Rams to charge record PSL price, Cavs arena subsidy moves ahead, and other news of the week

It’s Friday again, so let’s go spanning the world:

  • The Los Angeles Rams are considering charging a top personal seat license price of as much as $225,000, just for the right to then buy season tickets for $350-400 per game. This seems like a bit of a reach when the payoff is just that you get to watch Rams games, but I guess Stan Kroenke needs to try to recoup his $2 billion in stadium costs somehow — and at least if it all goes south, he’ll be the one on the hook, not taxpayers.
  • Some Canadian bank bought the naming rights to the Toronto Maple Leafs arena away from some Canadian airline. Is this going to buy it valuable market exposure and name recognition that will justify the $40 million a year expense? Not on this blog!
  • The LED lights at the Atlanta Falcons‘ new stadium make football look all weird.
  • Shreveport Mayor Ollie Tyler says spending $30 million on an arena for a minor-league basketball team is a great idea that only “naysayers” don’t appreciate. “I think sometimes we don’t believe in ourselves and some of our urban areas we don’t believe that we are able to make things happen,” she says. If Mayor Tyler needs a reelection campaign theme song, I have a suggestion.
  • “The Federal Aviation Administration has determined that the Oakland Raiders‘ proposed stadium in Las Vegas would not be a hazard to aircraft.” Huzzah!
  • Would-be St. Louis MLS owner Paul Edgerley says he’s still ready to pay $150 million for a franchise, and $100 million toward a stadium, as soon as someone comes up with the other $60 million in construction costs. Noted.
  • Cleveland Cavaliers owner Dan Gilbert has officially reinstated his plan to do $140 million of renovation work to the team’s arena, with Cuyahoga County paying for half the cost. ”This is corporate welfare at its worst,” said Steve Holecko of the Cuyahoga County Progressive Caucus, after his erstwhile coalition partners the Greater Cleveland Congregations withdrew petitions against the arena subsidy after getting a promise of two mental health crisis centers from the county. Holecko’s group doesn’t plan to mount another ballot challenge on their own, though, so construction work is set to begin later this month.
  • Mikhail Prokhorov is ready to sell the Brooklyn Nets, but will hold onto the Barclays Center, after renegotiating the team’s lease so that it will pay less rent to the arena. This … does not seem like the smartest way of going about things, but maybe Prokhorov is figuring he’ll give up future rent revenue in exchange for a higher sale price now on the team? Or maybe he’s just not very smart.

Cavs subsidy foes scrap petitions, say “never mind, if we get crisis centers it’s all good”

In an unfathomable series of plot twists yesterday in the Cleveland Cavaliers $70 million glass-wall subsidy saga, this happened:

  • Cleveland city council president Kevin Kelley called for an investigation into primary subsidy foes Greater Cleveland Congregations, on the grounds that GCC … got funding from outside the city, I guess? Which wouldn’t be illegal or anything, but would be bad, because damn meddling out-of-towners?
  • Cavs owner Dan Gilbert tweeted that contrary to what a county lawyer had threatened, “I will never move the Cleveland Cavaliers out of Cleveland. Period. And that’s unconditional.”
  • Four of the five GCC members who’d filed the petitions for a public referendum on the Cavs subsidy deal — which is what had led Gilbert to pull out of the plan — wrote to Cleveland City Council Clerk Pat Britt that they were withdrawing the petitions. In exchange, Cuyahoga County — not Gilbert — had promised to build two mental health and substance abuse crisis centers that the GCC had been seeking.
  • Cavs CEO Len Komoroski declared that the arena renovation deal was back on the table, and that “we are very encouraged by this new development related to the private-public partnership plan to transform The Q for the long term.”

As the Cleveland Scene makes clear in its analysis of the crazy day, what happened here is that the county responded to Gilbert calling an end to the arena renovation plan by contacting GCC and asking if there was anything they could do to get the referendum campaign withdrawn. GCC’s price, it turned out, was the two crisis centers, which will cost the county an estimated $10 million to build, and $2.8 million a year combined to run. Once the county agreed to that — though it doesn’t appear that there’s actually anything more than a handshake agreement — GCC agreed to scrap the entire petition drive.

Of course, GCC was actually part of a broader coalition that had put together the referendum campaign — though GCC had been the ones to file it, so they could withdraw it unilaterally. And as the Scene makes clear, those coalition partners are now pissed:

GCC had been vilified as scheming extortionists by the pro-deal side and will now be vilified as sell-outs by their opposition allies. Members of other opposition groups, like the SEIU and the Cuyahoga County Progressive Caucus, are dismayed, if not furious. Some feel betrayed, sold out.

One activist told Scene that they spent hours collecting signatures for the referendum in order to “kill the deal, not help GCC make a deal.” The county’s commitment to investigating the costs of crisis centers — itself a tiny fraction of what GCC initially hoped to attain — is in any event considered to be vastly less important than the victory for democracy that has been short-circuited.

(Cutting a deal with your opponents without even telling your coalition partners, incidentally, is what really should be known in the community-benefits game as a “Bertha Lewis move.”)

