Bengals’ 16-year-old stadium could end up costing taxpayers around $1 billion

Hamilton County’s lease deal with the Cincinnati Bengals is bad. Real bad. There’s the requirement that the county pay to add such items as “holographic replay systems” in the event they’re ever invented, for starters — but also plenty of items costing taxpayers plenty of money here in the actual present. How much money, you ask?

Hamilton County taxpayers have spent more than $920 million since 2000 as part of a deal to build and operate Paul Brown Stadium…

By the time 2026 rolls around and the 26-year lease between the team and the county expires, the county will have spent more than $1.1 billion on the deal for the Bengals to play in Cincinnati.

Now, some of that is financing costs — a little over a third of the stadium costs are interest payments, which are really a cost of deciding to push payments out into the future, and so pretty much a wash in present dollars (where “present” is defined as the stadium’s opening in 2000). But much of it is not, including a new requirement that the county start paying about $2.7 million a year in stadium operating costs next year, because expecting a massively profitable pro sports franchise ($55.5m in profits last year alone, according to Forbes) to pay to clean its own bathrooms is just crazy talk. Here’s a handy chart provided by WCPO-TV:

Screen Shot 2016-01-06 at 12.03.29 PM_1452099867537_29456359_ver1.0_640_480Even if you don’t count the interest payments, that’s about $650 million so far, with tens if not hundreds of millions more to come over the next ten years. By which point the Bengals will almost certainly be demanding a new stadium, or at least a new lease with further upgrades to what will then be a 26-year-old venue. You really have to hope that this time county officials will pay attention to the fine print, but probably not.

Bengals call for review of other NFL stadiums to see what goodies they can make taxpayers buy for them

The Cincinnati Bengals are famous (around here, anyway) for getting a state-of-the-art clause in their stadium lease that requires the county to pay for any upgrades that 14 other NFL teams already have, spelling out that this specifically includes “holographic replay systems,” in the event those are ever invented. The team’s owners already used this clause last year to get $7.5 million in public money for a new scoreboard, and now it sounds like they have bigger dollar figures in their sights:

The team sent a letter to Hamilton County officials this week asking for a review of the stadium’s condition and for talks to begin on how it could be improved to keep up with newer stadiums in other NFL cities…

The team’s letter, signed by Bengals Vice President Troy Blackburn, doesn’t mention specific problems or potential upgrades at the stadium, which cost $450 million to build, but it does note that several NFL stadiums have been updated in recent years and that new stadiums under construction in Atlanta and Minneapolis will include “significant changes in stadium design.”

Reading between the lines of the story, it doesn’t sound like the Bengals have a wish list of improvements (in fact, Bengals development director Bob Bedinghaus specifically said he doesn’t have such a list), but rather that they’re taking advantage of a clause in the lease to trigger a review of other stadiums to see what they can shake loose. If the team and county can’t agree, it goes to a panel of arbitrators; given how that worked out in St. Louis with the Rams‘ similar state-of-the-art lease clause, it’s probably not too early for Cincinnatians to commence panicking about now.

Hamilton County officially approves $7.5m for new Bengals scoreboard under “state-of-the-art” clause

The Hamilton County Commission voted Wednesday to approve paying for three-quarters of the cost of a new $10 million scoreboard for the Cincinnati Bengals — something it actually agreed to back in April, and which it kind of had to given the horrible, horrible lease the county agreed to with the Bengals that requires the public to buy the team anything that the kids down the block have. But anyway, now it’s official and all.

I’d love to show you a rendering of what the new scoreboard will look like, but this is all that any news sites have run with their stories. Is that the old scoreboard, or a Photoshopped rendition of what the new scoreboard will look like? I’m going to have to find somebody who’s actually been to a Bengals game to tell me, aren’t I? At least maybe this year some fans won’t be too embarrassed to admit it.

Bengals miraculously agree to pay for a small cut of Bengals things

The Cincinnati Bengals lease is a bit legendary in some quarters, being that it contains one of those “state of the art” clauses that requires Hamilton County to provide any upgrades that other NFL teams have already gotten, specifically mentioning such imaginary enhancements as “stadium self-cleaning machines” and a “holographic replay system.” So it’s big news, kind of, that the Bengals owners and the county have cut a deal on a revision of the lease.

The prompt for the new lease had nothing to do with the team’s ridiculous guarantees — they’re not negotiating those away so fast — but rather that Hamilton County is looking to build a new mixed-use development that would include a General Electric building and apartment towers near Paul Brown Stadium, and this would exceed the height limits in the Bengals’ deal. So the county offered a swap: increased height limits for a list of items that the Bengals execs neglected to get the first time:

  • $7.5 million toward a new scoreboard that’s already required by the state-of-the-art clause.
  • $3 million in public funding for part of the $3.5 million cost of installing Wi-Fi at the stadium.
  • Permission to add an expanded weight room for an MLS franchise, if Cincinnati ever gets one (for football, not soccer — see comments below).
  • The right to hold one game a year in London if the Bengals so choose.

