Category: Cleveland Guardians

The Cleveland city council voted 13-3 last night to grant approval for a $435 million renovation of the Guardians‘ stadium, most of which will be paid for with public money. To recap the price list:

• The city of Cleveland will contribute $8 million a year for the next 15 years, from city parking revenues, Guardians ticket taxes, naming rights from a parking garage, and maybe additional sources if that’s not enough.
• Cuyahoga County, which already approved the plan two weeks ago, will kick in $9 million a year, from hotel taxes and alcohol and cigarette sales taxes.
• The state of Ohio has yet to approve $2 million a year in its own funding, but with Gov. Mike DeWine strongly backing it and the city and county already having signed off, it’s hard to see it being a sticking point.
• Guardians owner Paul Dolan will provide $150 million.
• The city and county have the option to extend the team’s lease for an additional five years, through 2041, but it will cost them an extra $112.5 million.

At $19 million a year in subsidies, this will be the second-priciest lease extension public expense in sports history, after the Indiana Pacers‘ Herb Simon somehow getting $600 million for a 25-year lease extension. The $285 million total price tag — or $397.5 million if Cleveland opts for the extended warranty — comes just 27 years after Cleveland taxpayers spent around $350 million to build the stadium in the first place, and just five years after the city gave $57 million worth of future tax revenues to the team to pay for more modest renovations to the place.

We’ve already discussed this deal at great length, and really there isn’t much more to say: Dolan has succeeded in turning his 1990s-era stadium into a subsidy gift that keeps on giving, and he’s set himself up to be able to demand even more renovations — or a whole new stadium — 15 years from now. That the whole process took place without much public debate, and without Dolan or his elected official pals even overtly threatening that the team would leave town otherwise, is a clear sign that we have not made very much progress in terms of transparency or analyzing the costs and benefits of sports subsidies since Dolan’s predecessor as team owner, Richard Jacobs, shook down Cleveland for stadium money in the first place in the early ’90s. And you have to figure that other owners of sports teams with stadiums of similar vintage — and there are a ton of them, since the early ’90s was when the new-stadium boom really kicked in — are going to be looking at this and thinking of how to replicate this in their own cities, and … yeah, this whole thing really is taking longer than I thought.

Whoops, did I forget to mention that the Cuyahoga County Council voted 9-1 last week to approve $285 million in public spending on Cleveland Guardians stadium renovations — which would turn into $397.5 million in public spending if the team agrees to stay in Cleveland for another 20 years instead of just 15? Well, yes, that happened, and here’s how some of the local government honchos explained it:

County Executive Armond Budish: “The improvements to the field are necessary to keep the team here. We’re fortunate here because the Dolan family wants to keep the team in Cleveland, but we still have to provide a competitive lease. And that’s what we’ve done.”

Gateway Economic Development Corp. chair Ken Silliman: “The fact is that, under the present legal environment, the leverage of cities and counties is minimal, unless you’re willing to lose your team.”

Councilmember Sunny Simon: “[This deal is] vital to a community of sports fanatics.”

We get the picture! Without a promise of nearly $400 million in public money, the Guardians owners would surely have hightailed it to … well, we’re not sure where, but there are all kinds of cities that would just love to have major-league baseball that are big enough to … no? Did the Dolan family at least threaten to move the team, scaring local sports fans and elected officials into opening the public checkbook?

Neil Weiss, the team’s vice president and CIO of Technology and Ballpark Operations, recently told cleveland.com that moving the Guardians out of Cleveland is something “nobody wants to do or would ever want to do.” During negotiations, in fact, the Dolans never brought it up, he said.

Ah, yes, the non-threat threat, that’s an oldie but goodie. As is leaving it to local politicians and sportswriters to make the implicit threat for you, though the Dolans didn’t manage to up the ante to the seldom-utilized ghost threat by having someone drop hints about the team leaving under the cloak of anonymity.

The Cleveland City Council still has to vote to approve the Guardians’ renovation subsidy, and according to Cleveland.com “has already warned that it will need further convincing that the cost-benefit ratio tips in favor of residents.” The city council has meetings coming up the next two Mondays at 7 pm, but no published agendas yet, so keep your calendar free and stay tuned.

The Cuyahoga County Council finally had a public meeting on Tuesday on the county and city of Cleveland’s plans to spend up to $400 million on renovations to the Guardians‘ stadium in exchange for a 15- to 20-year lease extension. WKYC’s headline on its report on the meeting says the plan “drew mixed reviews,” so let’s see what people had to say:

• North Royalton City Council President Paul Marnecheck: “While the ballpark is located in downtown Cleveland, the benefits do ripple out to all of Cuyahoga County. It generates tax revenue, job creation, and other economic upsides that benefit every community in Cuyahoga County. There are thousands of jobs that are tied directly or indirectly to Progressive Field.”
• County resident Sally Hanley: “I love Cleveland. Cleveland is a great city to live in. But we also know that Cleveland is  one of the poorest cities in the country. This really makes me wonder if spending this much money on Progressive Field makes sense with all of these unmet needs. I really have to wonder why we would be doing this for the team owner, who is a billionaire. He’s the one that would mostly be benefitting from all of the park upgrades.”

