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In 1990, voters in Cuyahoga County, Ohio went to the polls to vote on a hotly contested issue: whether to approve “sin tax” surcharges on alcohol and tobacco to raise money for new homes for the Cleveland Indians and Cavaliers. For a municipality whose schools were already starting to run short of funds in the wake of state property tax caps, slapping taxes on products disproportionately bought by lower-income residents in order to send money to wealthy sports owners was controversial, and the measure only passed by a narrow margin, 51.7% to 48.7%. But even if it came at a cost — about $170 million worth of extra fees on beer and cigarettes over the next 15 years — at least Cleveland had resolved one longstanding headache. “Happily,” noted Cleveland Plain Dealer sportswriter Bob Dolgan following the vote, “the new stadium will finally end talk about the Indians leaving town.”
This turned out to be perhaps a bit overly optimistic. Worries over Cleveland’s teams leaving town would, in fact, soon enough become a permanent feature of the local political landscape. First, the baseball and basketball projects ended up racking up about $30 million in cost overruns, which the city and county were required to cover. Then, five years after the initial vote, county residents were called back to the polls to give the okay for another round of sports funding — this time, they approved extending the sin taxes for another decade to provide money for a football stadium to host an expansion Browns team, after owner Art Modell had won permanent villain status by taking the original and absconding with it to Baltimore.
In 2014, it was back to the polls yet again. With the Indians and Cavaliers leases requiring the city and county to cover the cost of everything from major upgrades to replacing light bulbs, county residents approved an extension of the original sin tax for two more decades, raising $260 million to pay for “major capital repairs” on sports venues barely out of their teens. (Baseball team officials dragooned ushers into backing the measure by ordering them to wear “Keep Cleveland Strong” stickers on the job, reportedly under penalty of firing.) Another two years after that, Cavs owner Dan Gilbert asked for and got $140 million more to add public space and a hulking glass exterior wall to his team’s arena. (He would later ask for several hundred thousand more for a special coating to stop birds from blindly crashing into it.) The upgrade demands kept arriving, even as the remaining money in the sin tax fund dwindled: By 2025, county officials were looking at having to spend $400 million more on mandated future repairs than could be covered by future sin taxes, and were considering raising general sales taxes on other goods to cover the cost.
Soaring costs, shortened shelf lives
Ever since sports team owners discovered in the 1980s that they could boost their profits by adding stadium subsidies to their more typical revenue streams of selling tickets, hot dogs, and cable deals, the public price tags of new buildings have soared. Taxpayer costs typically ran less than $200 million per sports venue in the early 1990s; by the early 2020s, public contributions of more than $1 billion were becoming common, an increase of more than double the rate of inflation.
And just as quickly, team owners soon discovered that these initial stadium checks didn’t have to be their last public payday, as there were plenty of ways to go back to the well again and again for fresh infusions of taxpayer cash. Call it the grift that keeps on giving: If a team owner is clever enough about how to structure their lease language, they can turn a one-time windfall into a perpetual stream of public funds for their own private use.
Elected officials will often portray this as just the natural state of things: Things get old, and need replacing. “It is one of the oldest arenas in the league, which is hard for some of us to believe because it seems like it was just built,” Cuyahoga County executive Armond Budish said in 2016, when the county agreed to foot the bill for upgrades to a then 21-year-old Cavs arena. “But the useful life of arenas is not considered to be all that long.”
That hadn’t been the case for much of the 20th century, a time when team owners thought nothing of playing in buildings half a century old or more. Most of the new venues built then were either to support expansion into the South and West, as air travel made nationwide leagues more feasible, or to allow for multipurpose stadiums — the much-derided “concrete donuts” — that were thought to be more amenable to a newly car-focused suburban fan base.
All that changed once team owners realized stadiums and arenas were more than places to play games: They were also a mechanism for earning more on higher ticket prices and sales of everything from luxury suites to more elaborate food and drink options, while sticking taxpayers with the bill for these new amenities. Socializing costs and privatizing profits is a time-honored way to make money at taxpayer expense, as any banker bailed out by federal funds after the 2008 financial crisis could tell you; the main innovation made by sports team owners was in figuring out how to convince elected officials to pay for their new wine bars.
As Orlando Magic VP Cari Coats explained in 2001, with unusual candor, when her team was seeking a new basketball arena just 12 years after its previous one had opened: “We don’t want a new building just to have a new building. We would just stay where we are. If we’re using the revenue to build the building, then we’re not getting the revenue, and we’re right back where we started, and why do we have a new building?”
Sports economist Rod Fort put it even more bluntly. Asked at the time what was a reasonable shelf life for a modern sports venue, he deadpanned: “I don’t see anything wrong, from an owner’s perspective, with the idea of a new stadium every year.”