Given the Bengals’ old lease, none of this is actually so bad — really, getting the team to pay anything toward stadium improvements at this point is a plus for the public. County commissioner Todd Portune, who’s been one of the Bengals’ biggest critics, called it “a new era in our relationship,” so maybe it really is possible to get team owners to kick in money for things that will benefit them just by sitting across the table and shaming them. So long as, you know, it’s only a little part of the money.

Cincinnati gets $5m bill for stadium upgrades to go with 2015 All-Star Game

One of the perks of building a new MLB stadium is that your city can get in line to host an All-Star Game: Of the last 17 All-Star Games, all but two have been held in recently built stadiums (three if you count Miami’s Pro Player Stadium, which opened in 1987 and had to wait until 2004 for its day in the spotlight) [correction: ignore the parenthetical, I apparently can’t read]. And with it comes … a request for an extra $5 million in public money?

“We want to make the ballpark shine,” said Hamilton County’s stadium Director Joe Feldkamp. Many of the fixes on the list, he said, were being planned anyway and are just being sped up. Reds Chief Operating Officer Phil Castellini said the improvements are needed to “allow our community to be viewed in the best possible light when we have the honor of hosting the All-Star Game in 2015,” he wrote in an email to the Enquirer.

Actually, $5 million isn’t all that much to spend on stadium upgrades, especially since Hamilton County is already on the hook for all capital maintenance costs for the Reds. (And the Bengals, who are demanding $21.8 million of their own improvements to Paul Brown Stadium.) But it is a reminder of why signing a lease that commits taxpayers to pay for future improvements is a terrible, terrible idea. And with Hamilton County already having sold off a public hospital in 2011 and raised property taxes in 2012 to pay for past stadium debts, it’s going to be interesting to see what they turn to next. No, probably not that.

New book by Harvard prof details $10b in hidden stadium and arena subsidies

Hallelujah! After years of waiting, Harvard stadium researcher Judith Grant Long’s book is finally out, and while I haven’t seen a copy yet, Bloomberg News has and provides some highlights of her findings:

  • The 121 sports facilities in use during 2010 cost taxpayers about $10 billion more than is commonly reported, thanks to hidden subsidies for things like land, infrastructure, operations, and lost property taxes.
  • Once hidden costs are taken into account, the average sports facility split is 78% public, 22% private.
  • The worst deals for the public include stadiums for the Indianapolis Colts, Cincinnati Bengals, and Milwaukee Brewers, each of which managed to rack up more in subsidies than the stadiums themselves cost to build. Best deals include venues for the Columbus Crew, Toronto Maple Leafs, and Ottawa Senators.
  • Arenas are generally better deals than stadiums, because they cost less to build. And  small cities tend to get get worse deals than larger ones, since they have less leverage to keep a team in town without large payoffs.

If you’re not familiar with Long, she’s been a favorite reference of FoS ever since she first started publishing her “Full Count” data on the true costs of sports facilities close to a decade ago. (At one point her book was also going to be called “Full Count,” I believe, but it ended up with the slightly less pithy title “Public/Private Partnerships for Major League Sports Facilities.”) Until Long came along, for example, it wasn’t clear that the Minneapolis Metrodome was actually one of the best deals for the public, thanks to a lease that forced the teams to actually share revenues; you can read more about her work in a profile I wrote of her for Baseball Prospectus back in 2005.

Needless to say, I’ll have much more to say about this once I’ve actually gotten my hands on a copy. (Which will have to wait until Routledge starts sending out either review copies or e-books, because $125 isn’t in my research budget.) But suffice to say that this is big, big news, and will be a huge boon to anyone trying to suss out the true public costs of stadium and arena deals after all the parts have stopped moving.

Cincy still seeking stadium funds, Sacramento’s Olympic dreams, and other stadium news

There was literally a ton of stadium and arena news over the weekend, so it’s time to deal with most of them via bullet points:

  • Remember how Hamilton County filled next year’s gap in funding for the Cincinnati Reds and Bengals stadiums by selling off a public hospital? Apparently they haven’t yet, and the deadline for payment is just three weeks away. Also, part of the plan involved cutting costs and holding more events at the stadiums, but that’s not “practical or dependable,” according to the county’s tax expert. If they manage to get this straightened out, they can do it all over again with next year’s funding gap!
  • Sacramento Bee columnist Ailene Voisin notes that the lieutenant governor of Nevada tells her (via cellphone) that if the Kings‘ new arena gets built, it could host hockey and curling during the 2022 Winter Olympics if Reno-Tahoe is chosen to host. Which tells us three important things: Reno and Tahoe think they can host the Winter Olympics; Nevada has a lieutenant governor; and it lets him have his own cellphone.
  • There’s a new plan for that D.C. United stadium at Buzzard Point … okay, it’s actually a plan from 2010. And the main upshot is that five different property owners have pieces of the site, making a deal tough to accomplish. Also that the plan marks one part of the site as “Future Velodrome.” Presumably this means a velodrome to be built later, but I prefer to think that it means a place for racing these.
  • The Miami Marlins‘ fans may be cranky about parking, but it hasn’t stopped them from snapping up tickets: ever-quotable team president David Samson claims that the team has gone from “No. 125 — counting minor league teams” in season-ticket sales to the top third in MLB, with close to 15,000 season seats sold. Of course, even these guys had strong ticket sales their first year in a new place; the trick will be to see if the Marlins can keep drawing fans past the honeymoon phase, and into Jose Reyes’ first extended trip to the DL.
  • Ray Ratto has summed up the Giants-A’s territorial rights dustup in one act. Key quote: “If I could convince Mom and Dad to stop feeding you so you would die and I could bury you in the backyard, I would.”

