Cuyahoga County to spend extra $40m on arena repairs after Cavaliers blew through first $22m in record time

It’s Wednesday, so it must be time for Cuyahoga County to spend more money on the Cavaliers‘ arena:

Cuyahoga County Council is considering whether to issue $40 million in bonds to reimburse the Cleveland Cavaliers for repairs the county is required to cover under the team’s lease agreement on Rocket Mortgage FieldHouse.

Also under consideration is a measure that would re-finance $40 million of the $60 million in bonds sold by the county in 2015 as an advance on revenues from the county’s so-called sin tax, which was extended 20 years by a 2014 vote.

That’s a lot of words, but careful readers will zero in on the two numbers: $40 million and $40 million, which added together come to $80 million. It’s not really $80 million in new spending — one set of bonds would be new, the other merely refinanced — but it is a significant chunk of change for an arena that has already gotten a whole lot of chunks in recent years.

The reason for the new spending proposals, as explained in a not very clear article at Cleveland.com, is that the county agreed to cover “major capital repairs” in the team’s lease, and Cavs owner Dan Gilbert (who is reportedly doing better after his recent stroke) has already blown through $22 million in county tax funds while also fronting $40 million of his own money, for such things as “the replacement of the heating and cooling system, retractable seating, sports lights, ADA-compliant restrooms, and other things.” Some of that sounds a bit dodgy as required maintenance — is that replacing worn-out retractable seating and sports lights, or upgrading them? and WTF are “sports lights,” anyway? — but if the lease says the county has to pay for them, there’s not much the county can do about that, hence the rush to pass another $40 million bond issue.

The main problem here is that the county appears to have either seriously overestimated how fast tax revenues would come in, or seriously underestimated how much capital expenses the arena would rack up so quickly. Given that the county previously said it would be using taxes on Cavs playoff tickets to help pay off its existing arena upgrade bonds, and the Cavs currently just finished year one of an umpteen-year rebuild following the departure of LeBron James, I’m putting my money on … you know, probably both.

Friday roundup: NYCFC turf woes, Quebec’s NHL snub, and why people who live near stadiums can’t have nice things

And in less vaportectury news:

  • NYC F.C. is having turf problems again, as large chunks of the temporary sod covering New Yankee Stadium’s dirt infield were peeling up at their home match last Saturday. There’s still been no announced progress on the latest stadium plan proposed last summer (which wasn’t even proposed by the team, but by a private developer), and I honestly won’t be surprised if there never is, though Yankees president Randy Levine did say recently that he “hopes” to have a soccer stadium announcement this year sometime, so there’s that.
  • Deadspin ran a long article on why Quebec City keeps getting snubbed for an NHL franchise, and the short answer appears to be: It’s a small city, the Canadian dollar is weak, Gary Bettman loves trying to expand hockey into unlikely U.S. markets, and Montreal Canadiens owner Geoff Molson hates prospective Quebec Nordiques owner Pierre Karl Péladeau, for reasons having to do with everything from arena competition to Anglophone-Francophone beef. Say it with me now: Building arenas on spec is a no good, very bad idea.
  • The Cleveland Cavaliers arena has an even more terrible new name than the two terrible names that preceded it. “I know that sometimes [with] change, you get a little resistance and people say, ‘Why are they changing it?’ and ‘How’s that name going to work?'” team owner Dan Gilbert told NBA.com. The answers, if you were wondering, are “Dan Gilbert is trying to promote a different one of his allegedly fraudulent loan service programs” and “nobody’s going to even remember the new name, and will probably just call it ‘the arena’ or something.”
  • Inglewood residents are afraid that the new Los Angeles Rams stadium will price them out of their neighborhood; the good news for them is that all economic evidence is that the stadium probably won’t do much to accelerate gentrification, while the bad news is that gentrification is probably coming for them stadium or not. The it-could-be-worse news is that Inglewood residents are still better off than Cincinnati residents who, after F.C. Cincinnati‘s owners promised no one would be displaced for their new stadium, went around buying up buildings around the new stadium and forcing residents to relocate, because that’s not technically “for” the new stadium, right?
  • Worcester still hasn’t gotten around to buying up all the property for the Triple-A Red Sox‘ new stadium set to open in 2021, and with construction set to begin in July, this could be setting the stage for the city to either have to overpay for the land or have to engage in a protracted eminent domain proceeding that could delay the stadium’s opening. It’s probably too soon to be anticipating another minor-league baseball road team, but who am I kidding, it’s never too soon to look forward to that.

