At first glance, using $125 million dollars in public money to finance an arena for a private, catholic university with a crappy basketball program seems as if it might be a poor investment for the citizens of Chicago. But fear not, says the Metropolitan Pier and Exposition Authority, who funded a study showing how the urban development would pay dividends for years. DePaul also hired a separate consulting firm, which provided even more dramatic numbers.
DePaul hired AECOM – a global consulting firm – and they found, amongst other findings, that the arena’s naming rights could be leased for $1.23 million dollars a year, and that DePaul would sell 22 luxury suites at $45,000 per year.
But most important is the economic development of the neighborhood. All those fans need places to park, food to eat, places to have drinks. They need hotel rooms and gasoline.
And here is where the luster of some of those numbers begins to wear thin.
Let’s assume that the naming rights actually bring in that kind of cash, and that people are lining up to pay $45,000 for private suites to enjoy basketball games. I don’t believe that, but for shits and giggles let’s just assume that to be true.
Last year DePaul reported an attendance of almost 8,000 people per game. But the actual people who showed up to games, based on the number of tickets scanned at the entrance, was just 2,600. So where are the other 5,400 people?
It turns out that DePaul, like a lot of universities, buys tickets for their students who can then get in for free as long as they’ve paid their athletic fees. They also give tickets to charities. Based on the discrepancy between the reported attendance and the actual attendance, it’s clear that not a lot of students or charities are taking advantage of these tickets.
The studies which calculated how much the neighborhood would benefit took this into account, right? Of course not. They not only include the people who aren't actually showing up, but the study bumps attendance from 8,000 to 9,500.
In reality, the economic benefit of funneling $125 million in public funds into private hands is dependent on 5,400 invisible fans and the money they’ll be spending on dinners and drinks and everything else.
Seems reasonable.
MPCC Event Center ProFroma 052013 Lead Income Statement Lead Income Statement by Ann Weiler
