Renewal of the sin tax, expires 2015 &Pro Sports
The following is an attempt to document the funding, payment and revenue generation of Cleveland's sports facilities. It's also a call for a larger discussion on how the lopsided public investment can be better leveraged for a fairer and increased share of private investment.
In light of the new ownership of the Cleveland Browns and the recent announcement of a multi-million dollar naming rights deal with FirstEnergy, there is a need to begin serious due diligence in assessing the City of Cleveland's remaining debt and interest obligations and schedule of payments for maintenance obligated under the lease.
This is particularly important as the two voter-approved county sin tax levies (1990 and 1995) expire in 2015. Additionally, there have been previous reports of the Gateway sports complexes potentially needing infusions of money for additional capital repairs and improvements.
A discussion of renewing the current sin tax in Cuyahoga County will require collaboration from the City of Cleveland, all three professional sports teams, Cuyahoga County and critically the Ohio State Legislature. The public deserves to be informed as to why a renewal/extension on the 25-year sin tax will be required and what are the investments returning to the public?
With the agressive new ownership of the Cleveland Browns quickly getting down to the business of selling the City's stadium naming rights, it's ripe for the City to be agressive in leading a serious and open discussion about how the funding of Cleveland's sports facilities and the resulting subsidies to the teams can leverage more benefits to the city and and county tax payers.
In particular, the Browns, under the former owner, were considering a commitment to collaborate with the City and the Port Authority in developing a mixed-use project that included plans for athletic fields and a sports-medicine/wellness facility on land north of the stadium. (Source: Laura Johnston, The Plain Dealer, 9.18.2012).
Such plans need to be re-considered by the new ownership and private investment needs to occur in relative proportion to the investment the City has and will continue to make in paying for the stadium. Thus far the majority of the burden of payments and obligations have been shouldered by the City and most all of the direct revenues and benefits generated by the sports facilities have benefited the professional sports teams.
Some numbers to begin with: * Approximate construction cost of Stadium: $300 million. * Percentage of public funding: 74.7%. * Total estimated Browns Stadium Bond Payments to retirement: $202 million. - Payments made to date $67.9 million. - Principal balance owed: $134.1 million. * Browns' Stadium Lease: $7.5 million (fixed $250,000 per year, 30 years (1999-2028)). * Total maintenance/capital repairs required under contract to be paid by the City of Cleveland: $52.5 million (see Schedule 14f below). * Browns' naming rights revenue: $102 million (approximate $6 million x 17 years). * Sin Tax received by City to-date: $116 million: $87 million for debt service; $29 million for capital repair requirements of which $5 million was advanced in 2012. * In addition to the sin tax money, the city: added an 8 percent tax on all parking in the city; raised the admission tax on all events by 2 per cent; and added a $2 a car rental fee. (source: Roldo Bartimole, 3.5.2012 & 5.29.2009).
Brian J. Cummins, Cleveland City Council, Ward 14; bcummins [at] clevelandcitycouncil.org; 216-664-4238 office