This week’s candidate for weirdest headline, from yesterday at Cleveland.com:
Bibb to Cavs and Guardians: No more bailouts until there’s a new game plan to fund stadium repairs
So once the Cavaliers and Guardians owners agree to a new way to fund stadium repairs, then Mayor Justin Bibb will agree to bailouts? Wha? Let’s read further:
Bibb told reporters at a recent news conference that he wants to create a special financing district that could collect small fees on parking, dining and entertainment in the Gateway District. The mayor said it’s a “practical, pragmatic” way to generate revenue to help maintain Progressive Field and Rocket Arena.
“Fees” on parking, dining, and entertainment are more commonly known as “sales tax surcharges,” and applying these to the entirety of the Gateway District — which includes not just the Cavs arena and Guardians stadium, but a bunch of malls and restaurants and other attractions — would represent additional tax money that locals and tourists alike would have to pay toward maintaining and upgrading the teams’ venues. That’s in one way better than the city having to scrounge around every couple of years for more cash to spend on upkeep, but in another way worse in that the city would be implementing a new tax to funnel upgrade money to the team owners ad infinitum, presumably even after the expiration of the current leases (2034 for the Cavs, 2036 for the Guardians) during which the city took over major capital repairs for the teams in exchange for them agreeing to stay put a few more years.
If the Cavs and Guardians aren’t ready to pursue new revenue streams, Bibb said City Hall won’t approve another bailout.
“I made it clear to the teams,” Bibb said. “I’m not tapping the general revenue fund until we look at these other concepts.”
“Take my tax money or I won’t give you any more tax money” is a novel approach, I’ll grant you that. Bibb says using surcharges in a New Community Authority, or NCA, would “shift the cost of stadium repairs away from residents and toward visitors who attend games and dine nearby,” but 1) residents go to see Cavs and Guardians games, that’s exactly who Cavs and Guardians fans are, and 2) even if this were all tourist money, it’s still tax money that the city could choose to collect and keep, but would instead be turning over to the team owners. (Cleveland currently has a similar taxing district on the lakefront, but that’s designated for building public spaces, at least, not for upgrades to privately controlled sports venues.)
One weird twist about Ohio NCAs is that property owners have to opt in to them, so it’s entirely possible all the landholders whose restaurants and malls would get newly tax-surcharged could tell the city to pound sand and there would be no new revenue at all. (The stadium and arena are co-owned by the city and the county; it’s an interesting question if the Cavs and Guardians, as tenants, could opt out of being taxed to fund their own upgrades.) Cleveland.com theorizes that “business owners would support it because the Cavs and Guardians drive foot traffic that keeps the Gateway District lively,” but that presupposes that 1) business owners will assume the Cavs and Guardians will leave without new taxes, despite those leases being in place for another decade and 2) they think game-day foot traffic is valuable enough to be worth getting saddled with as much as a 5% tax hike.
All this is coming to a head because the cigarette and alcohol taxes that were originally used to pay for the Gateway venues and later extended to pay for upgrades are coming up short of what the teams want, and local voters are currently so steamed by the Browns moving to suburban Brook Park that they may not approve a renewal of those taxes anyway. Mayor Bibb is also famously steamed about the Browns moving, or at least was until Browns owner Jimmy Haslam agreed to make $80 million worth of payments to his city, but he’s stuck with those leases for the near future, and would rather raise taxes just in the sports district than on all of Cleveland.
Even if it’s public money either way, you can kind of see where Bibb is coming from. Or you could point out that the whole Gateway complex was pitched as economic development that would pay for itself but instead is requiring ever-higher levels of public subsidies, and there’s a time to stop throwing good money after bad. At this point it would probably require breaching the teams’ leases and letting them walk if they want, but since neither has any great immediate options for relocation (Brook Park isn’t going to build two stadiums) and they can walk in another 9-to-11 years anyway, there’s an argument to be made for calling their bluff now and seeing what their owners do once the subsidy faucet is shut off.
Man, this “we pay, they profit” system really has to go.
The Gateway neighborhood is a ghost town when no games are going on. Also, when Gateway was first conceived BP had its North American headquarters and Forest City Real Estate had its global headquarters a short walk away. BP moved to Chicago when it merged with Amoco, and Forest City got bought by Brookfield and no longer has much presence in Cleveland. That’s before you factor in companies that were based outside of downtown like LTV Steel (no longer exists), TRW, Rubbermaid, OfficeMax, etc.
So it’s a ghost town 243 days a year? Why would anyone keep operating a business in that location if it was also saddled with a 5% sales tax surcharge?
The arena has like 200 events a year, not just the basketball games. There are 81 baseball games, and obviously, there are days when there is a baseball game and an event at the arena. So it’s less than 243 days a year, where there are no events downtown, but if you visit Cleveland, you’ll see that Gateway is empty on those nights. Like I said, Cleveland has lost a lot of corporate HQ and jobs over the years, so its not really fair to say “hey, the stadiums didn’t deliver the promised growth!” Well, when you lose big companies that were within walking distance of the stadium, that’s likely to outweigh any benefits the stadium would have delivered
You said “when no games are going on.” The arena and its concerts wouldn’t be going anywhere even if the Cavs left, so that would be even more reason for local businesses not to want to pay a 5% sales tax surcharge just to avoid the slim chance of the Cavs and Guardians leaving.
You’d still have to keep the venue up to date to attract concerts and other events. Glendale had to spend $40 million on their arena AFTER the Coyotes left as part of their deal with ASM to take over.
The Cavs draw 800K people for their regular season games, the Guardians draw 2 million, and the Monsters (AHL team) draw about 400K. To act as if those businesses won’t miss 3.2 million people coming downtown. By comparison, the population of downtown Cleveland is 21K (it was about 7K 20 years ago) and 92K people work downtown. So we can’t act as if as if the teams aren’t a significant source of traffic to the area.