Last week the Sun-Times ran a story about a juicy little sex-and-clout scandal involving the Park Grill restaurant in Millennium Park. If you didn’t see the story you probably heard some of the seamier stuff, like the part about how Matthew O’Malley, one of the Park Grill’s two principals, had a baby with Laura Foxgrover, the Park District official whose department oversaw the bidding process for the Millennium Park restaurant contract. Or how the roster of investors includes many friends and associates of the mayor.
But none of the bidders mentioned the 9/11 attacks in their bids or showed any skepticism about the economy. On the contrary, they filled their bids with sunny projections.
Best of Chicago voting is live now. Vote for your favorites »
Mott was less specific, promising only to pay rent “in the form of direct fee payments to the Chicago Park District.” A few pages later, in a breakout of projected expenses, he estimated his rent payments would be $270,000 by 2006.
This is where things get interesting. That clause means the Park Grill doesn’t have to pay the minimum fee until it has netted about $3 million or until 2018—whichever comes first. I’ve gone over this lease with various accountants, commercial leaseholders, lawyers, restaurant operators, city officials, and political insiders who have done deals with the city. They say landlords frequently lower rents to help tenants pay for build-out costs. But no landlord—at least, no landlord who wants to make any money—links his rent to a tenant’s net earnings. “If you’re going to make rent contingent on future earnings, you do it on the gross,” says one commercial leaseholder with properties all over town. “You never, ever, do it on the net!”
It’s certainly unlike other deals the Park District has signed with restaurateurs. According to Richard Mott, North Pond pays an annual rent of 5.5 percent of gross sales or $85,000, whichever is higher. Typically, the Park District charges its concessionaires 5 to 6 percent of gross sales from the start of operations. If they’re operating a kiosk, the rent goes up to 15 percent of the gross, since there’s so little overhead.
