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 council approves losing $8m a year on Browns stadium lease instead of $6m a year

The Cleveland city council voted yesterday to approve giving the Browns $2 million a year for the next 15 years to help pay off $120 million in planned stadium renovations. (The measure needed a 12-vote supermajority to win, and snuck by with 13 votes on the 19-member council.) Since the Cleveland Plain Dealer reported over the weekend that the city is currently losing $6 million and change per year on the Browns stadium lease, this will push Cleveland’s losses over the $8 million per year mark.

The anti-funding side may have lost, but at least it prompted a four-hour debate that I’m now sorry I didn’t try to find a webcast of:

At one point, Councilman Tony Brancatelli pulled a red flag from his pocket and threw it on the table, calling out Banner on his comments about how favorable the deal is for the city, compared to what other cities have paid into their athletics facilities. The truth is, Brancatelli said, all of those cities have been held hostage by their contracts with NFL teams.

“We’ve afforded the Browns a lot of luxuries that many businesses who come to this table don’t have,” Brancatelli said.

Much of the debate appears to be about whether the Browns’ renovation requests were for “repairs” (which the city is obligated to pay for) or “capital improvements” (which the city already provides a fund for, but the Browns will now be getting $2 million a year on top of). Which led to exchanges like this one:

“There’s a common sense part of this that if you’re four years past something’s useful life it’s time to replace the scoreboard,” [mayoral chief of staff Ken] Silliman said.

[Councilmember Jeffrey] Johnson snapped back: “Well, I’ve got a common sense approach, too, and it says that we’re about to spend $2 million of my community’s money, and I need you to prove to me me that the scoreboard needs to be fixed today. … Respect me enough to bring me something that proves it. Don’t play me for a dummy.”

From the sound of it, the Cleveland council just punted and said fine, let them have their damn money. Next up, in all likelihood: the Indians!

Cleveland running $6m-plus annual loss on lease with Browns

The Cleveland Plain Dealer ran a great piece on Saturday (where almost nobody would see it, but let’s not be picky) running down the details of the Cleveland Browns lease, which some local officials see as a giveaway, but which Browns officials say is actually pretty generous to the public. Here’s what Cleveland rakes in each year, it turns out:

  • $250,000 in rent
  • $570,000 in revenues from three city-owned parking lots
  • $3.5-4 million in ticket taxes on Browns tickets

The Browns keep everything else: ticket sales, ad revenue, concession sales, and the $6 million a year from naming rights to the city-owned building. The city, meanwhile, needs to pay for police overtime to patrol Browns games (cost not given), plus $850,000 a year in capital improvements to the stadium, a figure that will rise to $5 million a year in 2023. Plus, if the latest Browns renovation plan goes through, an additional $2 million a year for more stadium improvements.

The city, meanwhile, is paying for the entire $296.3 million construction cost of the stadium that opened in 1999. And I need to correct myself: I’d written that the stadium will have been paid off by 2015, when the city’s “sin tax” on cigarettes and alcohol that was passed to cover stadium costs expires — but no, it turns out the city has only paid off $68 million of that debt, and is going to have around $200 million left to go when the sin tax expires. So either Cleveland will need to dip into its general fund to the tune of about $10 million a year, or it will need to extend the sin tax — and which point the Browns, Indians, and Cavaliers have promised to seek even more money for stadium improvements. It really is the gift that keeps on giving.

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.

Browns announce $120m in stadium upgrades, won’t say who’ll pay for them

Okay, it’s definitely Announce Stadium Plans But Refuse To Say How They’ll Be Paid For Week: First the Atlanta Braves, then the Virginia Beach mystery arena, and now the Cleveland Browns have announced $120 million in renovations to their stadium, with money coming from we’re-not-gonna-tell-you:

 The Cleveland Browns announced Wednesday a two-year plan to deliver $120 million in upgrades to the “fan experience” at the city-owned FirstEnergy Stadium –- including a new scoreboard, audio equipment and physical changes that would allow fans to move about more freely…

Browns CEO Joe Banner declined to discuss financing during a news conference Wednesday afternoon, revealing only that the organization has acquired what amounts to a loan from the NFL that could cover about half of the expense.

