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Analysis: DePaul arena plan raises more questions than it answers

DePaul's Durrell McDonald (25) advances with St. John's D'Angelo Harris(11) during second half Allstate ArenRosemont Ill. Saturday January 19 2013.

DePaul's Durrell McDonald (25) advances with St. John's D'Angelo Harrison (11) during the second half at the Allstate Arena in Rosemont, Ill., on Saturday, January 19, 2013. | Andrew A. Nelles~Sun-Times Media

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Updated: June 15, 2013 6:31AM

Mayor Rahm Emanuel apparently feels free to build a new basketball home for DePaul University after nailing down the “framework” agreement on signage and night games that will pave the way for the Cubs to renovate Wrigley Field and the land around it.

But, that doesn’t settle the political debate about whether it’s wise to use $100 million in public money to build an arena for 18 games a year for a school now decades removed from its days as a college basketball powerhouse.

Marc Ganis, a Chicago-based sports business consultant, said he’s “stunned” by the mayor’s decision. A domed stadium attached to a convention center makes sense, he said. A basketball arena attached to McCormick Place is financial folly, he said.

“There’s not a single example around the country where the two go together, much less go together successfully,” said Ganis, who has worked on two dozen successful sports facility developments, including the new Yankee Stadium.

“Not only is it ridiculous having an 18-event anchor tenant, but it’s an anchor tenant that can barely sell 10,000 seats a game. It’s not like it’s a professional sports team or a well-established college basketball power. It’s neither of those two. That’s why there has to be something else going on. Because on its face, it’s a foolish proposition.”

Ganis said it’s not just capital costs that need to be considered. Arenas cost money to operate and maintain on an annual basis.

“We’re not talking about a couple million dollars. We’re talking about well over $10 million to operate a first- class arena in a union environment. That’s every year. People shouldn’t think it’s just capital costs,” he said.

Ganis said he’s waiting for the other shoe to drop.

“This is so foolish on its face, there has to be something else going on here. The only thought I have is, maybe it’s tied to the casino plan. Casinos and arenas make sense because they can be used to bring in gamblers,” he said.

Earlier this year, DePaul turned down a ten-year, rent-free offer to move the Blue Demons basketball to the United Center in favor of pursuing Emanuel’s plan to build a new basketball arena near McCormick Place.

Local Ald. Bob Fioretti (2nd) said then he was dead-set against the idea.

“Taxpayer money to build a stadium for 18 games? Somebody’s got to have a hole in their head to be proposing that,” Fioretti said at the time.

“There’s resistance to helping the Cubs, a team that generates $17 million-a-year in amusement tax revenue and supports all of the businesses surrounding Wrigley Field. There’s no claim for financial assistance there. Yet, here we are helping a private institution create a place to play for a very limited number of games. What will it generate?”

Fioretti said land around McCormick Place would be better used to build “several small hotels, invest in the tourism trade and get those 5,000-to-10,000-member shows on a much more regular basis.”

The alderman scoffed at suggestions that McCormick Place has excess bonding capacity that could be used to build a basketball arena.

“That’s still taxpayers’ money in tough economic times,” he said.

Fioretti could not be reached for comment on reports that a mayoral announcement was imminent.

Cubs spokesman Julian Green laughed, but refused to comment when asked how he felt about DePaul getting a public subsidy from the mayor when the Cubs could not.

Emanuel apparently feels free to announce the DePaul project after nailing down the “framework” agreement with the Cubs.

Cubs Chairman Tom Ricketts has offered to bankroll a $300 million Wrigley renovation without a public subsidy — and build a $200 million hotel and office building adjacent to the stadium — if the city lifts restrictions on signage and night games and allows street fairs on game days.

But, until Emanuel agreed to let the Cubs play up to 46 night games per season and build a 6,000-square-foot video scoreboard in left-field, a 1,000-square-foot see-through sign in right-field and 35,000 square feet of signage outside the ballpark, it would be have been very difficult to justify building a taxpayer-subsidized arena for DePaul for 18 homes basketball games.

Now that the Cubs are well on their way to getting what they want, DePaul is apparently next in line. Waiting in the wings are the Bulls.

The Bulls are building a new $25 million practice center on a United Center parking lot without a subsidy. But, their plans to build a $95 million retail and entertainment complex nearby are contingent on nailing down a modified version of the property tax formula that has saved the Bulls and Hawks millions on property tax bills assessed against the United Center.

The tax break is due to expire in 2016. It includes a complex formula that ties United Center property taxes to stadium revenues, with a $1 million-a-year minimum. The UC’s most recent property tax bill was $2.5 million.

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