DePaul's South Loop Arena, Fact vs. Fiction

Much has been said about plans for an arena for the DePaul Blue Demons in the South Loop near McCormick Place. In this report, we answer a few questions regarding the plans.

Chicago is planning on closing 50 public schools. Why can't the city of Chicago spend the tens of millions of taxpayer dollars on the schools instead of an events center?

The school closings are unfortunate.

However, Chicago is a separate entity from the Metropolitan Pier and Exposition Authority (MPEA, also known as McPier).

Simply put, you can't take from Peter to pay Paul.

MPEA is a municipal corporation that operates Navy Pier, McCormick Place, and the new events center. MPEA's funding for the new arena/events center is coming from a $855 million bond sale that was completed in 2012. (see this Crain's story for more information - http://www.chicagobusiness.com/article/20120611/NEWS07/120619979/mcpier-sells-855-million-in-bonds)

Revenue from MPEA bonds that were sold in 2012 cannot be used for the public schools or for any other purpose than for which they were originally sold.

The MPEA bonds will be retired with payments from Hotel taxes. These hotel taxes are paid by visitors and are not an additional tax on the citizens of Chicago.

Why are public funds going towards an arena for a private university?

Bear in mind that DePaul University is a tenant in the new events center. DePaul is a tenant which is paying for half of the construction costs. Yet DePaul is using the arena less than a 1/3 of the year. On top of that, DePaul is a tenant which will pay rent.

In reality, the public isn't subsidizing DePaul. DePaul is subsidizing a public arena.

This means that for 2/3 of the year, the arena can be rented out for other purposes such as conventions, trade shows, concerts, sporting events, graduations, etc.

It is important for Chicago to invest in its tourism, trade show, and convention business. One point that seems to be often overlooked is that tax revenues that are generated from tourism, trade shows and conventions go back to the city and are used to fund the city's schools.

Wasn't the United Center offering DePaul free rent to play their games there?

Yes and no. The United Center did offer DePaul University free rent. However, Jerry Reinsdorf and Rocky Wirtz are shrewd businessmen. Instead of charging DePaul rent, their plan was to charge operating costs. These operating costs were found to be even more costly than what DePaul pays the village of Rosemont for Allstate Arena today. So, one needs to understand that there was nothing "free" about their offer to DePaul.

Why can't DePaul build at the Finkl Steel site which is closer to the Lincoln Park campus?

DePaul's leadership examined many potential sites for an arena including the Finkl site. A study done on the Finkl site found that the surface streets in that area would not support the amount of traffic entering and exiting the arena. The study found that improvements needed on Armitage Avenue to handle the traffic would have cost the city more than $500 million. Needless to say, this was not a viable site.

Can't the $70 million that DePaul is spending on an arena be put to better use within the university?

Over the last few years, DePaul University has spent considerably to upgrade facilities throughout the University. Among those projects were the following:

- The College of Communications was relocated in expanded facilities at the Loop Campus.

- New Building for the Theater School

- New Building for the Music School

- Enhanced Facilities for the College of Law

- New Science Building

- New Arts & Letters Hall

Now it is the Athletics Department's turn for a facilities upgrade.

The $70 million expense will also be offset by selling the naming rights and advertising for the new arena.

Will DePaul University be associated with gambling at a proposed casino near the arena site?

No. The believed site for a proposed Chicago casino is over a mile south of the arena site. There is no relationship between the arena project and that site.


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