Foes of $70m Cavs subsidy file repeal petitions, city won’t accept them, all hell breaks loose

As expected, members of the coalition opposing the deal to give Cleveland Cavaliers owner Dan Gilbert $70 million in public money so he can build a big glass wall filed petitions yesterday containing more than 20,000 signatures seeking to have the agreement overturned. As not so much expected, the Cleveland city council clerk’s office told them to take a hike, arguing that accepting the petitions would “unconstitutionally impair an already executed and binding contract”:

“A referendum seeking repeal of Ordinance No. 305-17 would unconstitutionally impair an already executed and binding contract. Therefore, I do not accept the petition papers for such referendum,” said a letter signed by deputy clerk of council Allan Dreyer when the petitions were presented to the clerk’s office.

An hour later, a second letter signed by Dreyer, but presented to the groups’ leaders by council president Kevin Kelley, stated the city was “taking custody” of the petitions but added, “do not consider the petition to be filed with the Clerk.”

This did not go over well with coalition leaders Rev. Jawanza Colvin of Olivet Institutional Baptist Church and Rev. Richard Gibson of Elizabeth Baptist Church, who held out their arms demanding to be handcuffed and arrested, saying they had no intention of leaving unless the petitions were accepted. Eventually the council “took custody” of the petitions without accepting them as “filed,” and everybody went back to their own corners to figure out their next steps.

Exactly what the hell the Cleveland council is thinking isn’t clear, since the arena renovation deal would involve county bonds, which are explicitly subject to repeal by public referendum under Ohio law. (Actually the bonds haven’t even been sold yet, as the county has been waiting on the referendum drive before moving ahead with that.) There’s some question as to whether a public vote overturning the bonds could also overturn the agreement between the council and Gilbert over how to use the proceeds of the bonds — in which case presumably the council would need to come up with $70 million some other way — but there doesn’t seem to be any precedent for refusing to accept referendum petitions on the grounds of “go away, kid, don’t bother me.” This was all going to end up in court sooner or later, and it sounds like the smart money is on “sooner” now.

Cleveland community groups launch referendum drive to repeal Cavs’ $70m subsidy

As expected, the Cleveland community groups that were calling for Cleveland Cavaliers owner Dan Gilbert to have to put money into community development projects in exchange for getting $70 million in public money for arena upgrades are gathering signatures for a referendum to overturn the plan for him to get the money in exchange for just improving some school basketball courts:

In a news release issued Wednesday, April 26, the groups said they will work to collect 6,000 signatures to “let Cleveland voters have their say about the deeply-flawed deal for the city of Cleveland to spend $88 million of taxpayer dollars on a new glass atrium for Quicken Loans Arena.”

Members of the coalition are the Greater Cleveland Congregations, Service Employees International Union Local 1199, Cuyahoga County Progressive Caucus, AFSCME Ohio Council 8 and Amalgamated Transit Union Local 268.

Past after-the-fact referendum attempts in other cities have failed when courts ruled that there was a no-backsies provision, but it looks like things are different in Cleveland, where county bond issues are subject to referendum approval. The arena money got an “emergency” designation, though, meaning if went into effect immediately … so, we’ll see. The groups have 30 days to gather the 6,000 signatures; no date has been reported for when the actual vote would be.

Cavs owner promises to fix some basketball courts, Cleveland council says, “Okay, here’s $70m”

Cleveland Cavaliers owner Dan Gilbert finally blinked yesterday, offering up some long-awaited concessions in exchange for $70 million in public renovation money for his team’s arena. And what, exactly, is the billionaire mortgage tycoon offering?

  • The Cavaliers have pledged that the portion of the admission tax that goes to the city’s general fund will never fall below the portion directed toward debt service on the upgrades. If that happens, the Cavaliers will write the city a check for the difference.
  • The Cavaliers have agreed to refurbish the basketball floors in city recreation centers, more than 20 in total. After the announcement the city confirmed that the Cavs will also refurbish high school basketball courts in Cleveland public high schools, as well.
  • Additionally, the Cavaliers announced it will donate all admissions revenues from its road-game watch parties at The Q during the NBA playoffs to benefit Habitat for Humanity. Over the last two seasons, those watch parties have raised more than $1 million from admissions that was donated to several charities.

That is pretty weak tea, as the Cleveland Scene points out: The admission-tax money is already slated to go to the general fund, so this is just locking in the dollar amounts; and the road-game watch party money was already being donated to charity, so this just directs it to one specific charity. That leaves just the promise to “refurbish” 65 community and high-school basketball courts, which comes with no dollar value or specifics — as the Scene puts it, “It’s unclear if the Cavs will build new courts entirely or just, like, buff them.”

