Archive for January, 2008

Will Wrigley Takeover by Illinois Help Enrich Billionaire Sam Zell?

January 30, 2008

Illinois taxpayers may soon be asked to make real-estate billionaire Sam Zell even richer. As part of his takeover of the Chicago Tribune, Zell is trying to unload the Chicago Cubs and Wrigley Field, which the Tribune Company currently owns. Details remain sketchy but involve the Illinois Sports Finance Authority (ISFA) issuing low-interest, tax-exempt bonds to purchase and rebuild the historic stadium. (The ISFA was specifically created to build and manage a new field for the Chicago White Sox.)

A public takeover of Wrigley Field would save a future Cubs owner millions in stadium repair costs. According to the Chicago Reader, leasing the stadium from the state would also save new owners an additional $50 million in property taxes over 30 years. By being able to offer these advantages, Zell could get a much better price for the Cubs.

Accounts vary, but Zell apparently approached Governor Rod Blagojevich (an ardent Cubs fan) with the idea of a state takeover. The Chicago Sun-Times reported recently that Mayor Richard Daley, after initially denouncing the takeover idea, is now “open” to it. Zell is a major Daley campaign contributor.

FREE LUNCH Near the Top of the Charts

January 29, 2008

Here at Good Jobs First we’re happy to see that a book dealing with business subsidy abuse is currently Number 8 on both the New York Times hardcover nonfiction bestseller list and the Amazon business list. David Cay Johnston’s Free Lunch is a rollicking good read.

In one instance, Good Jobs First gets featured in the text: Johnston discusses our 2003 report Shopping for Subsidies, which documented more than $1 billion in subsidies Wal-Mart has extracted from state and local governments around the country. (The research is now updated and available on our Wal-Mart Subsidy Watch website).

Free Lunch covers some other topics we’ve written about, such as the shameful story of how the New York Yankees got public officials to turn over city parkland for the team’s new subsidized stadium—a tale that our affiliate Good Jobs New York detailed in its 2006 report Loot, Loot, Loot for the Home Team (which Johnston cites in his notes). Or the shameless way that the Cabela’s chain of outdoor gear stores has turned subsidy solicitation into an integral part of its business plan—as Good Jobs First executive director Greg LeRoy discussed in a 2006 article in Multinational Monitor.

The book covers a lot more ground, including subsidies that never even occurred to some of us who study subsidies for a living. A fascinating example offered by Johnston is the burglar alarm business, in which for-profit companies rake in profits while local governments bear the cost of sending police cars to respond to what are often false alarms.

Strictly speaking, much of Free Lunch is not about direct subsidies. It covers a variety of ways in which government policies of all sorts—deregulation of electricity, privatization of infrastructure and student loan processing, eminent domain, etc.—contribute to what he calls “corporate socialism for the few.”

Although his proposals are modest—such as giving members of Congress unlimited expense accounts so they are less tempted to do the bidding of corporate interests in exchange for free trips and meals—Free Lunch is a powerful indictment of a political and economic system that has veered dangerously toward concentration of wealth at the top.

Biting the Hand that Hosts Us: Google in the Candy Store

January 28, 2008

Since Google owns Blogspot, what better way to launch our blog than to remind readers that Google, its “do no evil” slogan notwithstanding, is in the business of pitting states against each other to see who will give the biggest subsidies.

As Business Week documented in the case of Lenoir, North Carolina, (and as we reported early in Eye in Subsidies) Google shopped a server farm using a site location consultant, amassing property tax abatements, a state utility tax exemption (those servers use a lot of juice!), infrastructure, and land assembly assistance (cobbling together 51 parcels) that included paying for one couple’s divorce to clear the title.

Total estimated subsidies: $212 million — more than $ 1 million per job!

“There were 18 or 20 drafts of contracts, a lot of ticky-tacky stuff,” T.J. Rohr, an attorney and member of Lenoir’s city council told Business Week. “And a lot of the time it seemed like they were saying, ‘It’s our way or the highway.'”