Hamilton County to sell hospital to feed stadiums

The Hamilton County Commission has finally agreed on a plan that would allow them to keep paying off the Cincinnati Reds and Bengals stadiums while still handing out the property tax break that was agreed to as part of the stadium deal (and which is so important to county taxpayers, especially if they’re really rich). Under the new plan, the county will sell Drake Hospital to a private corporation for $15 million, helping to close next year’s $14 million stadium budget gap.

It’s still not clear whether the gambit would be legal — earlier reports suggested that any proceeds from hospital sales are legally required to go to health care — but that’s the kind of thing that can be worried about later. Sort of like how the county is going to pay the following year’s stadium budget gap, assuming the economy doesn’t pick up by then and start generating bucketloads of sales taxes. But surely we don’t have to worry about that, right?

Sales taxes are still regressive, 49ers and Kings still spinning wheels, and other non-news

With Thanksgiving making for an epically slow news weekend — aside from for those reporters lucky enough to cover Black Friday pepper-spray incidents — we were instead treated to a smorgasbord of stadium non-news stories this weekend:

  • Rich people pay more property taxes while the poor and middle class pay more sales taxes, reports Cincinnati.com. This is considered newsworthy because the deal to cut property taxes following a sales-tax hike to pay for new Bengals and Reds stadium will mean not just a massive transfer of funds from taxpayers to the sports team, but also from the hoi polloi to the hoity toity: “The half-cent stadium sales tax paid by homeowners is estimated by the county to be a maximum $192 annually, while owners of the county’s highest-value homes get rollback rebates of $1,175 or more — netting them nearly $1,000 apiece under the current structure.”
  • The NBA lockout looks to be over, and everybody in Sacramento is back to saying what they were saying before about a new Kings arena. “Our position from day one is that this has never been about building a facility to benefit a professional sports team,” said Mayor Kevin Johnson, who two years ago kicked off his arena campaign by declaring that without one the Kings “very may well look elsewhere.” The apparent end of the lockout “is good for the efforts to keep the Kings in Sacramento,” said Michael Ault of the Downtown Sacramento Partnership, which is working on efforts to keep the Kings in Sacramento. And a local economic consultant and a woman who runs a restaurant said they hoped the end of the lockout would help the economy. This is considered newsworthy because it’s the same thing the Sacramento Bee runs every other day, and the announced resumption of the NBA season gave them an excuse to run it on page one.
  • The San Francisco 49ers are winning, but don’t have a new stadium yet, writes the San Francisco Chronicle. And they’re not especially talking to San Francisco about one, while continuing to pursue one in Santa Clara. This is considered newsworthy because … okay, I’m stumped on this one. Maybe the reporter was originally assigned to cover Black Friday, but came away empty-handed when no shoppers thought to bring pepper spray?

Hamilton County set to drain stadium fund for property-tax cut

The long-simmering Cincinnati Bengals and Reds lease controversies could be about to boil over, as the Hamilton County Commission appears set to approve a property-tax cut that was promised as part of the stadium deals, but which there’s now no money for:

If Republican Chris Monzel and Democrat Todd Portune do that — and both of their plans have been deemed not practical by the county administrator — the stadium fund will be bankrupt by March.

That will leave Hamilton County Auditor Dusty Rhodes without the cash to meet all the obligations in the sales tax fund.

“It would be the height of irresponsibly to commit funds they knew were not there,” Rhodes said. “I’ve long criticized various governments for living in dream world.

“This takes it to a whole new level,” Rhodes said.

Backing up a bit: What happened here is that when Hamilton County raised sales taxes by 0.5% in 1996 to pay for new stadiums, it designated 30% of the proceeds to rolling back property taxes. Unfortunately, this happened, which meant that sales tax proceeds fell short of what was needed to pay off both the stadiums and the property tax cut.

Monzel and Portune have different ideas about what to do next: The Republican wants to sell a hospital to raise $13 million, but any proceeds there might need to be reserved for medical care. Portune, meanwhile, wants to raise money by hosting more events at the stadiums, getting the teams to pay up-front costs of repairs, and other lease concessions, something he’s tried before to no avail. More likely is that the county has to dip into its general fund reserve, which could affect the city’s bond rating or even, according to Hamilton County Administrator Christian Sigman, prompt a state takeover of the county’s finances.

It seems clear that somebody is going to have to blink — just don’t bet on it being the Reds or the Bengals, since neither of them has any incentive to, thanks to having those sweetheart lease deals in their back pockets.