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.

Cincinnati stadium debt options: Rock, or hard place

The Cincinnati Enquirer ran a long article on Sunday looking at Hamilton County’s lease woes with the Cincinnati Reds and Bengals, and looking at how other cities solved similar revenue shortfalls. The findings:

  • Indianapolis raised sales and hotel taxes, plus redirected tax revenue from the stadium area to pay off construction bonds on the Colts‘ stadium.
  • Cleveland sold off naming rights to Jacobs Field (now Progressive Field) and Gund Arena (now Quicken Arena), which had formerly been named for the Indians‘ and Cavaliers‘ owners.
  • Orlando has scrapped a planned performing arts center* and cut back on police, fire, and road services to fill funding shortfalls on the Magic‘s new arena.

In other words, options for Hamilton County include raising taxes, cutting spending, or selling off anything that isn’t nailed down — sound familiar? Other already rejected options include declaring bankruptcy (would destroy the county’s reputation), selling the stadiums (no one will buy them), raising ticket taxes (the leases prohibit it, though it’s possible a voter referendum could get around this), default on the agreement to pay into Cincinnati’s public schools fund to make up for lost property taxes on the stadiums (school bondholders could sue), refinance the bonds (won’t save much money), buy the Bengals (too expensive), or end a riverfront development project (very little of that funding comes from the stadium tax fund).

The problem is that the damage was done when Hamilton County agreed to build the stadiums and agreed to those godawful leases; now, as I told the Enquirer, “The teams say, ‘You made a deal and if you got the short end of the stick, that’s not our problem.” At this point, barring a ticket-tax end run, the county seems like it’s going to have to pay off its stadium debt out of taxpayer pockets one way or another — unless they can find a way to retroactively revise the leases using time-traveling neutrinos.

*UPDATE: The Orlando performing arts center informs me that construction is underway for phase one of the project, with a groundbreaking having taken place in June. It’s phase two that’s currently not scheduled, according to the center, “due to construction timing.”

Bengals stadium: Worst. Deal. Ever?

Good, long article in yesterday’s Wall Street Journal on the financial woes of the Cincinnati Bengals‘ Paul Brown Stadium — or rather, the financial woes of Hamilton County, which built the place in 2000 and within four years was suing on the grounds it had been hoodwinked into a sweetheart deal. Among the article’s highlights:

  • The initial $280 million price tag ultimately swelled to $350 million (if you believe the Bengals), or $454 million (according to the county), or $555 million (according to Harvard stadium expert Judith Grant Long, whose long-awaited book Full Count, I am assured, really is due out any month now). This last figure would set a record for public subsidies for an NFL stadium.
  • As a result, the county has been facing steep debt payments: $34.6 million in 2010, equal to 16.4% of the county budget. As a result, the county has been slashing funding for things like schools, the sheriff’s department, and youth programs, and is now set to repeal the property tax reduction that was the carrot to get county residents to approve the Bengals stadium (and an accompanying Reds stadium) in the first place.
  • Hamilton County hamstrung its own finances by agreeing to let the Bengals collect all parking revenues at the new stadium, while the public picked up all security costs. The team put pressure on the county by saying it would move to Baltimore without a sweetheart deal — but documents from the time indicate that Baltimore’s offer was capped at $200 million in public funds, and would not cover operating costs.
  • Even on the field, the new stadium has underperformed: “The Bengals had said that with a new stadium, the team’s revenue would increase, allowing it to sign better players, win more games and attract more fans to the area. In 2000, the new stadium’s first year, the Bengals had the same record they’d had the previous year, 4-12. Since then, the team has managed just two winning seasons in the new facility. Its attendance levels have actually dropped.”

The problem, it seems, is that unlike in other municipalities, Hamilton County footed the entire stadium bill itself — and counted on a 0.5% sales tax hike to make the bond payments. When sales tax revenues didn’t grow at the rate the county had hoped, it was left with a budget hole that’s grown progressively larger.

(The Bengals have since responded with a two-page letter that asserts that it’s the county’s fault for making a lousy deal, and anyway the real problem is the county took part of the sales-tax proceeds and wasted it on things like roads and public schools.)

One hopes this will be a cautionary tale for other local governments negotiating leases, but it probably won’t be, for reasons already discussed here. In case any local elected officials with lease talks on their agenda are reading this, though, here’s a handy crib sheet of quotes from the WSJ report on the Bengals fiasco to reference in your hearing testimony:

“The Cincinnati deal combined taking on a gargantuan responsibility with setting new records for optimistic forecasting,” says Roger Noll, a professor of economics at Stanford University who has written about the deal. “It takes both to put you in a deep hole, and that’s a pretty deep hole.”

“It’s the monster that ate the public sector,” says Mark Reed, Hamilton County’s juvenile court administrator.

Tom Luken, a former Cincinnati mayor and councilman, actively campaigned against the deal. “Anybody with half a brain can figure that this is a bad deal,” he says. “As it turned out, it was even worse than they painted it.”

And finally, the punchline: Hamilton County commissioners are set to vote today on spending another $307,000 on the stadium, to upgrade its instant-replay system from analog to digital — stadium upgrades being the county’s responsibility as part of that lease that taxpayers arm-twisted the Bengals into accepting. Next step: holography!

Bengals want $43.6m more in stadium upgrades

Remember how, after offering up $7.4 million in additional rent to help out Hamilton County’s empty stadium fund, the Cincinnati Bengals demanded $30 million in lease breaks and a new scoreboard? Well, now it turns out they also want a total of $43.6 million in stadium upgrades, according to records obtained by the Cincinnati Enquirer.

Hamilton County officials say they can’t afford it; the Bengals retort that this is just normal maintenance. Though their arguments don’t exactly back up that contention:

Dornette added the scoreboard isn’t a team want — it’s a need. The Bengals scoreboard, for example, is not high definition. The Bengals are stuck with the equivalent of an analog TV in a digital age, they say.

Other stadiums, including the rival Steelers, for example, feature high definition scoreboards.

The Bengals are, of course, the team that famously included “holographic replay systems” among the items that the state-of-the-art clause in their lease requires them to get once other teams have them. So at least they can argue that they’ve established “Because all the other kids have them!” as a precedent.