And … that’s it? A two-hour public meeting, and WKYC can’t be bothered to watch the whole thing to quote more than one pro and one con commenter? I mean, i can’t be bothered to watch the whole thing, either, but let’s see if I can at least do better than that:

• Nina McClellan, “member of the community”: “I would like to speak with great concern about this deal, which looks like it’s being rammed through on a very fast track. … Why the rush? Is it to help a multibillionaire, Paul Dolan? He’s worth about $4.6 billion. … We have children who were for years being poisoning in this community, and there was no rush then.”
• Keith Wilson, Cuyahoga County Progressive Caucus: “There is a lot of myths about deals like this. … Since the ’90s, economists have known that the promises of economic development and the benefits simply don’t pan out for cities.”
• Ann Caruso, no ID given: “We have some of the poorest air quality in the country, we are the poorest city. … I don’t understand why certain groups come to the county council or City Hall, they ask for this public money, and they aren’t so readily given that money. … You go in poor neighborhoods, their sidewalks are crumbling, their curbs are crumbling.”
• William Tarter Jr., resident: “I am extremely concerned about the short-term and the long-term details, particularly around revenue, of this legislation.”
• Lou (or maybe Liu?), no ID given: “I remember back in 2019 when we had all the meetings on that particular project for the basketball court, Warrensville’s mayor had a very good point. He said, ‘To tie up this deal, if we can also plug in our public service funding which can get from the revenue, through different ways, it will be a very good deal. But unfortunately, I came up here two years ago, October 8, to tell you how horrible that renovation actually was. You want to create a facility for everybody, but now it’s only good for certain people enjoying beer.”

That’s everybody, and while it’s only seven people total, that is not a mixed reaction! That’s one guy who says spending on stadium renovation would be a good thing, and six people saying hell no it’s not. (Unless you’re either a billionaire or certain people enjoying beer.)

The rest of the meeting was devoted to staffers for the Gateway Economic Development Corporation talking about diverse hiring goals on construction projects, about how economic impact studies are better these days because they no longer “overstate the case for a public subsidy” but rather focus on rehabilitating “a desolate city neighborhood.” Councilmember Nan Baker pointed out that the economic impact statement provided for the Guardians project “does give those kind of numbers I think you said you were getting away from,” and asked some other technical questions about how new tax money would flow to the stadium project on top of public funding approved in previous years, and honestly that was as much as I had time for, but that’s still more than WKYC managed.

There was also a Progressive Caucus meeting Monday night at which an economist was set to speak on the potential impact of the stadium spending, but that doesn’t appear to have been livestreamed and nobody’s updated the Progressive Caucus website, so we’ll all just have to imagine what was said, in the absence of some sort of news-gathering enterprise that could attend events and report back to the broader public what was said.

The county council will hold its next meeting on October 26, at which point maybe we’ll learn more about the proposed subsidy. Or not! In the meantime, the only way to find out what Cleveland area residents think of this plan would be to, I dunno, you’d probably have to talk to people, maybe out on the streets, or even phone or email experts, that seems like a lot of work, sorry I mentioned it.

Me, about seven weeks ago:

The city of Cleveland, Cuyahoga County, and state of Ohio have agreed to spend $285 million on upgrades to the Indians (soon to be the Guardians) stadium in exchange for the team owner Paul Dolan signing a 15-year lease extension. … According to the Cleveland Plain Dealer, “all public funding would come from existing revenue sources.” This presumably means an extension of the cigarette and alcohol “sin taxes” that funded the stadium in the first place, as has been previously floated, but it’s hard to say for sure until the actual agreement is released.

On Friday, the actual agreement was released! And I’ve gotten around to reading it, and here are the highlights:

the public financial contributions set forth below are confined to the repair, upkeep, and appropriate modernizations needed to protect and preserve a valuable publicly owned asset.

The Guardians’ stadium — I’ve honestly lost track of its corporate name by now and no one’s paying me to check, though I know it’s not that auto insurance company any more [CORRECTION: I was wrong! Now let’s all forget the corporate name again] — is owned by the city and county, because the team’s previous owners suckered them into building it, in a story that you can read about in Chapter 1 of Field of Schemes the book. Apparently this commits the public to keep upgrading it forever, or at least justifies calling any future upgrade demands preservation of “a valuable publicly owned asset.”

with the public providing 2/3 of the contributions toward an improvementfund solely dedicated to the modernization of the Ballpark

It’s actually $285 million public, $150 million from the team owners the Dolans, so slightly under two-thirds, but close enough.

The County will cause these approximate one-time revenues to be deposited into the Ballpark Improvement Fund with final amounts determined at the time of deposit:

• $5,250,000 from County’s General Fund;
• $1,060,000 from 2020 County Bed Tax Collections (60% of 1.0% Bed Tax);
• $2,250,000 from County Account of Sports Facility Reserve;
• $1,050,000 from 2021 County Bed Tax Collections (60% of 1.0% Bed Tax); and
• $2,000,000 Payment to County from Development Parcel proceeds

That’s all a bunch of money left over from various reserve funds from the last renovation five years ago, and is relative chump change.