If this is how the Cleveland arena battle ends, and it could well be, it’s a truly incredible result — and one that drives home my longstanding worry about “community benefits agreements”: It makes it relatively easy for a team owner (or, in this case, a local government) to neutralize public concern over a subsidy deal by buying off whatever community groups are spearheading opposition. (For the Brooklyn Nets, it was even simpler: Fund the creation of your own friendly community groups, then cut a deal with them.) It’s nice that GCC extracted something from the county that will actually benefit Cleveland citizens more than arena renovations, I suppose, which wouldn’t have happened without the referendum drive. On the other hand, yeah, democracy sounded like a nice idea for a minute there.

County lawyer thinks it’s his job to threaten that Cavaliers could move without arena upgrades

I wondered aloud yesterday what Cleveland Cavaliers owner Dan Gilbert would do now that his dream of a $70 million taxpayer subsidy for a big glass wall was dead, and while Gilbert still hasn’t responded publicly, the county’s lawyer took to the airwaves yesterday to threaten that the team might move out of town as a result:

“I think it has put a big question mark on the future of the Cavs in Cleveland,” [Quicken Loans Arena deal negotiator Fred] Nance told WKYC by phone on Tuesday. “Because while the deal would have extended [the Cavs] lease and we wouldn’t have had to deal with this until 2034, it’s not clear what’s going to happen in 2027 and owners don’t wait until December 30 of the last year of their lease — they start making those plans years ahead of time.

“We have significantly diminished our ability to keep this team here as a result of this.”

If you’re thinking, “Hey, didn’t Cleveland just approve a whole bunch of ‘sin tax’ money three years ago so its pro sports teams wouldn’t threaten to move?”, good memory! Except that Gilbert quickly decided that getting a whole bunch of money to ensure the team stayed put didn’t mean he couldn’t ask for more money on top of that to ensure the team would stay put, and nobody bothered to ask for the Cavs to extend their lease as part of that deal — in fact, the sin tax subsidies now extend several years beyond when the Indians‘, Cavaliers’, and Browns‘ leases expire (in 2023, 2027, and 2029, respectively). So the team threatening to leave is sorta kinda a viable threat, at least if you think moving the 11th most valuable franchise in the NBA to some other as-yet-to-be-determined city is viable in the first place.

Of course, this isn’t even Gilbert making the threat, but rather the county’s lawyer. Which is completely demented from a leverage standpoint — shouldn’t the local governments be providing reasons why local sports teams should want to stay, not pointing out ways they could leave if not gifted with public money? But given that this is a county that just lavished about $160 million worth of future tax money on its sports team owners without even asking that they sign longer leases in return, maybe it’s exactly the kind of completely demented we should expect.

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.

Court gives go-ahead to Cleveland arena referendum, will now take place sometime or other

The lawsuit over whether the city of Cleveland could reject legally gathered petition signatures to overturn its $70 million Cavaliers arena upgrade subsidy deal — on the basis that the deal was “an already executed and binding contract” — was resolved on Thursday by the Ohio Supreme Court, which ruled “Ha ha ha, yeah, that’s a good one.” Cleveland now has to put the issue up for a public vote, which is problematic since the city has now stalled so long with this legal battle that it may have missed the deadline for a November vote:

The deadline for filing issues with the Cuyahoga County Board of Elections for the Nov. 7 ballot passed on Wednesday, according to the board’s election calendar.

But a lawyer for the Cleveland taxpayers who sued to force the city to move on the issue said it’s now up to the city to make it happen.

“This is now administrative details. They should be able to do this quickly,” attorney Subodh Chandra said. If the city drags its feet, he may take them back to court, Chandra said.

And in the best quote of this whole sad saga:

“Someone just needs to call the Board of Elections and say, ‘How quickly can we restore the rule of law in Cleveland?’,” Chandra said.

What happens once the vote is scheduled remains unclear — Greater Cleveland Congregations, the coalition that is behind the petition effort, seems mostly out for a “community benefits agreement” to add some sweeteners for local community groups, not to scuttle the entire subsidy deal. But even if Cavs owner Dan Gilbert negotiates and a CBA comes to pass, if GCC switches sides to endorse the deal, does that mean Cleveland voters will follow suit? This is all shaping up to be a big-ass mess, but I guess you can’t get $70 million in public money to build a giant glass wall without a few bumps along the way.

Cleveland sues self to avoid public vote on $70m Cavs renovation subsidy

In the latest step in the increasingly bizarre Cleveland Cavaliers $70 million glass-wall subsidy battle, the city of Cleveland is now suing itself over whether the plan can be challenged by referendum, apparently so that city lawyers can argue both sides of the case:

[Council President Kevin] Kelley described the action as that which was requested in a taxpayer demand letter issued by the attorneys representing the referendum coalition. He said it was the “most expeditious way” to resolve the issue…

[Referendum-challenging attorney Subodh] Chandra was dismayed when Scene reached him by phone.

“I have been a litigator for more than two decades,” he said. “I thought I had seen everything. But I have never seen a party working to orchestrate a suit against himself, telling himself to do the right thing.”

The city’s lawsuit will now go directly to the state supreme court, with no appeal. Since Chandra and his fellow attorneys are now excluded from the suit, if the city fails to make a strong argument that it violated the law by refusing to accept petitions calling for a public vote on the deal, then it can wash its hands of the problem and walk away, maybe? It would seem there would have to be a way to challenge this legally, but if Cleveland really has invented a get-out-of-lawsuits-free card that it can play by suing itself, then they certainly deserve our respect. Also fear, because damn, is that ever not democracy.

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.