is lollapalooza giving enough back to chicago?
  • TUESDAY, OCTOBER 05, 2010

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Some thoughts for live music fans in Illinois and beyond: The top story on the Swarm for the past two days has been about the mother of all festivals, Lollapalooza, and its benefits/costs to the city of Chicago. While the festival brings in a quarter of a million music fans and no doubt bolsters local business, the organizers have inked a deal with the city that all but eliminates their tax liability. The music festival stands as one of the last great industry money machines, but it might be time to take a closer look at the benefits of "signing" to a city that (maybe) does not significantly benefit from hosting in the first place.

This question was originally lifted from a blog by Jim DeRogatis (a popular American music critic). In the post, DeRogatis explores some of the questionable provisions of Chicago's agreement with C3 Presents, a politically connected promotion company who also put on Austin City Limits. The basic conclusion (after some research), is that each city does not see a significant portion of profit from the festivals, and given the town's current economic climate, the disparity is a problem.

ACL, for example, makes 80 million for the city's economy, and the city of Austin sees about 100,000 of it for its budget. Lolla is a little more complicated. Money is set aside for the non-profit parks foundation, although C3 does not rent the park from the city, it is required to pay a percentage of gross revenue to Parkways, the non-profit organization set up by the Chicago Park District. But the "sweetheart" deal, keeping the festival in Chicago through 2018, seems to also provide certain tax exemptions to C3 as an incentive. Read the whole article to get a better idea of the details, DeRogatis breaks it all down with some examples of city code.

The real question at the heart of the discussion is the cost to the city versus the benefits. DeRogatis makes a few notes on Chicago's troubled economy: the worst budget crisis in history, "with city services being slashed and lay-offs of police, sanitation workers, and teachers threatened". Following the money trail, the tax exemptions come at a cost to the city's workers, even though economically speaking, the city always benefits from the influx of tourism brought on by the three day music fest.

"Clearly, Lollapalooza is a for-profit venture, albeit one uniquely partnered with a non-profit, city-founded organization devoted to civic improvements. But profits from the concert, "after payment of reasonable expenses" such as staging costs and fees to the performers, do not "inure exclusively to the benefit of civic improvements." They flow into the bank accounts of C3 Presents."

Is it really fair to fault C3 for profiting off of their work? And how much do they really owe the city? Are they bending the rules of taxation in a criminal way, or is it just business? None of these are easy questions, although they seem essential in a time when the economy of the city—and the country as well— is suffering.

In New York, we don't have such a festival, aside from CMJ, which is tied to New York in other, deeply fundamental ways. But who knows what kind of deal CMJ has with the city? Perhaps some of you know more on these topics. Discuss. -joe puglisi

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