Still, that was enough to get the city council to approve the plan by a 12-5 vote just a couple of hours later. The Greater Cleveland Congregations and the Cuyahoga County Progressive Caucus, which had pushed for more substantial contributions to community programs by Gilbert, could still seek to overturn the vote via a public referendum, but there’s been no announcement of that as of yet.

If the decision stands, one of Cleveland’s richest businessmen just got $70 million in public funds to renovate his basketball team’s home arena, just a few months after he got $57 million in public funds to use for other upgrades, all for an arena built with $100 million in public funds in 1994. Turns out when you’re a rich dude, it’s not just subprime mortgages that are the gift that keeps on giving.

Dan Gilbert may actually manage to blow up his $70m Cavs arena subsidy deal after all

When last we checked in on Cleveland Cavaliers owner Dan Gilbert’s $70 million big glass wall subsidy, it looked set for passage, with a majority of the city council set to approve it and opponents mostly just demanding some kind of fund for “community benefits” to be added. Now, though, it appears to be … “falling apart” is probably overstating it, but definitely hitting a major speed bump. Detangling this informative yet slightly convoluted article from the Cleveland Scene, we get:

  • After the arena renovations bill passed the Cleveland city council 11-6 in a preliminary vote last week, it was expected to get final approval this week. Instead, city council president Kevin Kelley pulled it at the last minute, saying “some members requested more time to discuss it.”
  • One possibility is that the Cavs are concerned about getting a 12-vote supermajority, which would allow them to avoid a public referendum as well. Except that, according to the Scene, it would only allow them to avoid a referendum if the city were selling the bonds, and it’s the county, so, what the hell?
  • Gilbert is so desperate to turn more votes, for whatever reason, that he personally called Ward 2 councilmember Zack Reed to ask what he could do to win his support. Reed answered that he wanted a community benefits fund, a la what Greater Cleveland Congregations had proposed, and Gilbert presumably wouldn’t give in, because Reed remains opposed (and now publicly gripey about having to spend 40 minutes on the phone with the Cavs owner to no good end).

While it still seems likely that the arena subsidy will be passed by the council eventually, there’s a lot more grumbling from councilmembers than a couple of weeks ago, which isn’t going to help this thing win if it goes to a referendum as now appears it will. Gilbert, meanwhile, is apparently refusing to budge on the one thing that would make his opposition melt, which is to throw a few million dollars at some community groups as the price of getting $70 million in public funds. If so, that’ll be some quality grasping-defeat-from-the-jaws-of-victory stuff there — though given that this is a guy who responded to federal government charges that his loan company had lied about borrowers’ creditworthiness by countersuing the government and then having his suit immediately dismissed, playing hardball to spite your face does seem to be a bit of a Gilbert character trait.

Cavs arena subsidy demonstrators go to Detroit to demand of Gilbert: Can we get a cut, too?

Points for creativity to opponents of Cleveland Cavaliers owner Dan Gilbert’s $70 million in glass wall subsidy demands, who took buses to Detroit to stage a protest on a melting public ice rink outside Gilbert’s Quicken Loans offices:

“We’re not all in,” the crowd of more than 150 chanted…

Stacy Mathews of Cleveland said there’s no guarantee that the community would benefit from a public investment in the arena.

“I don’t have any personal feelings against Dan Gilbert,” she said. “I don’t know him personally, but I just hope with the movement and changes that he’s trying to make for his team that he would also do that for the city as well. Cleveland right now are going pretty good, but there are still areas in Cleveland that need to be addressed. There are still many poor areas … (and resources needed) in the schools and things of that nature.”

Look, here’s video!

Those aren’t necessarily the snappiest soundbites — and definitely isn’t the snappiest chant — and appears to be a bit of a pivot from “this is a stupid subsidy” to “if Gilbert is going to get $70 million in free public money, either he or the city of Cleveland should throw some money at other local needs as well.” This all appears to be heading toward a battle over a community benefits agreement, and you know my feelings about those.

Meanwhile, the Cleveland city council has introduced legislation to approve the Gilbert arena subsidy, and is expected to cast a final vote by mid-April. There may be some haggling over the details, but it looks like the plan to give a billionaire $70 million for no coherent reason at all is likely to sail through without much difficulty — and without Gilbert even having to come up with his own chants.

