Cleveland residents could vote in May on $160m in new tax subsidies to Indians, Cavs, Browns

One of the drawbacks of the Googlocene is that everything hangs on keywords; and so, because it didn’t come up in my various searches on “stadium” and “arena,” I completely missed Tuesday’s raucous Cuyahoga County council hearing about putting a measure on the May ballot to extend alcohol and cigarette taxes for 20 years and give the proceeds to local sports teams.

As a refresher: Back in the 1990s, Cuyahoga County built a passel of sports venues for the Browns, Indians, and Cavaliers, funding them primarily with tax surcharges on cigarettes, beer, and wine. (Upside: Drinkers and smokers don’t have organized lobbying groups. Downside: “Sin taxes” hit the poor far harder than the rich, who can only drink so many snifters of cognac.) Those taxes are set to expire next year, and the local sports teams see this as a great opportunity to get even more public money for upgrades to their facilities — everything from new water heaters to “replace obsolete scoreboard system,” which I guess fails to meet modern standards of humongosity — without “raising taxes,” since extending taxes that were set to expire doesn’t get counted as raising taxes for some reason.

Under the new plan, the sin tax would be extended for 20 years, raising about $13 million a year that would be directed to the teams. The Cavs and Indians are looking to go roughly 50-50 with that money, though the Browns are expected to demand something as well, albeit a lesser amount given that the Browns are already getting $2 million a year in added city subsidies for their own stadium renovations. The total present value would be about $160 million if the sin tax keeps bringing in the same revenue as it does at present, possibly more like $200 million if inflation causes it to rise.

The original leases on the three venues require the county-owned Gateway Corp. to pay for maintenance on the buildings, and Gateway officials insist that if the sin tax extension isn’t passed, the county would need to either raise the funds some other way, or risk having the teams break their leases and potentiall move elsewhere. That seems a pretty minor risk — there aren’t any open baseball or basketball markets close to Cleveland’s size (#18 in the Nielsen rankings), and while NFL teams don’t care as much about media markets, the Browns just got their own boodle to keep them happy — but it’s apparently the main justification for throwing a couple hundred million dollars in new money at Cleveland’s sports team owners.

The council is set to vote on holding a public ballot measure by the first week in February; if it’s approved as expected, then we should have quite the fun next three months talking about all the economic and ethical ramifications of this. Or just about the power of yes.

Cleveland to give Browns $22m for renovations just because

The city of Cleveland and the Browns owners have reached an agreement on how the $120 million worth of stadium renovations announced last week will be paid for, and it’s not as awful as it could have been: The city would kick in $22 million, paid off $2 million at a time over the next 15 years (part of that would go toward interest), and the team would cover the rest.

That’s getting off relatively cheap compared to some stadium reno deals, but then, the city is getting nothing back for its money: The Browns aren’t even agreeing to extend their lease at their 17-year-old stadium. Plus, the city already pays into a “capital improvement fund” under the team’s lease, but these more extensive renovations — which include a new scoreboard and new seating and concourses — would come on top of that.

The Cleveland city council is set to hold a hearing on the plan next Monday, and some councilmembers are already getting all gripey:

“I’ve got residents calling me, saying, ‘Please don’t support the stadium,’” said Councilman Kevin Conwell. “That stadium is modern enough right now, in my opinion. They’ve got to break out budgets to show me that putting up that money toward improvements won’t affect city services.”

Right now the $2 million a year is set to come out of the general fund, but if this proposal goes through, it’s almost certain to heat up talk of extending the cigarette and alcohol taxes that paid for the stadium in the first place, and splitting the proceeds among subsidies for upgrades for the Browns, Cavaliers, and Indians, the last of whom have been talking about getting city funding for major renovations for a couple of years now, though clearly they’re waiting for the Browns to go first. Following on the Atlanta Bravesnew stadium plans and the Carolina Pantherssuccessful renovation subsidy campaign, what Cleveland does is going to do a lot to set the tone of how cities with pre-millennial stadiums handle team demands for upgrades, so this is worth watching closely.

Cleveland columnist threatens Indians move without more public subsidies

I missed it at the time (thanks to Roldo Bartimole of the Cleveland Leader for pointing it out), but the Cleveland Plain Dealer’s Brent Larkin wrote a column last week worrying about the Indians‘ crappy attendance despite being in a wild-card race, and hinted that the team could move if it doesn’t improve:

If this is the new normal, then another crisis over the Indians future here is inevitable.

It won’t happen soon. The team’s lease at Progressive Field doesn’t expire for a decade (though 1995 taught us that stadium leases can be worthless). And it will never happen while the Dolans own the team.

But if attendance remains in the tank, eventually it’ll happen.

Just as it happened here throughout the 1960s, when Seattle, New Orleans and Tampa all tried — and at times came perilously close — to steal the team. And just as it happened in 1990, when baseball’s commissioner came to town and all but guaranteed that if voters rejected the “sin tax” to build Gateway, the Indians eventually would move.

