that distance. The arena would be right next to McCormick Place, which is the major convention center for the city and is immediately south of Soldier Field (where the Bears play).

 

[freescooter]

to me this sounds like an effort to build a new arena that needs a tenant. If that tenant happens to also have the ability to throw in a big piece of the costs, all the better. This isn't "building a new arena for Depaul" so much as building a new arena. DePaul could be anyone who would use an arena and is just one of the required pieces to make the deal feasible.

 

[upstater]

to me this sounds like an effort to build a new arena that needs a tenant. If that tenant happens to also have the ability to throw in a big piece of the costs, all the better. This isn't "building a new arena for Depaul" so much as building a new arena. DePaul could be anyone who would use an arena and is just one of the required pieces to make the deal feasible.

But how does DePaul come up with $100 million?

DePaul would essentially be tossing that much money to the wind. It would never see that money again. I bet you DePaul's AD is subsidized like the vast majority. So, how do you service $100m worth of debt??

 

[frankthetank]

But how does DePaul come up with $100 million?

DePaul would essentially be tossing that much money to the wind. It would never see that money again. I bet you DePaul's AD is subsidized like the vast majority. So, how do you service $100m worth of debt??

Supposedly, there will be a mix of private donations and debt service. DePaul wouldn't be plopping down $100 million upfront nor would it be borrowing all of it.

You have to remember that real estate in Chicago can be quite expensive (it's not NYC or SF-level pricing, but certainly as expensive as anywhere else in the downtown and Lincoln Park areas that DePaul is looking at), so DePaul is well-versed in getting the financing to buy up buildings and properties that cost tens of millions of dollars. DePaul partnered with Columbia College to build a student dorm in the South Loop (and I used the term "dorm" loosely as they are really luxury apartments) that cost over $130 million in 2002 dollars.

 

[Pudge]

Thank you Frank. All informative stuff.

 

[freescooter]

upstater, I have no idea how they would come up with $100 million. My guess would be that DePaul would go on the hook for a piece of the bonds. They wouldn't really write a check. But the point is that this is far far far from a done deal, first and foremost, and secondly, I suspect the developers of this thing probably looked to DePaul because they needed an "anchor tenant" who would play 15-18 games a year there and likely pay a premium price for the privilege either in rent or by contributing to the project. If they had a choice they'd probably have preferred the Bulls or the Blackhawks, but neither one waa available...so they took the next best thing.

 

[Fishy]

I'll wait until I see this building start to go up before I believe that the City of Chicago will dump more than $10 into a hole for DePaul basketball.

 

[huskymedic]

ESPNAndyKatzMay 15, 11:55pm via Safari on iOS
This plan by Mayor Emanuel to build a new DePaul arena as part of revamping Navy Pier is huge for new Big East
http://www.chicagobusiness.com/article/20130515/BLOGS02/130519849/

From within:

>>DePaul's board has approved an agreement in principle to hold its men's and women's basketball games there, as well as some other events such as graduation ceremonies, Mr. Koch said. The school, which now plays its basketball games in Rosemont, will finance half the cost of the new building (or $70 million) and, according to Mr. Reilly, it will pay “market rate” rent of $25,000 per men's game, $15,000 for women's, which attract a smaller crowd.

DePaul will get naming rights on the facility, and it is believed the school has lined up a major donor. The timetable calls for the Blue Demons to begin playing there in the 2016-17 session.<<

ESPNAndyKatzMay 15, 11:58pm via Twitter for iPad
Of course will have to see if the arena actually happens for DePaul. Of course, we'll see how political this becomes in Chicago.

 

[upstater]

ESPNAndyKatzMay 15, 11:55pm via Safari on iOS
This plan by Mayor Emanuel to build a new DePaul arena as part of revamping Navy Pier is huge for new Big East
http://www.chicagobusiness.com/article/20130515/BLOGS02/130519849/

From within:

>>DePaul's board has approved an agreement in principle to hold its men's and women's basketball games there, as well as some other events such as graduation ceremonies, Mr. Koch said. The school, which now plays its basketball games in Rosemont, will finance half the cost of the new building (or $70 million) and, according to Mr. Reilly, it will pay “market rate” rent of $25,000 per men's game, $15,000 for women's, which attract a smaller crowd.

DePaul will get naming rights on the facility, and it is believed the school has lined up a major donor. The timetable calls for the Blue Demons to begin playing there in the 2016-17 session.<<

ESPNAndyKatzMay 15, 11:58pm via Twitter for iPad
Of course will have to see if the arena actually happens for DePaul. Of course, we'll see how political this becomes in Chicago.

So, from $300 million to?

$100 million from DePaul is now $70 million.
$100 million from naming rights has been rolled into DePaul's basket.