The sweetheart lease time bomb
Cleveland’s problem, then, wasn’t that its new sports facilities hadn’t been built to last, but that its lease agreements with teams were exercises in planned obsolescence. In securing public stadium funding, the Indians, Cavs, and Browns owners had not only placed the buildings themselves under public ownership — handy for avoiding having to pay property taxes — but had secured leases requiring the city and county’s joint sports authority to cover future capital expenses. And unlike a private landlord who makes improvements to a property in hopes of charging more for it, those leases also prevented Cleveland and Cuyahoga County from getting added rent money or venue revenues in exchange for footing the bill for upgrades.
At the time the first Cleveland sin tax vote passed, Ken Silliman was working in the city’s law department, near the start of a career in local government that would last nearly four decades. Back then, Silliman explained, no city or county officials gave any thought to the need to kick in for additional stadium costs down the road. “In 1990, that was not on people’s minds,” he recalled. “We’ve got basically a near emergency situation, we need to find a way to fund two new facilities. And there was not a lot of focus on what happens once they start aging and they needed capital repairs.”
In what should have been a surprise to no one, similar recurring emergencies began cropping up in city after American city. Perhaps the king of the open-faucet approach to sports subsidies was Indiana Pacers owner Herb Simon. In 1999, Simon moved his team into a new $183 million downtown arena, for which he received $191 million in city money in exchange for a 20-year lease where he would pay just $1 a year in rent. Indianapolis officials boasted that Simon would be forced to pay off the city’s costs, plus $50 million in damages, if he tried to break the lease early: “We’ve made a provision that at the worst we end up with a first-rate facility that’s debt-free,” said city negotiator James Snyder. His boss, Mayor Stephen Goldsmith, said the choice had been stark: “Either we would have the Pacers and a new arena or an empty old arena.”
Goldsmith, at the time, was widely seen as a bit of a golden boy mayor. A county prosecutor with a reputation as a government “reinventor,” he had set out following his election in 1990 to privatize city services by using what he called the “Yellow Pages test”: “If the phone book lists three companies that provide a certain service, the city probably should not be in that business.” At the same time, he laid off hundreds of city workers, especially those responsible for oversight of city regulations. The results weren’t great. An attempt to privatize city swimming pools was withdrawn after three years when fees by private operators soared and pool attendance plummeted; when contracts for privately run golf courses provided that all capital improvements would be paid for by the city while virtually all revenues would go to the new private managers, the pros predictably hiked greens fees and kept the windfall profits for themselves.
Goldsmith’s proclivity for sweetheart contracts, it soon turned out, extended to sports leases as well. The mayor left the door open to future subsidy demands by providing Simon’s Pacers with only a 20-year lease, a decade shorter than most arena leases, while adding an opt-out clause that would allow Simon to move the team sooner if it showed operating losses. (Goldsmith apparently really liked opt-out clauses. He later inserted one into Indianapolis Colts owner Jim Irsay’s lease at the Hoosier Dome, a decision that eventually led to Irsay receiving a new stadium in 2008 with what was at the time the largest public subsidy in NFL history, just 24 years after the city had paid to build its predecessor.)
Handing a franchise an opt-out clause wasn’t just an insurance policy for the team. It was also a loaded gun. A team owner with an opt-out clause doesn’t have to leave town, or even break their lease, to cash in on its benefits; instead, by merely gesturing at the possibility of opting out, they can encourage public officials to hand over additional money to avoid facing even the threat of a team breaking its lease and moving.
This is what Simon set out to do with the Pacers. In 2010, with nine years to go on his 20-year lease, Simon got the city of Indianapolis to provide another $33.5 million in exchange for him agreeing not to opt out of his deal for another three years. In 2014, he extended the Pacers’ lease through 2024, in exchange for $160 million more in public cash, which he used for everything from operating costs like liability insurance and security to upgrades to locker rooms and concessions areas. In 2019, Simon negotiated yet another lease extension for an additional 20 years — this time in exchange for another $600 million for more operating subsidies along with “technology upgrades.” By doling out lease extensions in short increments, Simon had managed to turn an initial $191 million windfall into nearly $1 billion in taxpayer cash, with the possibility of demanding still more once 2044 approached.
Pay-to-play
This kind of stadium recidivism soon began to catch on with other sports team owners looking to find a way to get local governments to throw good money after bad. In Charlotte, North Carolina, Carolina Panthers owner Jerry Richardson took $87.5 million for a six-year extension of his lease from 2013 to 2019. Three years later, Atlanta Hawks owner Tony Ressler got $142.5 million in exchange for 18 more lease years. Three years after that, Phoenix Suns owner Robert Sarver agreed to accept $168 million to keep his team in town for an additional 15 years beyond 2019. All of these teams were playing in relatively new homes — the Panthers stadium and Hawks arena were each just 17 years old at the time the lease extensions were negotiated — none of which stopped their owners from demanding to be paid to continue to play in them.
