February 01, 2010
Bengals offer lease concessions — in exchange for lease concessions
Well, check this out: The Cincinnati Bengals have actually offered to cough up lease concessions in order to help bail Hamilton County's stadium fund out of its $13 million a year in losses. The offer by Bengals VP Troy Blackburn — which was actually made last October, but only released yesterday following a series of public-records requests — was estimated by the team to be worth $40 million, but the math is, shall we say, a bit funny:
- The Bengals would pay $1 million in rent each year from 2010 to 2014. That's $5 million cumulative, though more like $4.3 million in present value, since some of the money wouldn't come until years down the road.
- The team would pay for $2 million in stadium capital repairs by the end of the 2011 season.
- Waiving a requirement that the county pay the team about $2.6 million a year to play at Paul Brown Stadium — that's right, according to their lease, the Bengals pay negative rent — from 2018 through 2026. That's $23.4 million in cumulative dollars, but since so much of the payments are far in the future, it's only worth about $12.5 million in 2010 dollars.
- Staff reductions at the stadium, which the team controls but the county funds, estimated at $2 million in savings over 15 years.
Even as the Bengals count, that's only about $32 million, and in real numbers it's more like $21 million. Still, at least they're offering something, right?
However, the Bengals are also making demands in exchange: The county would have to give up its stadium luxury box, as well as revenue from non-NFL events, and — these are potentially biggies — hand over any naming-rights revenue and agree never to impose ticket taxes. Also, while the Bengals deny it, there are indications that the team might be granted an out clause in its lease ten years before they could otherwise leave. Little wonder, then, that county commissioner (and longtime Bengals nemesis) Todd Portune called it a lousy deal, saying, "If the offer didn't come with strings it would be a very generous offer. It's a start but there's a long way to go." That's what they said about the Treaty of Greenville.
December 25, 2009
The Times fumbles the season of stadium giving
It's Christmas, so with little else to report — aside from something about some bill the Senate passed — newspapers turn to burning off stories they haven't found room for on newsier days. For the New York Times, that's a long piece by Ken Belson on how cities that built stadiums years ago are seeing fiscal woes now. Belson's lede: "Years after a wave of construction brought publicly financed stadiums costing billions of dollars to cities across the country, taxpayers are once again being asked to reach into their pockets."
It's certainly nice to see the Paper of Record giving this topic attention, even on a day when nobody's going to read it. Unfortunately, though, the actual article is a muddled mix of differing anecdotes. Most of it is devoted to the Cincinnati Bengals situation, where, as reported back in August, reduced sales-tax receipts have left Hamilton County with a $14 million a year shortfall in its stadium payments, with local school systems already having given up funding to help fill the gap. That's certainly dire, but it's not actually taxpayers "again being asked to reach into their pockets" to pay for stadiums — any more than it'd be correct to say your car payments went up just because you lost your job and had to dip into your savings to pay them. Either way it's the same public expense; it's just a matter of which pocket the money is coming from.
The other examples cited, meanwhile, aren't all the best parallels to the Bengals fiasco: Indianapolis and Milwaukee seeing shortfalls in stadium bond funds are similar "dip into savings" deals, but Columbus being asked for increased subsidies for the Blue Jackets is genuinely new expense, as is Glendale considering lease concessions for the Phoenix Coyotes. And New Jersey's mulled ticket surcharge for the Devils is, as discussed here previously, potentially a way to get the team to give the taxpayers money, not the other way around.
The most enlightening part of the article, meanwhile, is probably this snippet buried deep on the jump page:
Compared with the lucrative deals for teams in Baltimore, St. Louis and elsewhere, the Bengals won a particularly lopsided lease.
Bob Bedinghaus, the commissioner who spearheaded the stadium project, said as much in 2000.
"They're an organization that's run by lawyers, and they look for every penny around every corner," he told The Cincinnati Enquirer. "It's going to be a difficult relationship going forward for the next 30 years."
