Aurelia Pucinski
Aurelia Pucinski
Mary Anne Mason
Mary Anne Mason

The Bears won’t take the field until their first preseason game Friday, but a divided state appeals panel handed the team a midweek loss: $4.1 million in delinquent Cook County taxes.

From 2002 through 2007, the team internally divided the face value of its Soldier Field club-level and luxury suite tickets into two prices — one for the actual seat or suite and the other for the included amenities, such as parking passes, expanded food options and beer availability throughout and after the game.

The team then paid the 3 percent Cook County amusement tax only on the price apportioned to the seats and suites.

In an 18-page opinion written by Justice Mary Anne Mason, the 1st District Appellate Court ruled Wednesday that the Bears owe the county the 3 percent amusement tax on the entire face value of those tickets.

The Bears contended that the amenities for the premium tickets were “non-amusement services” and not subject to the tax ordinance.

But Mason wrote that the amenities are exclusively tied to the purchase of a seat and are the precise reason fans are willing to buy pricier tickets.

“The absurdity of excluding the vast majority of ticket revenues from the amusement tax when the generation of those revenues is driven by fans’ desire for the ‘privileges’ associated with premium seats renders the Bears’ position untenable,” she wrote.

The county assessed the Bears with an unpaid $5 million tax bill in August 2007.

In a 2011 hearing, Administrative Law Judge Denis E. Guest agreed with the county that the Bears owed for amusement tax and assessed delinquent taxes and interest at $4.1 million.

Guest ruled the club-level seats should be taxed at the full ticket price and luxury suites should be taxed at 60 percent because the price of the suite included tangible property such as food, drinks and parking not subject to the amusement tax.

He also found that the Bears did not act negligently or willfully to warrant penalties as the county requested.

When the case went to the Daley Center in August 2012, Cook County Circuit Judge Margaret Ann Brennan reversed the administrative judge’s decision.

As an administrative review case, the appeals panel reviewed Guest’s ruling and not the trial court’s.

The majority found that the tax, which applies to admission fees or other charges that allow attendance at a game, applies to the entire ticket price.

“Quite simply, fans who want to witness a Bears home game from a club seat or a luxury seat cannot get to a seat where they can watch the game without paying the price attendant to those seats,” Mason wrote. “Thus, it is impossible to separate these ‘other charges’ from the fee paid to enter the stadium.”

That ruling is similar to one the appellate court made in October in Stasko v. City of Chicago, 2013 IL App (1st) 120265, a class-action lawsuit filed by Bears season ticket holders to challenge the city of Chicago’s assessment of amusement tax to personal seat licenses.

While PSLs entitle a holder to purchase season tickets, they don’t allow entrance to any game on their own. Still, the court in Stasko found the PSL was a prerequisite cost and was therefore subject to the city’s tax.

“The reasoning of Stasko, applied here, compels the conclusion that the full price paid by club seat ticket holders and luxury suite licensees is subject to the [c]ounty’s amusement tax,” Mason wrote.

The majority found the Bears’ position would allow any business that pays amusement taxes to unilaterally and arbitrarily assign a portion of face value to reduce the amount of tax paid.

The majority reversed the circuit court’s opinion and confirmed the administrative judge’s ruling.

Justice Michael B. Hyman concurred in the majority.

In a seven-page dissent, Justice Aurelia Pucinski disagreed that the tax should apply to the full price. There is nothing in the county ordinance that requires permission from the county to set admission prices different from face value, she wrote.

“I am unwilling to effectively rewrite the ordinance to say what the [c]ounty wants it to say,” she wrote.

She contended the 60 percent tax determined by the administrative law judge was arbitrary and should be reversed.

The Bears are represented by James P. Gaughan Jr. and Larry Jacobson of Schiff, Hardin LLP. The attorneys and a team spokesman could not be reached for comment.

The county was represented by Assistant State’s Attorneys Daniel F. Gallagher, Kent S. Ray, Cristin K. Duffy and Alvin P. Portis.

“We’re just pleased with the court’s ruling,” Gallagher said.

It is unclear whether the Bears started paying the full tax amount following the 2007 assessment or if the team will owe additional taxes since 2007.

The ruling comes as a victory for the county just two days after the appellate court struck down the county’s non-titled property use tax — estimated to bring in $14 million in revenue this year — as an illegal use tax.

Karen Vaughan, a spokeswoman for Cook County Board President Toni Preckwinkle, said in a statement that the county is pleased with the ruling and plans to work with the Bears and other local sports teams to ensure they comply with the amusement tax.

A 2015 budget forecast released by Preckwinkle’s office in June projected the county will collect more than $29.5 million in amusement taxes by the end of November, accounting for just more than 1 percent of the county’s $2.7 billion in expected revenue for the year.

The case is Chicago Bears Football Club v. Cook County Department of Revenue, 2014 IL App (1st) 122892.