Friday roundup: Delayed votes, poorly considered tributes, and a no-LeBron loan offer

Greetings from my undisclosed location! I have time for an abbreviated news roundup this week:

LeBron James was not the centerpiece of the Cleveland economy stop it stop it please god stop it

Eeaaaaaaaaaaaaaaaaaaaaaaugh, nooooooooooo, not another article about how much LeBron James is worth to the Cleveland economy!

When James played for Miami, there was a downward trend in the number of restaurants in Cleveland that coincided with an upward trend around the stadium in Miami. Likewise, when James returned to the Cavs, restaurants near Cleveland’s Quicken Loans Arena spiked while the number restaurants within a mile of the American Airlines Arena started to slide, according to the Harvard study.

That’s from a CNBC article headlined “How LeBron’s move west could tip parts of Cleveland’s economy south,” though it’s mostly full of economists saying anything from “we’ll see” (Case Western Reserve’s Jack Kleinhenz) to “people who stop going to Cavs games will just go to Indians games instead” (Smith College’s Andy Zimbalist) to “we saw more tourist restaurant spending the year LeBron came back, but that could easily be a coincidence” (city tourist bureau spokesperson Emily Lauer). The headline is already a giveaway to the problem with the story’s premise, as is the above quote: Of course less money is spent in and around the Cavs’ arena when fewer people go to Cavs games, but that doesn’t mean people stop eating or going out at night — it just means that they find other things to do than going to see NBA basketball.

At least CNBC managed to avoid repeating the urban legend that LeBron is worth $500 million a year to Cleveland’s economy, which hopefully we put a stake in back in 2015. But still, even putting a reporter on such a story reveals that some CNBC editor thinks “let’s look at how Pro Sports City will fare economically without Pro Sports Star” is an assignment worth making, which, no, it really isn’t, and the economists you spoke to ended up telling you as much. And you didn’t even call Geoffrey Propheter, who did the definitive study on NBA arenas and their economic impact! I bet he has lots of ideas for better ways that CNBC reporters could be spending their research time — give him a ring, he’s in the book.

With LeBron gone, who will come see Cleveland’s new glass wall?

LeBron James is a Laker, which means the Cleveland Cavaliers will be really, really, laughably bad next season, and probably for many seasons to come. Which means Cavs fans won’t have much reason to come out and see the team’s new glass wall.

Bloomberg News, for one, is worried about the effect on the new ticket tax that’s helping pay for the arena’s renovations:

The departure of the team’s biggest draw could pose risks if attendance drops, given that a tax on ticket sales is used to help pay off the debt.

Risks to who would that be exactly, Bloomberg doesn’t say. But given that the ticket taxes would be collected by the city to help repay $140 million in public debt on the stadium upgrades, it sure looks like taxpayers will be on the hook for repaying it if there’s any shortfall, much like happened in Cincinnati with the Bengals stadium when sales tax receipts fell short, with dire consequences.

But hey, maybe with the Cavs’ future in the toilet, Clevelanders will instead spend more money on concerts — substitution effect, right? Except that the Cavs’ arena already just had a record-setting year for concerts, so expecting much improvement in that department is probably ambitious. Maybe they can sell the glass wall on eBay.

Friday roundup: Trump rescued stadium tax break, Sacramento MLS group needs more cash, more!

Happy interval between Hanukkah and Christmas! If anyone is out there reading this and not getting on a plane from somewhere to somewhere else — or is reading this while waiting for a plane from somewhere to somewhere else — enjoy your lightning-round news of the week:

