There’s an article in Cleveland Crain’s Business today that’s behind such a wreck of a paywall that it’s hard to figure out exactly what’s going on, but I’ve been able to puzzle out the gist of it: The Cleveland Browns’ real estate consultant says Ohio can recoup the $1.2 billion in tax money the team owners want for a new stadium so long as tourists pour into the state in unprecedented numbers just because the team moved a few miles:
“We have seen in venues similar in size to the proposed Brook Park stadium where an event, like WrestleMania or the Final Four, there are multiple days of activities surrounding that event, or these sports fill the venue for several days in a row,” said [RCLCO managing director Erin] Talkington, who leads the firm’s sports, entertainment and large-scale mixed-use practice.
“Those are some of the numbers that we’re looking and calculating how that drives additional revenue,” Talkington added…
According to a proposal presented to news media in February by the Browns, a $2.9 billion projected increase in Ohio income, sales, and commercial activity (business) taxes over 30 years would pay off a $600 million bond issued by the state.
So who is Talkington, and where do these numbers come from? Crain’s doesn’t say, so let’s do some research of our own:
- RCLCO, formerly Robert Charles Lesser & Co., “is proud to be the ‘first call’ for organizations seeking strategic and tactical advice regarding property investment, planning, and real estate development.” Talkington, in particular, consulted on the Tennessee Titans and Tampa Bay Rays stadium plans, two proposals that diverged pretty dramatically from reality in their economic impact promises. Talkington herself has a B.A. in architecture, which while a fine enough field is maybe not enough to make you an expert in fiscal impact.
- This isn’t the first time we’ve heard rosy numbers from RCLCO: They made the same claims in December, and as noted the Browns put forward the same numbers last February before their consultants had even written their report. So the only thing making this news is that Talkington got the Crain’s reporter on the phone and gave her some fresh quotes, I guess?
- New tax revenues of $2.9 billion over 30 years would mean about $96.7 million a year — likely backloaded, but let’s ignore that for the moment. At, say, 5% interest, that would be enough to pay off about $1.5 billion in costs — not nearly enough to cover $1.2 billion in stadium spending and leave “a net $1.3 billion for the state of Ohio,” but still a positive. Assuming, of course, that that $2.9 billion over 30 years in new taxes really exists.
So, is the new tax revenue real? After 17 paragraphs of Talkington and William DiBlasi, “CFO at Elevate, a sports and entertainment property agency,” Crain’s finally gets to its rebuttal, which is still not from any budget or economics experts, but rather from an elected official:
Cuyahoga County Executive Chris Ronayne has said that the county is not in the position to use public funds for a new stadium that he and Cleveland Mayor Justin Bibb contend will pull tax revenue from the city.
So: An architecture major working for the Browns owners says a new suburban dome will pay for itself, while two elected officials who want the team to stay in Cleveland say it won’t. The answer must lie somewhere in the middle! Too bad it’s not possible to determine what the entire field of economics has concluded about the fiscal impact of sports stadiums, guess we’ll just have to go with our gut on this one.
City of Cleveland should be thrilled if they move 1000 feet away from the city limit. That way they aren’t on the hook for the stadium expenses but would get some spill over spending (we can argue about what that number is but we know it’s not zero) occurs. So Brook Park spends $400 million on the stadium but some of the out of town fans will stay in hotels and go to restaurants in Cleveland proper. Heck some of the people going to the game will park at the airport which the city owns.
Not to mention the city could sell the land the stadium is on and make a big pile of cash.
One would think, and yet Bibb is fighting hard to keep the Browns within city limits. Civic pride weirds economics.
Its one of 2 possibilities:
1) He doesn’t want to be the guy who “lost” the Browns. Dennis Kucinich never lived down being the mayor when the city went into default over his refusal to sell Cleveland Public Power, even though history has vindicated that decision. This is silly because again they would still be the Cleveland Browns and the city would save on costs for building the stadium while getting a lot of the advantages of having a pro team.
2) He wants a payoff from the Browns. He could say “ok I’ll drop the Modell Law lawsuit if you give me $100 million to redevelop the lakefront.” This would be a great move.