Larkin contrasted the Indians’ lousy attendance (28th in the league, ahead of only the two Florida teams) with that of the Minnesota Twins, who are terrible this year but play in a new sta — hey, wait a minute, don’t the Indians play in a nearly new stadium, too? One that was lauded for having turned the team (and the city) around when the Indians sold out 455 straight games from 1995 to 2001?

Larkin doesn’t actually say that the Indians need a new stadium (again), just that they need to be more “profitable” somehow. And as Bartimole notes, Cuyahoga County residents could soon be asked to extend the sin tax that paid for the Indians’ stadium — and use it for future major improvements for the Indians, Browns, and Cavaliers. Or maybe it would be simpler just to tax beer drinkers and give the money straight to the Indians owners to boost their profits and keep them happy — all the other kids are doing it.

Browns seek sin-tax extension for stadium upgrades

Sure enough, Cleveland’s sports teams are talking of extending the city’s sin tax that built two new stadiums and a new arena in the 1990s to pay for further upgrades to those buildings. However, it’s not the Indians leading the charge, according to the Cleveland Leader, anyway, but rather the Browns:

The Browns are banking on the support of the Indians and Cavs, who have yet to join their efforts, because without them it will be quite a challenge to get the sin tax renewed. One of the biggest challenges that they will face will be in changing the minds of state officials, as well as overcoming the tobacco and alcoholic beverage lobbies who were successfully able to insert language into a budget bill in 2008 that bans counties from levying local sin taxes.

It’s not immediately clear whether the teams are seeking the sin tax extension to pay for new upgrades, or just for upkeep that’s already required in their leases. (There’s a Crain’s article too, but it’s behind their paywall.) Not that there’s likely much of a difference in the eyes of the teams, but it’d help to put a figure on how much additional public money the three teams are hoping to avail themselves of before their leases start to expire in another 12 years.

Browns: We built selves restaurant, we deserve public money

Mark Naymik has a column in today’s Cleveland Plain Dealer detailing the claims the Cleveland Browns owners used about how much money they’ve put into renovating their stadium in order to talk the city council into giving them $5.8 million in public cash. And the list is pretty impressive, though probably not in the way the Browns owners hoped:

The team said it spent $50 million on stadium repairs and improvements it wasn’t required to spend.

That’s a good chunk of money, for sure. The figure, however, is a bit misleading. It includes escalators that were installed when the stadium was built. This amenity was an upgrade the team’s late owner believed was necessary to attract fans. The figure also includes a restaurant at the stadium, which generates profits for the Browns.

The Browns also counted sales and tickets taxes paid by fans ($35 million since 1999), team income taxes ($6.2 million) and its elecric bill ($24 million), leading city councilmember Mike Polensek to snort, “I’m glad you pay utilities and taxes like most other businesses.” (It’s also worth noting that these are agressively feeble numbers for a team paying only $250,000 a year in rent on a stadium it got for free, and casts even more doubt on some of the wilder claims of the tax benefits of having a team in your city.)

The real news here, as Naymik notes, is that the Browns are looking to get the city’s sin tax extended beyond 2015, and “there’s growing chatter that the Browns will join forces with the Indians and Cavaliers — whose facilities are 20 years old and in need of upgrades — to mount a campaign” to extend it. Which should answer anyone wondering what the shelf life is of modern stadiums: until the teams can gather the chutzpah to ask for new (or improved) ones.

Late election returns: SF and Cleveland

If you were too busy following the news of New York’s city council electing its first Neopagan, you may have missed reports on a couple of stadium-related votes on Tuesday:

Cavs owner uses home opener to stump for casinos

If you ever wonder why rich people continue to buy sports teams even as they complain that they lose money — aside from the Beeston Dictum — how’s this for an ancillary benefit: Cleveland Cavaliers owner Dan Gilbert got to appear on video screens during his team’s home opener to urge fans to vote in favor of legalized casinos in Ohio. “Keep the jobs here. Keep the tax dollars here,” Gilbert told the sellout crowd, who’d already received handouts urging the same thing.

Not mentioned by Gilbert, so far as I can tell: That the referendum would give his company exclusive rights to build casinos in Cleveland and Cincinnati. It’s nice to have your own captive audience.

Stadium tax breaks cost Cleveland $18.6m a year

Judith Grant Long has long pointed out that property tax exemptions represent a hidden public cost of sports stadium construction, and now indefatigable Cleveland journalist Roldo Bartimole has estimated the exact costs in his hometown: About $8 million a year for the Browns, $3.8 million a year for the Cavs, and $4.8 million a year for the Indians. All three teams received new homes mostly built with public funds — and made sure that the public would own the buildings as well (though not the profit-making revenue streams they generate), since that absolves them of owing property tax.

Bartimole notes that 55% of property taxes in Cleveland go to the local school district, so that’s roughly $9 million a year in education money that isn’t flowing in because of the tax abatement. Let’s see how the Cleveland schools are doing in the absence of those funds … oh, dear.