Cuyahoga moves $70m Cavs subsidy forward, because mumble mumble “maximize assets” something

Cleveland Cavaliers owner Dan Gilbert took another step closer to getting $70 million in arena renovation subsidies on Tuesday when a majority of the Cuyahoga County Council voted to move the funding bill out of committee. A full council vote is expected on March 28, and unless somebody unexpectedly gets cold feet, the $140 million bond issue — half of which will be repaid by Cavs rent payments, the other half by ticket taxes and hotel taxes that currently go to city and county coffers — should pass easily.

Let’s check out what some county council members had to say!

“I do not think the deal is perfect but I do think the Quicken Loans Arena is by far the most important of Cuyahoga County’s entertainment and sports facilities. It is a vital and essential part of our economy.” —Dan Miller

“This is our facility and we will take care of it.” —Michael Gallagher

“This deal is not either/or or now or never but how and when.” —Shontel Brown

Well, at least nobody cited any dumb reasons like fear that the Cavs would move without a new glass wall or that arenas create scads of jobs or anyth—

“There is a threat the Cavs might leave and it is my job to have some stability. We own this building and we need to make sure our asset is maximized.” —Sunny Simon

“We need to maintain an economic driver that will not only keep my residents employed.” —Anthony Hairston

The Greater Cleveland Congregations group, which has opposed the deal and called for Gilbert to at least put money into a community development fund in exchange, was roundly ignored by the county council. The big wild card now is the Cleveland city council, which also has to sign off on the deal, and hasn’t even scheduled hearings — as Cavaliers CEO Len Komoroski noted, the team wants to start construction this summer to be ready for hosting an All-Star Game in 2020 (other cities like Houston and Orlando are bidding for it as well, but you’ve got to be prepared, right?), so they’re going to be pushing hard for an early decision. Here’s hoping the city council at least comes up with some better cliches before casting their votes.

Cleveland Plain Dealer: Give Cavs owner $70m, because LeBron and Mickey Mouse WOOHOO!!!

The Cleveland Plain Dealer has historically not been a very good newspaper in covering stadium development issues, taking local sports team demands seriously even when they want to do things like cover their stadium with a geodesic dome, and generally giving Roldo Bartimole an entire career of shaking his head sadly at their miserable reportage.

None of that, though, prepared anyone for this editorial published on Friday, which argues that it’s totally worth Cuyahoga County giving Cavaliers owner Dan Gilbert $70 million to pay half the costs of an arena expansion because, well, let’s try to follow along:

[Do you remember] the payoff when LeBron James electrified the city and team by coming back and helping to deliver an NBA championship in a never-to-be-forgotten, come-from-behind series? A series that turned downtown Cleveland into a sea of ecstatic fans and led to a victory parade that attracted Cavs fans the world over for a glorious day of downtown pedestrian gridlock that banished our comeback doubts.

Yes, winning championships is fun. Gilbert doesn’t get to rescind that championship if his renovation isn’t approved. So, what’s your point again?

How much would it be worth to get even more economic development value from the money the public already has invested in Quicken Loans Arena — the jobs, the energy, the draw — by extending the life of the Q another dozen years or more?

An excellent question, though posed a bit strangely — the only thing threatening “the life of the Q” is the city and county’s eventual willingness to replace it, so it’s not like that decision is really hanging on a new glass exterior wall. But sure, it’s a calculation that should be conducted, ideally with studies and tax revenue projections and—

It’s certainly worth the deal on the table now in which the Cavs pay half and make other commitments to the county, city and region.

Or you could just say “You betcha!!!” Yup, that is also an option.

As part of the deal, the Cavs pony up $122 million of their own dollars (for an arena the public owns) and underwrite risk in the financing deal for the county and agree to stay in Cleveland until at least 2034.

Yeah, no, not exactly. That $122 million isn’t in cash but in increased future rent payments, which will reimburse the county for half the $140 million in renovation costs, leaving the other $70 million to be covered by ticket taxes and hotel taxes that would otherwise go into city and county coffers. Yes, the public owns the arena, but only on paper so Gilbert doesn’t have to pay property taxes. (He owns the revenue streams from the arena, which are the important part.) I have no idea what “underwrite risk” means, other than that Gilbert would over cost overruns, which, that’s all well and good, but he’d still get his $70 million in free money regardless.

The only real reason worth considering here is getting Gilbert to extend the Cavs lease to 2034, when it currently expires in … 2027. So that’s seven years of added lease time, in exchange for $70 million in renovation subsidies. We have seen worse deals, but that doesn’t necessarily make this a good one.