Also, Cleveland leadership has been awful for decades. Frank Jackson was mayor for 16 years and never did anything on the Lakefront. Even though he had a comprehensive plan handed to him by his predecessor (ironically developed by the current County Executive). Most egregiously, 450 acres on the lake is tied up in a private airport that’s mostly unused. There is some debate about what can be built there because of what’s underneath the surface but if you turned it into a park that would be better because the presence of an airport restricts what can be built around it.
There are so many things like taking down the elevated highway that cuts the downtown core from the lakefront which have been talked about since I first moved to Cleveland in 2003 that could have been done by now that are still in the talking phase. Its ridiculous especially in light of the fact that not only does Cleveland State University have one of the top Urban Planning departments in the country despite being based in one of the most poorly planned cities were there 3 major national real estate developers based in Cleveland during most of this time (DDR, Forest City, and Jacobs Group).
If Cleveland-ish has a dome, why would WWE or NCAA choose it for an annual event over another city with a dome (Seattle, Indianapolis, Detroit, Minneapolis, Dallas, Houston, Las Vegas, Los Angeles, Atlanta, New Orleans, Milwaukee, Toronto)? Cleveland will have to pay to bring those events, negating some (or all) of the tax revenue generated from the event.
Deep down, these cities all know new/renovated stadiums and arenas are major money-losers in the short term, never mind over the medium and long terms. They just know that they can’t “win” the argument based on vibes alone, so they have to con people into thinking their city is an exception that can somehow make work whatever numbers they end up throwing out there.
So the WWE now gets tax incentives and outright bribes to have their big events in a city. Cleveland is just as likely to pay off the WWE as Indy and Minneapolis have.
The first commenter, in lauding the alleged spinoff impact of a dome located close to Cleveland’s borders, has sidestepped the biggest blemish of the proposal: that’s the Browns’ outrageous $1.2 billion public ask and the opportunity costs of all the public unmet needs if the public was foolish enough to cave to the team’s request . And, though off the main topic, the comments re Burke Lakefront Airport’s re-use as a park shows naïveté of what makes a workable urban park. Consider the chapters on parks in Jane Jacobs’ Death and Life of American Cities.Lastly, as someone WITH an urban planning degree who proudly served under Mayor Frank Jackson during his revival of 5 Year Capital Planning to activate neighborhoods in Central, Fairfax, Larchmere, Detroit Shoreway, University Circle and Ohio City, i can’t let the critique of Mayor Jackson remain unchallenged.
Ken – I know about the $1.2 billion public ask. However, $600M of that is from the state, $420ishM is from Brook Park and $120ishM is from the County. So if you’re the city of Cleveland that’s better than the renovation proposal for the stadium downtown because you’ll still get something from having an NFL team on your border without having to do the heavy lifting.
But since you’re here, since you were Mayor Jackson’s Chief of Staff let me ask you:
Why didn’t the administration you were a part of do ANYTHING in terms of Lakefront Development in 16 years? Nothing on rerouting the freight trainline, closing Burke Lakefront Airport, making the Shoreway a street level boulevard, or connecting downtown to the lake.
Sure you can come on a site full of people against government funding for sports facilities and score a bunch of likes and make some cash on your book. Why don’t you write a book about how the city failed at utilizing its best asset (6 miles of city owned property on the lake)? Is it because you would have to hold yourself and your friends accountable?
Moreover, the Browns’ projection that Brook Park can contribute over $400 million to the project seems to assume the dome can generate 50-60 major events annually. But Professor Victor Matheson’s research of 20 years of performance in this century shows that football stadia —domed or not— attract about 15 major events annually. That discrepancy means that Brook Park’s admissions and parking tax revenues are greatly overstated.
What non investment grade rating would $400 million in Brook Park bonds get? Has anybody looked at what Brook Park residents think of their little town taking on such a large, risky project? Is it possible in Ohio to have a referendum like Tempe had?
There is a process in Ohio where anything passed by legislature can be put on the ballot if there is a successful petition drive. Given the low number of registered voters in Brook Park, getting it on the ballot would not be hard if people were motivated to stop it.
That being said the only things in Brook Park is the remnants of the old Ford Plant (the proposed stadium site), a couple basic hotels (Holiday Inn Express type) because of the airport, car dealers, and strip clubs. When it comes to economic development in the Cleveland area the attitude is “something needs to be done. This is something therefore it needs to be done.” So I doubt opposition will be significant.