The controversy continues over the city of Cleveland and Cuyahoga County having to cover more than $400 million in upcoming repair costs for the Guardians stadium and Cavaliers arena despite having no money to do it with. And according to Cleveland.com, there’s nothing the local governments can do about it:
Under its lease agreements with the Cleveland Cavaliers and Cleveland Guardians, Gateway Economic Development Corporation of Greater Cleveland is responsible for paying for capital repairs over $500,000 at Rocket Arena and all repairs — big or small — at Progressive Field.
Worse yet, it’s not just genuine repairs that taxpayers are on the hook for; the Guardians leases also contains one of those dreaded state-of-the-art clauses that requires publicly funded upgrades if the Cleveland stadium has fallen behind three-quarters of other MLB ballparks, “as well as any changes required by television networks, the league, insurers or government regulations.” Most recently, this required the city and county to spend $1.3 million to install padded seats behind home place in 2023, on the grounds that all the other kids had them.
Gateway officials have responded by trying to stall on approving the payments, with one board member telling a Guardians official, “We are required to fund it. We are not required to fund it on the schedule that you’re asking.” But ultimately, according to the lease extensions approved by lawmakers in 2004 and extended in 2021, the leases require the city and county to cover these costs in exchange for the Cavs and Guardians staying put through 2034 and 2036, respectively.
The city and county do have a doomsday option, though. As I wrote last December:
The leases say the teams can sue Gateway for damages if they don’t get their repair money on time. However, if Gateway runs out of money — which it would if the city and county stopped giving it more cash — it doesn’t appear that the Guardians and Cavs owners can sue the city and county, so it’s within the governments’ power to shut off the money spigot and dare the teams to break their leases and try to find better ones elsewhere, if they wanted.
That doesn’t seem to be the plan so far: Gateway officials are griping to the city and county that they need a bailout — another bailout, following one for $20 million last year that raided funds for a minority business program and other projects — and Mayor Justin Bibb is muttering about creating tax surcharges in the stadium district to help cover costs. This all seems destined to end with the team owners negotiating another round of lease extensions in exchange for a lot more public cash, like how it’s been done one state to the west; you’d like to think that Ohio legislators could be better negotiators than Indiana ones, but if city and county officials had shown any ability before this to write leases that would protect taxpayers, they wouldn’t need the talcum powder.
The city/county is correct. Urgent repairs, eg, broken hot water heater, needs to be timely. Padded seats install can get in line behind new school books, etc.
they can start by stop calling padded seats “repairs”.
The city and county shouldn’t have agreed to that state-of-the-art clause, then. Or, if they want to get out of it, they need to default and renegotiate.
Since the former Indians have already abandoned their history by changing their name, they might as well move elsewhere.
Cities really need to stop pandering to billionaires (in fact politicians in general), but good luck with that. Sports facility ‘tenants’ (generally non paying) continue to affix plaques that proudly thank the elected officials that forced through legislation that provided hundreds of millions (or billions) in taxpayer largesse to the team owner – with neither irony nor shame.
Bankrupting the entity that “owns” the stadium but gets no revenue and pays all expenses is a fine idea. It may be that the team would respond with a lawsuit against the city that created that entity, but what is sauce for the goose, etc.
We should not be under any illusions that if the team was actually required to pay any reasonable amount to use the stadium and could somehow contrive to show a loss on operations, the first thing they would do is try to break the lease themselves.
Scumbags gonna scumbag.
The lease doesn’t seem to allow for suing the city or county, just the Gateway Authority, which doesn’t help if it’s out of money.
Thanks, yes I understood that.
However, you seldom need permission to sue someone… I’m not clear how a lease can prohibit lawsuits, even if it uses standard language about ‘saving and holding harmless the agency’ etc.
Any landlord (even of a non paying tenant who is under contract not required to pay) must maintain the property/premises in a condition that allows the tenant to make reasonably intended use of same.
Not sure how a court would view a claim by the city/county that “they have nothing to do with” the agency they set up for a singular purpose: to own and operate the sports facilities.
Maybe one day we get to find out…
Sure, they can always sue. But it’s only the authority that has entered into a contract to cover the upgrade costs, and the authority is a quasi-independent entity controlled by the city and county. From my reading of the lease, the city and county can’t be compelled to make those payments — but IANAL, so yeah, we’ll see, or would if the city and county felt like finding out.
Brook Park will probably try to lure them in too.
If Gateway can’t (or doesn’t) make the payments, wouldn’t that violate the terms of the lease and instantly free up the teams to move? I don’t know about the Guardians, but the Cavaliers would have at least 3-4 cities as suitors.
Yes, that’s exactly what I wrote above:
“it’s within the governments’ power to shut off the money spigot and dare the teams to break their leases and try to find better ones elsewhere, if they wanted”
“…dare the teams to break their leases…” Wouldn’t the failure by Gateway to make contractual payments automatically break the lease? So the teams wouldn’t be the party breaking the lease, Gateway would be.
It may be semantics, but it’s important from a PR standpoint.
The teams would have to sue to have the teams declared in default of the leases, I believe.
What cities do you see as Guardians suitors? Manfred is still claiming he wants to expand by two teams before he leaves as commissioner, and it’s hard to see where he’s even going to find cities for those.
Nashville and Portland.
Nashville’s MSA is slightly smaller than Cleveland’s. Portland’s is not significantly bigger.
I’m sure someone there would figure out a way maybe to build them a stadium, but after the initial shine wore off, they’d be stuck in a not-significantly-better situation, just with a new stadium.
If Tennessee – which just gave $1.2B to the Titans for their new yard – wanted to pony up more to get a baseball team, okay, fine.
But neither Nashville nor Portland feel like a reasonable threat.
This is precisely the problem.
There are no good markets left to expand to (if you are taking a third NY team and Oakland off the map).
It’s getting harder and harder to find even marginal markets to expand to.
A third team in the NY market could work (depending on where it was and who they had to bribe to get access). A third team in the LA basin seems less likely to be successful… and if it can survive it would do so almost entirely at the expense of the Angels. A team in Montreal or Vancouver (often touted) is less likely to be a revenue generator, despite the significant population bases.
Charlotte, Nashville, Portland, San Antonio etc… they are all marginal MLB markets. In nearly every case it would be cheaper and better for the prospective owner to simply overpay for an existing market.
Two things will stop this Sportsball Franchise Fantasy League. First is the impending lockout of the Major League Baseball Players Association in December 2026. Second is the AI bubble that will burst sooner if not later.
We’ve already had many sports strikes and lockouts since the sports subsidy game began in earnest, as well as many bubbles bursting (dot-com, housing, probably at least one other). Not sure why those things would have a different impact this time.
If there was a healthy relocation market oakland wouldn’t play in a 10,000 seat park for four years, and Tampa would be building a new park now.
Since cleveland has a clause to always keep the park current at the landlord expense thats a good way to go now.
AND if there were a healthy relocation market, we probably would have seen more than two franchise moves in the last 50 years.
Just SAYING relocation is on the table if you don’t get what you want is easy and all well and good. But that doesn’t make it easy.
Cuyahoga County could sell and then lease back hospitals, which Hamilton County did to pay for something the Bengals wanted.
Oh great, 3 of the 5 teams in the AL Central with stadium issues, does that mean they should all move to Nashville and form a Nashville division?
I like it. I like it alot. This is exactly the kind of extraneous to the box thinking we have been metastasizing amongst ourselves during recent incorporations.
Would you be interested in a non-paying special advisor role?