  • San Diego Union-Tribune columnist Kevin Acee, who never met a stadium or arena deal he didn’t love to bits, says that several people are interested in building a new arena in San Diego, including the owners of the Padres and new Brooklyn Nets minority owner Joe Tsai. Acee adds, “Several people insisted in recent weeks the Nets will remain in Brooklyn long-term and there are no plans to ever move the team to San Diego,” which, given the relative size of the markets, is possibly the least surprising sentence ever written in the English language. Also, Acee includes zero attributed quotes in his story, and says nothing about how such an arena would be paid for, so take it with a large grain of salt for the moment.
  • Donald Trump made retaining the tax-exempt bond subsidy for sports stadiums in the tax bill “a priority,” according to one GOP aide. So when he tweeted in October, “Why is the NFL getting massive tax breaks while at the same time disrespecting our Anthem, Flag and Country? Change tax law!”, either he didn’t mean anyone to take him seriously just because he was the president of the United States speaking out on a matter of public policy, or more likely he just forgot to check with his funders before clicking Tweet.
  • “The Miami Open tennis tournament won permission to move to the Miami Dolphins’ stadium, with the kickoff planned in 2019,” reports the Associated Press, which seems to be slightly confused about how a tennis match starts.
  • After the NBA used the promise of an All-Star Game for Cleveland in 2020 or 2021 if it approved publicly funded arena renovations for the Cavaliers, and the city approved $70 million worth, the league gave those games to Chicago and Indianapolis. Not that there’s really that much value in hosting an NBA All-Star Game, but still, HA ha, suckers.
  • Apparently the reason why Sacramento didn’t get an MLS expansion team along with Nashville this week is the league is worried the city’s ownership group doesn’t have enough cash for a $150 million expansion fee and a $250 million stadium. All they need is to find someone with deep pockets who thinks the best thing to do with their money is to invest it in a U.S. soccer franchise that will start off $400 million in the hole, and, well, good thing that P.T. Barnum movie is opening this week, that’s all I can say.
  • There’s a “Plan B” stadium proposal for the Pawtucket Red Sox, where instead of helping to fund the stadium directly, the state would instead give the city all income and sales taxes collected at the stadium and let the city use the money on construction costs. Rhode Island state senate president Dominick Ruggerio says he doesn’t “see that as being a viable alternative,” and plans to submit his own stadium-financing bill, which probably won’t pass the state house. This could go on for a while, until somebody remembers where they stored the money generating machine.
  • The Arena Football League is now down to four teams, in part because the Cleveland Gladiators had to suspend operations for the next two seasons thanks to renovations to the Cavaliers’ arena. This was reported in the Albany Times-Union, which has to care because Albany is supposed to be getting an AFL expansion team this year, and man, do I feel sorry for whoever got stuck with being the Times-Union beat reporter on this team, because this is looking like a sad year ahead for them.
  • Deadspin’s Drew Magary weighed in this week on arena and stadium subsidies and concluded that “Arenas Are Important And Football Stadiums Are Not,” according to his headline, but really he meant “if you’re going to waste money on something, at least arenas can be used more days of the year,” which, fair enough. Or as Magary puts it as only he can: “We are entering an age of horrific corruption, and so I have accepted the fact that living in a fraud-free America is a hilarious pipe dream. All I can do is hope for the least of all corruptions, and pray that a bare scrap of public good accidentally comes out of it. If you are some ambitious dickbag city councilman looking to make his name for himself, an arena should be your priority when it comes to getting worked over.”
  • NHL commissioner Gary Bettman spoke out again about the Calgary Flames arena situation, calling it “very frustrating” and saying that “they’ll hang out and hang on as long as they can and we’ll just have to deal with those things as they come up,” but insisting that “yes, Quebec City has a building, but nobody’s moving right now, we’re not expanding East.” Which either means the Flames owners really don’t want to threaten to move right now (or ever), since making overt move threats is usually Bettman’s job, or it means even Bettman is sick of trying to pretend that the Flames have a viable threat to go anywhere.

Cavs owner waits two whole months after getting arena money to dream about even newer arena

It’s been almost two whole months since Cleveland Cavaliers owner Dan Gilbert got approval of $70 million in taxpayer money to renovate his arena, just three years after getting his last batch of public arena money, so what’s a guy to do now? How about drop hints that he’d like to tear it down and build a whole new arena when his lease expires in 2034:

The Cleveland.com headline on this — “Did Cavaliers owner Dan Gilbert hint at a new arena for 2034?” — is fairly hilarious, given that he obviously hinted at it, though a Gilbert spokesperson insisted he didn’t hint at it, and we’re apparently in an age where you need to give important people the benefit of the doubt even when they’re obviously lying about things right in front of your face, so okay.

If you’re wondering about what that “Inverted Bowl” thing is, it’s the design firm Rossetti’s claim to attempted fame, which from the firm’s renderings appears to be “get rid of the upper deck and replace it with a wall of overhanging balconies and claim that this makes the upper deck ‘the best seats in the house.'” On the one hand, this is just reinventing cantilevering, which does indeed create better upper-deck seats, albeit cantilevering that doesn’t create an overhang over any of the lower deck, pretty much eliminating any significant benefit you’d get from it; on the other, with only a handful of rows of seating in each balcony, it’s going to be really tough to create as many seats in an “inverted bowl” arena as in a standard bowl. (This isn’t helped by the fact that the closer you get a ring of seats to the game action, the fewer seats you can fit in each row — try cutting a strip of paper and play around with it if you can’t picture why.)

Plus those top balconies are going to need to have a crazy rake so that the fans in the back rows can see the game over the heads of the fans in front of them … but you know what, Rossetti put together a really nice video, with talk about the “digital age” and animations of their staffers’ actual brains for some reason, so go watch it and repeat to yourself it’s just a show, you should really just relax.

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.