Just to compare, Gillette paid Bob Kraft a total of $10 million for the first 10 years of rights to the stadium. $1 million a year. The Buffalo Bills won't even rename their stadium because no one has ever ponied up $1 million a year for the rights. I know Buffalo isn't New York, but the new Big East isn't the NFL either. The amount of people that would hear the name of the Bills stadium dwarfs the amount that will watch DePaul bball on Fox Sports.

 

[UPitt]

So, from $300 million to?

$100 million from DePaul is now $70 million.
$100 million from naming rights has been rolled into DePaul's basket.

Just to compare, Gillette paid Bob Kraft a total of $10 million for the first 10 years of rights to the stadium. $1 million a year. The Buffalo Bills won't even rename their stadium because no one has ever ponied up $1 million a year for the rights. I know Buffalo isn't New York, but the new Big East isn't the NFL either. The amount of people that would hear the name of the Bills stadium dwarfs the amount that will watch DePaul bball on Fox Sports.

Chicago is not on par with New York, but Barclays paid $400 million dollars for naming rights to the Barclays Center for 20 Years.

 

[upstater]

Chicago is not on par with New York, but Barclays paid $400 million dollars for naming rights to the Barclays Center for 20 Years.

Now that's impressive. I wonder if it's a backloaded deal.

Also, that's NBA basketball watched the world over (good for a British bank). DePaul bball will not attract anywhere near that kind of audience.

The NBA is extremely popular around the world. We are talking billions of eyeballs.

 

[frankthetank]

So, from $300 million to?

$100 million from DePaul is now $70 million.
$100 million from naming rights has been rolled into DePaul's basket.

Just to compare, Gillette paid Bob Kraft a total of $10 million for the first 10 years of rights to the stadium. $1 million a year. The Buffalo Bills won't even rename their stadium because no one has ever ponied up $1 million a year for the rights. I know Buffalo isn't New York, but the new Big East isn't the NFL either. The amount of people that would hear the name of the Bills stadium dwarfs the amount that will watch DePaul bball on Fox Sports.

You're looking at it from just a pure 18 basketball games or so per year perspective. Is there a line of people waiting to donate tens of millions of dollars for a DePaul basketball arena only? Maybe not. Is there a line of people waiting to donate tens of millions of dollars for an arena that's going to be attached to McCormick Place so that his/her name becomes immortal in Chicago or, if you're a corporation, curry a TON of favor for the pet project of the Mayor (in a city where the Mayor's Office is more powerful than any other major city in the country)? When you phrase it that way, you might find quite a few rich people or corporations that have the combo of vanity and political desires to set forth that money. You have to look at the bigger picture (much like the massive money that donors send in to fund a Presidential Library). Having lived in Cook County for the majority of my life, $70-100 million amortized over a 20-30 year period (some or all of which might even be tax deductible if structured properly!) really isn't as much as you'd think if what you end up getting is a direct line to the Mayor's office for all of your other business with the city.

Chicago politics is a completely different animal than maybe any place other than New Orleans (who have their own unique style of patronage and corruption). In other cities, the City Council might matter. There could actually be the notion of separation of powers in a place like Hartford or even New York City. In Chicago, that doesn't exist. What the Mayor wants is what the Mayor gets. Period. The Mayor doesn't set forth plans unless they're effectively done deals, and even when they aren't done deals, they might push them through, anyway. (See how former Mayor Daley literally bulldozed Meigs Field in the middle of the night. Speaking of which, Mayor Daley, who gave Rahm his first big political break and even guys as high up as Obama have kissed his ring to start their political careers in the past, is an alum and very large donor to DePaul. What might look like a weird expensive plan to a lot of people across the country is hardly a weird plan to those that know how Chicago politics works and the power players involved.)

 

[frankthetank]

Anyway, the mistake that many people are making is looking at this as a DePaul arena. Someone above had the correct perspective: you have to look at this as a City of Chicago arena that Mayor Rahm is putting all of his political resources behind (and DePaul happened to be in the right place at the right time as a viable tenant). When phrased that way, there are actually a lot of big money people that see this as the cost of admission to Rahm's office to do other much larger business with the city.

 

[noeynox]

Anyway, the mistake that many people are making is looking at this as a DePaul arena. Someone above had the correct perspective: you have to look at this as a City of Chicago arena that Mayor Rahm is putting all of his political resources behind (and DePaul happened to be in the right place at the right time as a viable tenant). When phrased that way, there are actually a lot of big money people that see this as the cost of admission to Rahm's office to do other much larger business with the city.

I don't know. Sounds as about unethical as CT pols putting pressure on ESPN to look for UConn in CR. I mean Depaul turning down a rent free agreement to the United Center so they can masquerade as the main tenant for an arena that is going to cost taxpayers at least 100 million, because that other 100 million naming rights sounds lie a sham, so the taxpayers will probably have to pick up the tab on that also. Everyone knows Rahm is political bully, that is no secret. He is going to try and Rahm that one down taxpayers throats. Wonder what the kickbacks are.