Cavs owner doesn’t want $70m in subsidies after all, if it means letting the public vote

Well, check this out: Faced with the requirement of holding a public vote on his plan to use $70 million in city subsidies for a renovation of the Cleveland Cavaliers arena, team owner Dan Gilbert late yesterday announced via press release that he’d be taking his glass wall and going home:

Cleveland, Ohio (August 28, 2017) – The Cleveland Cavaliers announced today the cancellation of their participation in The Q Transformation Project of the publicly-owned Quicken Loans Arena, which would have:

  • Significantly upgraded one of the oldest arenas in the NBA
  • Make it more competitive for the long term with other nearby midwestern cities and national venues to maintain and attract additional events
  • Created over 2,500 project-related construction jobs
  • Grown The Q’s permanent job base to 3,200…

…and so on — you get the idea, which is that spending $70 million in tax money on upgrading a private sports team’s basketball arena was a totally awesome idea and you guys ruined it by going and having a petition drive to put spending public money before the public.

The actual reason given was that waiting on a referendum would “cause the groundbreaking of The Q Transformation to miss the current construction cycle, which pushes the overall price tag of the project higher due to rising construction costs,” and also that the Cavs expect interest rates to go up soon, which would make the arena renovation more expensive to finance. Neither of which quite makes sense — inflation in construction costs plus a possible interest rate hike still aren’t going to cost Gilbert an extra $70 million, and if the overall project got too pricey you’d think he could still bail on the deal even after a referendum was passed — but “construction and financing costs are on the rise and our polling shows we were going to get our heads handed to us in any public vote” is a more reasonable guess. (Though “Kyrie Irving is leaving and soon LeBron James will too so no need to renovate an arena when nobody’s going to show up to watch games anyway” is a reasonable alternate theory.)

The Cuyahoga County Progressive Caucus, one of the groups that had pushed for the referendum after the city council approved the subsidy last April, declared victory last night:

“Despite their stated reason for the cancellation, the real reason is that the citizens of Cleveland spoke loud and clear in their opposition to the project by gathering 13,000 valid signatures to force a referendum on the issue,” the group said. “The Cavaliers, Mayor [Frank] Jackson and Cleveland City Council all know that the project would have been soundly defeated at the ballot box. This is their way of saving face.”

So what now? The hook for calling a referendum was that Cuyahoga County was going to be selling bonds for the arena project, which is subject to repeal by voters under Ohio state law; I could certainly see a scenario where Gilbert would try to find a different financing mechanism where democracy wouldn’t be in play. On the other hand, if he’s really getting cold feet because of interest rates — or pending LeBronlessness — maybe he’ll just forget the whole idea ever happened. That’ll mean no NBA All-Star Game for Cleveland, no huge jump in the arena’s “permanent job base” (just because of a glass wall and some more space to walk around, really?), and no Gilbert tossing unspecified change at refurbishing local community basketball courts — but also that Cleveland will get to keep $70 million in hotel tax money to use for something else, which is almost certainly a better deal.

Kudos to the Progressive Caucus, then, and to democracy, and I guess even to Dan Gilbert for deciding not to put everyone through a costly election just to play out the final chapter in his doomed subsidy demand. Unless this turns out to be one of those horror movie tropes, in which case I guess we’ll all just meet back here in a few months.

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6 comments on “Cavs owner doesn’t want $70m in subsidies after all, if it means letting the public vote

  1. Neil,

    All of the tax revenue goes towards Cleveland’s sports facilities, Neil. The only “something else” this $70 million will be used for is modernizations for the Browns or Indians stadiums.

    1. Incorrect. I think you’re confusing two subsidy streams — this money will stay with the tourist authority.

      1. Got it. Thank you for the clarification, Neil.

        I seem to remember the Cavs at least asking for the $70M from the sin tax. Did that happen? Maybe I just assumed that the sin tax would be the public’s share.

        1. Gilbert is already getting that money, the $70m was going to be extra:

  2. Actually the major force behind the referendum effort was Greater Cleveland Congregations. Although the Cuyahoga County Progressive Caucus was one of the organizations involved, along with SEIU and AFSCME, it was really GCC that took the leader. Also, as far as permanent job creation goes, since part of the “upgrade” included more concession stands, it would very likely have created a few dozen more part-time low-wage jobs. WIN!

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