Recreation Taxes – Charge Lollapalooza the Amusement Tax

 Revenue: $1 million

The City currently imposes a five percent tax on all “live theatrical, live musical or other live cultural performances that take place in any auditorium, theater or other space in the city whose maximum capacity, including all balconies and other sections, is more than 750 persons.”[1]

However, under the Park District’s agreement with the company that produces Lollapalooza, a three-day music festival held in Grant Park that attracted 270,000 attendees in 2011, ticket sales for the festival are not subject to the City’s amusement tax.  Instead, the company gives the Parkways Foundation, a foundation that raises private funds for the Park District, 10.25 percent of its profits and pays for any damage the festival causes to Grant Park.[2]

Under this option, the City would impose the amusement tax on all Lollapalooza ticket sales.  In 2010, Lollapalooza reported gross ticket sales of $20 million with an attendance of 240,000.  Assuming that gross sales grow proportionally with attendees, in 2011, Lollapalooza’s 270,000 attendees accounted for $22.5 million in ticket sales.  Assuming ticket sales stay at that level in future years; applying the amusement tax to Lollapalooza would generate $1.1 million annually.

Proponents might argue that the other major music festivals, such as Pitchfork and the Dave Matthews Band Caravan, pay the amusement tax.  And although Lollapalooza gives the Parkways Foundation a percentage of its profits, the money does not directly benefit the City.  Finally, they might argue that Lollapalooza should pay the tax because its policy of not allowing participating musicians to play in the Chicago area within several months of the festival depresses economic activity in City music clubs.

 

Opponents might argue that the agreement the City made with Lollapalooza provides generous benefits to the Parkways Foundation and ensures that the festival does not damage Grant Park.  Additionally, Lollapalooza may generate as much as $85 million in local economic activity which is a substantial benefit to the City.[3]

 

Budget Details

Fund: Corporate Fund, 0100 Type of Revenue:  Amusement Tax
This appropriation can be found on page 16 of the 2011 Annual Appropriation Ordinance.

http://www.cityofchicago.org/content/dam/city/depts/obm/supp_info/2011BudgetOrdinance.pdf

 

 


[1] City of Chicago. Municipal Code. Section 4-156-020(E) (American Legal 2011)

[2] Tribune Editorial. “Next year, send a check.” Chicago Tribune August 6, 2011.

http://articles.chicagotribune.com/2011-08-06/news/ct-edit-lolla-20110806_1_parkways-foundation-lollapalooza-mark-vanecko

[3] Sweeney, Brigid. “Lollapalooza vies with Chicago’s top conventions in spending impact.” Crain’s Chicago Business. August 1, 2011. http://www.chicagobusiness.com/article/20110730/ISSUE01/307309975/lollapalooza-vies-with-chicagos-top-conventions-in-spending-impact#ixzz1TlSrFddg