The County will issue Bonds for the difference between $135 million and the total of the above amounts, paid by the City, County and State of Ohio funding sources listed below…

Now we’re getting into some real money. As expected, it’s a mix of a whole pile of different public pots of cash: city parking revenue, city ticket tax revenue, county hotel taxes, county cigarette and alcohol taxes, and straight-up general fund money. Add it up and it’s a little over $18 million a year, which along with the other sundry funds is just about right for paying off $285 million in bonds.

The Lease will contain one five-year vesting option to Gateway to extend the Lease subject to the conditions herein. The five-year vesting option will vest at the City’s and County’s option upon Gateway and the City and County demonstrating to the Team, on or before December 31, 2030, adequate and sufficient funding sources to account for an estimated $9 million in annual Capital Repairs during years 16 through 20 of the option period and an additional $67.5 million in Ballpark Improvement Funds to be contributed to the Ballpark Improvement Fund within one year of the public entities exercising the vesting option.

The Dolans are only agreeing to a 15-year lease extension, through the 2036 season, in exchange for the $285 million in public cash — which as noted previously would be the second-largest per-year cost in sports history, after the Indiana Pacers. But if Cleveland and Cuyahoga County want, they can extend it through the 2041 season by spending an additional $112.5 million, which would raise the total public cost to $397.5 million.

Gateway agrees to convey or cause to be conveyed, the Gateway Development Parcel to the Team in exchange for a $2 million purchase price. Gateway or its transferee will then convey its entire share of the sale proceeds into the Ballpark Improvement Fund.

Depending on how much the Gateway Development Parcel is actually worth — nowhere in the proposed  agreement does it actually say what it consists of or even how many acres — that’s potentially an additional public cost, in terms of land being provided at below market price.

Anyway, no huge surprises here, though the term sheet is perfunctory enough that there will no doubt be a ton of fine print to wade through if and when this thing gets enacted. One hopes that this will all get revealed once the city and county councils take up the legislation this week, but one doesn’t hope too hard, it’s best to keep expectations low on these things.

The Athletic continues with its series on the Cleveland Indians Guardians‘ future in the city with a look at how the team owners the Dolan family plan to spend $285 million in public renovation money that is currently up for approval from the city and county councils. (The total renovation budget is $435 million, counting $150 million from the Dolans.) This consists of a lot of links to the same renderings we saw last time, plus a few quotes from team officials about how they needed public money because their restaurants were looking tired:

The glass-paneled restaurant that hovers over the lower bowl down the left-field line has rarely operated the last few years — business began slowing well before the pandemic. Those in the Indians organization deem it antiquated. It initially served as the jewel of the new ballpark, a coveted destination where fans who paid for special access consumed cocktails and gorged on gourmet meals atop white tablecloths while watching the Indians dominate the American League. Now, one team official compares the restaurant’s buffet to an Applebee’s.

So, the problem is that the team stopped serving “gourmet meals” but now offers only a “buffet”? Or that fans have stopped wandering into a restaurant way out in the outfield upper deck now that the team has stopped dominating the American League? Neither of these seem to call for a major reconstruction of the restaurant as a solution, but when your only tool is a $435 million capital budget, I guess every problem is a renovation project. Besides, look, renderings!

The Athletic’s caption calls this “a multi-tiered, open-air social gathering hotspot that could entice more fans to visit the upper deck,” which, sure, the occasional fan will possible think, “This game is boring, let’s check out that restaurant way the hell the other side of the stadium, it’s got tiers,” but I’m not sure it’s something I’d stake my business model on.

Other proposed renovations — in addition to electrical and plumbing upgrades, plus an expanded clubhouse so pitchers no longer need to hold their meetings in the same room as the ping-pong table, which apparently was a crisis — include tearing down the “shipping containers” in the right field upper deck, which you may recall were installed with the last batch of public money to make the ballpark feel more “intimate,” but which it turned out actually don’t:

The Indians haven’t nailed down exactly how they want to transform those tan and forest green boxes, but as one team official stressed: “It needs to be different.” Their goal is to make the upper deck less of an afterthought, to motivate fans to explore what that level has to offer in terms of sight lines and concessions.

“We just don’t give people a good reason to do that,” the official said.

The problem here, it seems, is that nobody wants to sit in the upper deck at Cleveland’s baseball stadium, because upper decks at new baseball stadiums tend to be pretty awful places to watch the game, because there are so damn many luxury boxes jammed in underneath them. And while that wasn’t so much a problem when the team was selling out every game and you had to sit wherever you could find a seat, now that the honeymoon period is over and attendance has reverted to more modest levels, even in years when the team is a World Series contender, nobody much wants to climb all the way up there now. So, sure, let’s tear out the stuff we put in a few years ago to try to make the upper deck seem more attractive then, and redo the restaurant so that the buffet items sit atop snazzier counters, can’t hurt to try, especially when somebody else is footing most of the bill. “It needs to be different” isn’t much of a game plan, but sometimes that’s all that sports executives have got.