The Q is a city treasure that goes far beyond its use by the basketball team.

How many of the region’s children have been wowed there by Mickey Mouse on ice skates, circuses and monster truck shows? How many people have danced in the aisles to the performances of Bruce Springsteen, Paul McCartney, Jay Z, Taylor Swift, Justin Timberlake, Beyonce? We want those acts to keep coming.

Now we’re getting deep into crazy talk, and not just because Paul McCartney is going to be 92 years old in 2034. Does the PD editorial board really think that Mickey Mouse is going to refuse to lace up his skates and play Cleveland if the arena doesn’t have a new glass wall in front? Have they bothered to investigate what concert acts want out of an arena? Or is investigation one of those old-media things that fly in the face of synergy and monetization and whatever else the things that used to be called newspapers are in the business of now?

All in all, this editorial can be summed up as: Arenas are fun places, is $70 million really too much to spend on more fun? To which the answer should be: We dunno, let’s check it out. That’s what the Detroit Free Press did when Gilbert came asking for cash for an MLS stadium in that city; clearly either the billionaire has greater pull in Cleveland, or the Plain Dealer editors have forgotten Rule #1 of journalism.

No, the Cavs didn’t get their $70m glass-wall subsidy approved, headline writers are idiots

Media literacy quiz time! Back in April, Cleveland Cavaliers owner Dan Gilbert declared that he wanted $70 million in public money to help him pay for a $140 million renovation of his arena, mostly to build a giant glass wall. Yesterday, Cleveland.com ran this headline:

Quicken Loans Arena, home of LeBron and the Cavs, to get $140 million makeover

Does this mean:

  • A) The money was approved
  • B) The money passed an important hurdle, but more approvals are still necessary
  • C) Gilbert agreed to pay for the renovations himself
  • D) Nothing happened at all beyond the Cavs putting out a press release

Yep, that’d be D:

The Cleveland Cavaliers today announced a striking $140 million upgrade to the Q Arena that dramatically alters the facility’s appearance and, the team says, would make the 22-year-old arena competitive by creating more space for dining, bars and public gathering…

Cleveland City Council will hold public hearings and vote on the proposed use of the city’s admission tax to pay back part of the loans.

The rest of the article is mostly just a rehash of Cavs talking points (“without any increase in taxes”! “an up-to-date arena for sports, concerts and other entertainment”! “the proposal looks pretty good compared to other small or medium-sized sports markets”!), plus a bunch of new renderings helpfully labeled “The Q TRANSFORMATION.” Somebody in the Cavs ministry of propaganda deserves a raise today.

Cleveland to Browns, Cavs, Indians: Everybody gets $57m in tax money, now play nice

And it’s official: The Cleveland Browns, Indians, and Cavaliers will get equal cuts of the “sin tax” extension voters approved back in 2014:

Each team will get $4.6 million per year for the next 20 years. The money can be used to upgrade the stadiums and arena where they play.

Via the magic of net present value calculators (even those that don’t know how to spell “principal”), we can determine that this revenue stream will be worth about $57 million in today’s dollars to each team. It shouldn’t be hard for each of them to find ways to spend that down — especially with the Cavs already asking for another $70 million to pay for a new super-spendy glass exterior wall — but if all else fails maybe they can just buy some IBM “Internet of things” gewgaws and call it “infrastructure.”

County official proposes diverting one-third of tourist dollars to build Cavs a glass wall

It’s been almost eight months since the Cleveland Cavaliers asked for a $140 million expansion of their arena to add more public space and give it a glass exterior wall, and Cuyahoga County Executive Armond Budish said, “Let me get half of that for you.” Now, Budish thinks he may have found some of the money, asking the local tourism agency to use hotel tax money to pay for the Cavs’ renovations.

Destination Cleveland collects about $15 million a year in hotel taxes, and paying off $70 million in Cavs expenses would cost about $4-5 million a year, so this would clearly be a hefty chunk of change, unless Budish has other revenue sources in mind as well. The Cavs are already getting a cut of the alcohol-and-cigarette-tax extension that county voters approved back in 2014 — Budish recently proposed splitting the proceeds evenly among the Cavs, Indians, and Browns, as nobody bothered to work that out beforehand — and since that amounts to about $170 million in total present value, Cavs owner Dan Gilbert is effectively asking for $70 million on top of the $60 million he just got two years ago for renovations. But really, who can put a price on the enjoyment that local sports fans get from a glass wall?