Bedinghaus lost his re-election bid soon after. He now works as the Bengals' director of stadium development.
You know, it might actually be time to do something about that.
August 25, 2009
Cincy stadium fund running $13m a year in red
Hamilton County, Ohio, is now projecting that its stadium fund will run a $13.2 million deficit for the year 2010 if tax revenues dip by a mere two percent, an amount that might be conservative in light of hard times. Commissioners are hoping to get concessions from the Cincinnati Reds and Bengals [ed. note: Good luck with that], and/or cuts from the Cincinnati Public Schools to close the gap.
Long before Bernie Madoff, Hamilton County Commissioners and insiders in the Cincinnati area knew that a day of reckoning would come as bills for the two stadiums came due. In 2004, County Commissioner Phil Heimlich called the stadium debt a "fiscal time bomb," suggesting service cuts may be needed in the future.
Since schools have a tougher time threatening to relocate, the smart money on who will make the most concessions might be placed on education. The county could roll back property tax relief, but the commissioners argue that would be "the last option they will consider."
One possible way to close the gap might be to offer naming rights to someone for the Bengals' stadium, something that Bengals owner Mike Brown bypassed so that he could put his Dad's name on the new facility. Betting that the taxpayers of Hamilton County will be able to benefit from naming rights revenue might be as unwise as betting on Cincinnati Reds games if you were a local legend.
August 11, 2009
The New Jersey Nets revealed a few weeks ago that they'll be dropping "New Jersey" from their road uniforms this season, as part of their never-ending plans to move to Brooklyn one of these years. And apparently New Jersey state senator Kevin O'Toole just noticed, because he's hopping mad:
"New Jersey's professional sports teams, the Nets, Jets and Giants, have no problem feeding at the taxpayer funded trough, yet seem to forget who their benefactors are when they order the teams' uniforms," O'Toole said. "The taxpayers of this state have poured hundreds of millions of dollars into infrastructure upgrades in the Meadowlands where all the teams play their home games. Is it too much to ask that professional sports teams that benefit from the support of the New Jersey taxpayer recognize the state on their uniforms?"
Actually, given the going rate for uniform advertising, you could argue that for "hundreds of millions of dollars" the Nets should have the outline of the state shaved into their hair, too.
Meanwhile, in Cincinnati, Hamilton County Auditor Dusty Rhodes is calling on the county to sell its luxury suites that it got as part of the deal to build the Reds' and Bengals' new stadiums, or at least get "something else of value" in exchange for giving them back to the teams: "At a time when county employees are losing their jobs ... it is simply irresponsible and wrong to be giving away for free these assets."
In the county's defense, at least the suites are available to non-profit groups and by lottery to county residents, which is a public benefit of some kind, albeit only to a lucky few members of the public. That's better than some other deals I could name.
January 16, 2009
County to Bengals: How about a bailout for us?
Now here's a pleasant change of pace: Hamilton County Commission President David Pepper says he's considering asking the NFL or the Cincinnati Bengals for a bailout on the team's lease at Paul Brown Stadium, which is set to start costing the county millions of dollars a year in coming years. "It may be a Don Quixote mission, but it's worth raising," Pepper told the Cincinnati Enquirer.
Pleasant, that is, until you read why Pepper needs the bailout: According to the Bengals' lease at the nine-year-old, publicly bought-and-paid-for stadium, the team stops paying rent to the county this year. Starting in 2018, the county pays the team for "any and all expenses of any nature whatsoever incurred by the Team relating to the Stadium Complex." (This is the same lease clause that requires the public to pay for any stadium upgrades that half of other NFL teams have, including but not limited to "holographic replay systems.")
Bengals owner Mike Brown says the lease was front-loaded at the county's request: "We're paying no rent now because we already paid the rent." Though given that the Bengals only agreed to pay $11.7 million total over nine years for use of a $455 million stadium - and still haven't paid some of what the county says they owe - it's hard to argue that the team couldn't afford to cough up a bit more to bail out the local school system.