Billionaire J.B. Pritzker Benefited From Tax Breaks, But He Doesn’t Think The Chicago Bears Should

The Chicago Bears took one step closer this week to doing what seems almost unthinkable—moving out of the city that’s been its home for 102 years and building a new suburban stadium an hour’s drive northwest of Soldier Field.

The team, owned by the billionaire McCaskey family, closed on a deal Wednesday to purchase 326 acres in Arlington Heights, where it’s planning a $5 billion mixed-use development of hotels, restaurants and offices anchored by the stadium. The Bears said they’re not looking for taxpayer money to help build what they’re calling Arlington Park, but added that “for the development to move forward, and for this effort to be financially feasible, a public-private partnership addressing predictable taxes and necessary infrastructure funding for public uses is essential.”

Democratic State Senator Ann Gillespie is on board, with some misgivings. She’s introduced a bill to freeze property taxes on major development projects. Gillespie’s legislation doesn’t call for direct state funds to be used, but Brian Costin, deputy state director of the conservative Americans for Prosperity Foundation, estimates it could result in Arlington Heights waiving $8 billion in property taxes for the Bears over 40 years.

Using taxpayer money to help stadium construction is “extremely common” around the country, says J.C. Bradbury, a professor of economics at Kennesaw State University in Georgia who tracks these deals. The public has funded, on average, roughly 60% of the capital expenditures for NFL stadiums currently in use. Non-direct spending contributions, like tax breaks, are harder to track as some aren’t even reported, he says. Taxpayers will likely be part of the funding packages for the two latest NFL stadiums to be built, for the Buffalo Bills and the Tennessee Titans.

For the government to help out in this case, the $5.8 billion Bears would have to persuade the billionaire Illinois governor, J.B. Pritzker, to back the plan. As of now, Pritzker, a Democrat, appears lukewarm to the idea. “I love the Bears,” he said, “but it’s a private business, and I honestly don’t think the public has an obligation to fund, in this major way, a private business.”

That’s rich, coming from Pritzker, the wealthiest U.S. officeholder, worth an estimated $3.6 billion, considering he and his family have benefited from plenty of tax breaks.

In one example, partially released 2014 tax returns show Pritzker and his wife paid no state income tax despite reporting a taxable income of $2.9 million, according to the Chicago Tribune. As to why, a spokesperson for Pritzker said at the time that the then-gubernatorial candidate “made personal venture capital investments in Illinois companies, which qualified him for angel investment tax credits.” The incentive allows investors to claim up to 25% of $2 million in qualified Illinois ventures. From 2012 to 2014, the Chicago Sun-Times reported that Pritzker’s businesses received $1.9 million in tax credits under the program.

The governor’s office did not reply to multiple requests for comment.

Gillespie, a Democrat, defends Pritzker’s use of the tax break. “I think the Angel Investment Credit is a different type of credit because it’s helping new industries, new businesses get started,” Gillespie tells Forbes. “And he did run an incubator program in the city before he became governor. So he was putting some of his own money into helping new businesses get off the ground.”

A broader look at the Pritzker family, one of America’s richest, shows tax benefits helped build their fortune, which Forbes estimates to be worth at least $37 billion altogether. In the late 1970s, the family’s Hyatt hotel chain partnered with real estate developer Donald Trump to convert New York City’s Commodore Hotel into the Hyatt Grand Central. As part of the deal, the project was granted a 40-year tax abatement, which the New York Times estimated to be worth $360 million in forgiven or uncollected taxes by 2016, with four years to go. The property cost $120 million to build. (The Hyatt Grand Central is slated to be replaced by a new skyscraper.)

The Pritzkers have a history of legally skirting tax payments. The family’s use of offshore trusts to park their money was exposed in a 2002 lawsuit filed by Liesel Pritzker Simmons, who sued her father and 11 older cousins for shortchanging her inheritance. Liesel and her brother Matthew each won $500 million, but the family’s secret sauce to avoid taxes was exposed.

A.N. Pritzker, the family’s patriarch and a Harvard Law graduate, set up numerous offshore trusts six decades ago, seeding them with small assets at first and slowly adding more profits from the Pritzker’s empire over the years, Forbes reported in 2003. That year, Forbes estimated that more than $3 billion of the family’s then-$15 billion fortune was held overseas. A.N. Pritzker, along with his son Jay, also parlayed corporate tax advantages into the acquisition of distressed businesses, a strategy they employed a number of times.

A.N. Pritzker grew the family fortune from $250,000 in the 1920s to an estimated $2 billion at his death in 1986. His heirs, at the time, reported to the IRS that the estate was worth $25,000. The agency came after the Pritzkers for $53 million, and the case was settled in 1994 for $9.5 million plus interest. Today, 11 members of the family are individually rich enough to be on Forbes’ billionaires list.

As governor, J.B. Pritzker has had a mixed record on corporate taxes, says Costin, who was a policy advisor in the administration of Pritzker’s predecessor, Republican Bruce Rauner. During his first term, Pritzker closed four corporate tax loopholes that amounted to roughly $655 million for the state and $42 million for local governments. He tried but failed to pass the Fair Tax Amendment, a reconfiguration of the state’s income tax laws to a progressive system that would have compelled wealthy residents to pay more.

“It seems that he’s very selective and in certain ways he’s tried to lower taxes on rich people, including himself, through the Angel Investment Tax Credit, which he hasn’t touched,” Costin says. “I think that he’s been hypocritical when it comes to tax breaks for corporations.”

Gillespie has a different perspective. She says that Pritzker approaches the subject strategically to “help Illinois stabilize our finances and grow economically.” In her first year in the general assembly, Gillespie teamed with Pritzker on a bill to provide an employer tax credit for apprenticeships, incentivizing young professionals to go into new fields with paid opportunities. In the past, she notes, Pritzker has generally steered tax breaks towards industries that have “an opportunity to grow and we have a natural affinity,” like data centers.

This year, the Illinois General Assembly authorized a $400 million Large Business Attraction Fund, which Pritzker’s administration said would help close deals with businesses considering locating in Illinois. Costin says those tax breaks could be directed at “politically favored industries at his discretion.” The bill also explicitly prevents using incentives to lure pro sports teams.

In a last bid to keep the team at Soldier Field, the oldest venue in the NFL, the City of Chicago in September released renderings of a $2.2 billion domed stadium renovation. The Illinois Sports Facility Authority still owes $640 million from a 2002 renovation of Soldier Field, leaving taxpayers on the hook, according to a report by NBC Chicago last year. The Bears had no comment beyond Wednesday’s statement announcing the Arlington Park deal.

“If there’s one thing that’s consistent in this research, the return on these stadium investments is not positive,” Bradbury says. “Every economist agrees that subsidizing stadiums is poor public policy.”