Columbus arena projects $47,000 profit by ignoring $14m in annual unpaid costs

Writing about stadium and arena economics in a way that’s easily digestible by a general-interest newspaper audience is hard — and doubly hard on newspaper deadlines. I get that. But the result is way too often stories that are only likely to confuse readers, and leave them with a false impression about how sports finance works and what’s important for economic success, and — you know, let me just skip to the Columbus Dispatch story itself:

Nationwide Arena reports small profit

That’s a great headline: Simple, direct, easy to understand. There’s some question about why the Dispatch replaced its more downbeat headline on an earlier version of the story (“Nationwide Arena to end fiscal year barely in black, with tax bill, debt looming”), but it’s two different ways of saying the same thing, really.

Except that neither way of saying it is really accurate, or at least doesn’t paint a full picture of what’s going on with the Columbus Blue Jackets arena following their $60 million(ish) public bailout in 2011. Here’s how the arena “turns a profit”:

  • The city and county send the Franklin County Convention Facilities Authority, which took over the arena in 2011, about $4 million a year in casino taxes.
  • The state provides the arena with a $4 million a year property tax exemption, though that expires this year.
  • The state, which is owed $10 million on an arena loan, and former arena owners Nationwide Realty Investors, who are owed $44 million on their own loan, have never received any payments on these debts, though the casino taxes were supposed to cover loan payments.
  • The county is deferring about $2 million a year in maintenance costs, which will have to be paid somehow eventually, but there’s no money for it now.
  • After receiving all these breaks — figure about $14 million a year total in various tax subsidies and unpaid obligations — the arena is projected to end the year with about a $47,000 surplus in its bank account. Profit!

Much like the Sprint Center in Kansas City, in other words, Nationwide Arena is a financial success on its books, but only because its books are propped up by massive subsidies from other people (mostly taxpayers, but by Nationwide as well via that unpaid loan). So the entire premise of the news story is dumb — whether the arena is “profitable” is entirely about how much cash the state, county, and city has decided to send it this year, not about whether the arena can actually bring in more revenue from operations than it spends on expenses, which is the usual definition of “profit.”

This is especially important because the next battle is likely going to be over that $4 million a year property tax break, which is already being framed as a way to keep the arena from losing money, though really it’s just about who’ll be $4 million a year in the red, the arena or the Columbus school district. Economic literacy in journalism matters, not just for being technically factually accurate, but because big policy decisions end up being based on how the public perceives the issues — and even if it’s too late to undo the costly public bailout of the arena, there are still plenty of future mistakes that can be avoided by actually understanding how money works.


6 comments on “Columbus arena projects $47,000 profit by ignoring $14m in annual unpaid costs

  1. I suspect there’s some people who fear reporting less-than-sunny headlines when the (Columbus) Dispatch Printing Company had at least a 10% stake in creating the thing that’s been bailed out by the public.

    https://www.nationwiderealtyinvestors.com/public/files/news-and-progress/archives/urbanland-020101.pdf
    The official name, Nationwide Arena District, comes from the diversified insurance and financial services organization that has assets exceeding $115 billion. Based in downtown Columbus, Nationwide developed the arena and the surrounding district. (The Columbus Dispatch Printing Company, the parent of the local daily newspaper, is a 10 percent investor in the project.)

  2. The slanted reporting of the Columbus story may also reflect the fact that the Dispatch’s new owner, Wes Edens, also is the co-owner of the Milwaukee Bucks. He may want to ensure good spin about subsidized arenas (his team just got $250 million in cash plus 30 acres of free land, mostly for the owners to speculate with).

    The Bucks owners also are getting a paid-for city parking structure to demolish (to build a bar mall there) so taxpayers can help build a new garage with revenue being split with Bucks owners. As a topper, city officials are giving the Bucks a street to privatize as part of their “entertainment center,” with its chain bars and restaurants. Columbus has its own Arena District, but not all in one place like the Bucks are doing. The Bucks are building theirs a block away from several blocks of thriving nightlife–the better to cannibalize them.

    http://www.bizjournals.com/milwaukee/news/2015/06/03/wes-edens-newspaper-firm-buying-columbus-dispatch.html

    • Interesting that Wes Edens is the guy David Beckham is trying to get to pay for a soccer stadium in Miami, one Beckham and his people have consistently promised will not use public money. Good luck with that, Becks?

  3. “Economic literacy in journalism matters”
    ________

    Absolutely true but newsrooms have been slashing staff for years and most of the reporters with specific areas of expertise are long-gone. I did a search on the newspaper site of Rick Rouan, the reporter who wrote this article. Shortly before penning this piece he was writing about prisoners’ tattoos (no joke) and it appears he rarely if ever covers business. He’s not going to catch any of this stuff and probably his bosses don’t even want him to because it might jeopardize the tickets they probably get from one of those tickets-for-advertising trades newspapers just love.

    • Well researched and noted, Joe. There are few reporters out there who have figured out how to do a better job on these stories, but I agree that the current journalism climate makes it really tough to do so, and easy to just mail it in and slap a clickbaity headline on it.

      (And before anyone says anything: Yeah, I live in the same journalism ecosystem as everyone else. I do try to do my homework — and can do more of it when writing for, say, Vice where I’m getting a semi-decent wage for an article — but even with the generosity of my readers here, I still can’t afford the time to make all the followup calls, etc., that I’d like.

Leave a Reply

Your email address will not be published. Required fields are marked *.
NOTE: Personal attacks on other commenters are not allowed in comments, and will be deleted.

HTML tags are not allowed.

757,914 Spambots Blocked by Simple Comments