In some cases, team owners have gotten elected officials to set aside future public spending on upgrades to their stadiums before those stadiums have even opened. In 2013, Atlanta Mayor Kasim Reed proudly announced that a new $1 billion Atlanta Falcons stadium would be ”a great public-private partnership” because the city would only have to put up $200 million toward the construction cost. Falcons owner (and billionaire Home Depot founder) Arthur Blank, it was promised, would cover the other $800 million.
Further investigation by local journalists, though, turned up a loophole. While the city’s newly created hotel-motel tax fund would only provide $200 million for the Falcons at first, it would keep on accumulating money once the initial construction cost was paid off. And rather than return any additional hotel tax funds to the city treasury, the proceeds would instead be directed to a “waterfall fund” earmarked for future “maintenance, operation and improvement” of the new Falcons stadium. As a result, the total public cost of the allegedly $200 million subsidy, Blank eventually admitted years later, would end up being “close to $700 million in public money.”
In the years following Blank’s sleight of hand, laying claim to an unending stream of tax money became a popular gambit for sports owners. In 2022, a $1.2 billion renovation subsidy that the state of Maryland had approved for Baltimore Orioles owner Peter Angelos and Baltimore Ravens owner Steve Bisciotti turned out to be worth potentially hundreds of millions more, thanks to a similar endless flow of future taxes. In fact, boasted Maryland Stadium Authority chair Tom Kelso, he viewed the stadium funding bills as “evergreen”: “Every time there is a new bond issue, the lease would have to be extended to last as long as the bond for the most recent project. … It allows the stadium authority to borrow up to $1.2 billion. As those bonds are paid down, it creates the capacity to borrow back again.” The state, in essence, had created a $1.2 billion slush fund for Baltimore’s team owners to tap again and again, creating an effectively bottomless pool of taxpayer money for future upgrades.
On the one hand, this was a creative solution to covering future sports spending needs: Maryland would hopefully be able to avoid continually having to dig under the sofa cushions for more tax money in dribs and drabs like Cleveland and Indianapolis have — albeit at the significant cost of writing effectively blank checks to the Orioles and Ravens up front. But it also goes to show how focusing solely on the initial cost of stadium construction can blind both elected officials and the public to the far greater sums of money they can end up being on the hook for down the road.
These kinds of continuing subsidy deals make it increasingly hard to pin down exactly how much a stadium has cost the public. If the preliminary price tag ends up being less expensive than the in-game purchases that follow, what is the true “final” cost of buying in? One way to evaluate this cost is in years of control: If a city gets a team owner to agree to a certain length of lease extension in exchange for a fresh round of public cash, then one can calculate the public expense in terms of cost per additional year before the team owner is free to come back with hand out again.
Just like up-front subsidies for stadiums, the public costs of lease extensions keep breaking new records every year. Just 11 years after Richardson received his $87.5 million in renovation cash in 2013, his successor as Panthers owner, David Tepper (Richardson had been forced to sell the team following multiple claims of sexual harassment of his employees), negotiated $600 million in additional publicly funded upgrades for the team’s privately owned stadium. Since the new deal only required Tepper to stay put for another 15 years — after that, he could leave if he paid off the city’s remaining debt on its $600 million expense — the per-year cost of the deal would be $40 million for each additional year of the team’s lease, tying the Ravens for the most costly per-year lease extension in sports history. It was a record that would stand for only another year and a half, until Tampa Bay Lightning owner Jeffrey Vinik garnered $250 million in arena renovations from Hillsborough County in exchange for a lease extension of a mere six years, setting a new benchmark of $41.7 million per year.
“Cities need to be thinking a lot more about the long-term capital repair consequences” of sports venues, advised Silliman. To that end, he said, Cleveland’s latest sin tax extension — enacted when he was chief of staff to Cleveland Mayor Frank Jackson — at least anticipated the need to set aside funds for future expenses, even if it ended up falling short of what the team owners’ leases required the public to cover. And it’s those leases, Silliman agrees, that are at the heart of the problem. “The only way another city or county could do better than we did in 2014 was to have more protective leases that put more of the burden of capital repairs on the teams,” he says.
To achieve that, though, would require a lot more backbone from local elected officials during sports negotiations — and possibly new legislation to make it easier for cities to play hardball or voters to force them to via public ballots — to prevent city councils and county commissions from treating every stadium and arena demand as an emergency in need of a solution, no matter what the future costs. Because once you’ve handed a billionaire a money printing machine, it’s awfully hard to convince them that they should ever turn it off.