In a written statement, Mayor Frank Jackson said that he supports the improvements and that the plan “meets structural requirements and will enhance the fan experience here in Cleveland.” Details for financing the project, however, are still in discussion, Jackson wrote.

Talk of extending the “sin tax” on alcohol and cigarettes (seriously, that’s all the sins that Cleveland could come up with to tax?), which paid for new stadiums for the Browns and Indians and is set to expire in 2015, to fund upgrades for both teams has been kicking around for a while now, but there’s been no formal proposal as of yet. And from the sound of it, there may be considerable resistance on the Cleveland city council:

“The sin tax went toward establishing the infrastructure and keeping it safe and secure,” [city councilmember Jeffrey] Johnson said. “This is different. This is about who can have the biggest scoreboard and bragging rights. And the ownership is just trying to create a stadium that they can show off and enhance their reputation without really enhancing the benefit to the average citizen.”

Councilman Michael Polensek agreed and said he would vote against the city chipping in to pay for the renovation. He pointed out that $120 million could hire more than 1,000 police officers or ameliorate the city’s entire abandoned housing problem.

“I’m weighing the glitz and glamor and the hype associated with sports teams against the reality of life,” Polensek said. “The majority of my citizens can’t even afford to go to a game. And you want me to go back and ask them to dig into their pockets and ante up for the Cleveland Browns? I’m looking to Jimmy Haslam and his folks to have a civic soul. Corporate leadership must try to understand our plight, and so often they fail to do that.”

“I’m looking to the local sports team owner to have a soul.” I guess people have hoped for crazier things.

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.

Today in new crap they’re putting in NFL stadiums

A couple of reports on new technology that NFL teams are installing to get people off their damn sofas and into football stadiums:

If you don’t go to NFL games (or don’t drink beer — which, come to think of it, probably implies the former), you should probably still care about this stuff because it ups the ante for teams with state-of-the-art clauses that say their public landlords have to provide them with anything that enough other teams get. I don’t think any city councils have yet been presented with a bill for pneumatic beer tubes, but it’s probably only a matter of time.

Things we missed during PoopGate

Just when things in the stadium and arena world seemed to be quieting down for the summer, we had a bit of a crazy week, thanks to all those sewage leaks and threats to move teams to various places. As a result, a few things fell through the cracks this week, so let’s catch up with a quick roundup post:

Browns stadium renamed, public owners get squat

They started changing the signs on the Cleveland Browns stadium this weekend, from Cleveland Browns Stadium to FirstEnergy Stadium, which as you’ll know if you’ve been reading FoS is because new owner Jimmy Haslam sold the building’s naming rights for $6 million a year, none of which he’ll have to share with the taxpayers who actually own the stadium

Meanwhile, NBC Sports blogger/NFL mouthpiece Mike Florio decides that this is a perfect time for a quip:

Earlier this year, new owner Jimmy Haslam sold the naming rights to FirstEnergy.

Hopefully no discounts or rebates were involved in the transaction.

Get it, see, because FirstEnergy is an electricity company, and they like to offer discounts and rebates to their customers! [UPDATE: Or maybe because Haslam has his own problems with rebates — thanks to commenters for pointing this out.] And also, the idea of discounts and rebates being involved in a sports stadium deal is so unheard-of, it’s hilarious!

Browns naming-rights deal worth $6m/year

Oh, by the way, the Cleveland Browns sold the naming rights to their stadium this week to FirstEnergy Corp. for $6 million a year over 17 years. And by “their stadium,” I mean of course, “the stadium that taxpayers paid to build and own but won’t be getting any money from selling the name of.” Because that’s the way that modern stadiums roll.

FirstEnergy, a deregulated electricity company, showed declining profits last year, giving them a good head start on joining this list. Though they’ll have to work harder to become the next this.