Renewal of the sin tax, expires 2015 &Pro Sports

Renewal of the sin tax, expires 2015 &Pro Sports

Brian Cummins
on Jan 18, 2013

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

http://brian-cummins.blogspot.com/2013/01/cleveland-browns-stadium-gets-new-name.html


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Anonymous
on 2017-06-24T01:53:22+00:00
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Joe Bialek
on Apr 05, 2014
"This issue is the absurdity of absurdities. Let me get this straight: the purpose of the Sin Tax..."
Joe Bialek
on Apr 05, 2014
"This issue is the absurdity of absurdities. Let me get this straight: the purpose of the Sin Tax..."
Brian Cummins
on Feb 04, 2013
"  The first question in the discussion regarding Cleveland's Pro-sports teams should be: Do..."
Roldo Bartimole
on Jan 30, 2013
"Unfortunately, it did not come out under selected headings but one sees the total of $134..."
Roldo Bartimole
on Jan 30, 2013
"I wanted to post this addition that spells out fully as of 2012 how much the county has paid..."
Roldo Bartimole
on Jan 30, 2013
"Kevin: The arts tax is a different "sin" tax, not the same as the one that supports big league..."
Karl Hess
on Jan 29, 2013
"Roldo thanks for your work.  I'm really tired of subsidizing profesional sports in Cleveland...."
Ronald Markowitz
on Jan 29, 2013
"Great idea but unlikely. If the Michael White administration had any competence they would have..."
Mark Cassell
on Jan 29, 2013
"Right on Roldo.  He is absolutely correct.  It is absolutely insane that the citizens of..."
Roldo Bartimole
on Jan 26, 2013
"Brian: I believe the only answer to this situation is  for the people of Cleveland and Cuyahoga..."
Brian Cummins
on Jan 26, 2013
"Pro Sports Player Salaries & Anticipted NFL TV/Media Revenue come 2014 On our facebook..."
Brian Cummins
on Jan 26, 2013
"What to do when the sin tax for the sports facilities ends in 2015?   Jason Russell of the..."
Kevin Cronin
on Jan 24, 2013
"Through taxes and bonds, how widely are costs for stadiums and the like shared?  If these sports..."
Brian Cummins
on Jan 23, 2013
"Ken, We need to work on including all three pro-sports teams and venues within the discussion...."
Brian Cummins
on Jan 23, 2013
"Jason, You ask -  Q. what does the city get from the presence of the pro-sports stadiums? ..."
Jason Russell
on Jan 23, 2013
"Ken, You have good ideas for what the tax revenue could have been used for, but I think an..."
Ken Kalynchuk
on Jan 23, 2013
"Thanks for sharing this, Brian.  I'm curious if you have the details available on municipal..."
Kevin Cronin
on Jan 23, 2013
"I agree that the data on the return for the investment in the arts will demonstrate the modest..."
Anastasia Pantsios
on Jan 22, 2013
"Yes but that is a whole separate tax with a whole separate set of issues. And they need to be..."
Jason Russell
on Jan 20, 2013
"Brian, I am glad that you brought this up, because I too have felt that the general public has..."
Dan Moulthrop
on Jan 18, 2013
"Brian, I'm very glad you have gotten this conversation started. There's so much that people don't..."
Brian Cummins
on Jan 18, 2013
"Thanks for bringing that up Kevin!   I've added the following chart as well as link to the Plain..."
Kevin Cronin
on Jan 18, 2013
"Sin taxes also support the Cuyahoga arts funding programs. It's not just about sports complexes."

Brian Cummins

Brian Cummins - 2017-06-24T01:53:22+00:00 - "The following is an attempt to document the funding, payment and revenue generation of..."

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Joe Bialek
on Apr 05, 2014 - 12:58 pm

This issue is the absurdity of absurdities. Let me get this straight: the purpose of the Sin Tax is to gouge those who purchase alcohol and cigarettes not because anyone is trying to discourage consumption but rather so the County can use that money to pay for sports stadiums that do not produce anything but a fleeting moment witnessing the passing of a football, the dribbling of a basketball and the throwing of a baseball so that such a minute tidbit of diversion can be enjoyed by all. The stupidity of this proposition is enough to make your head spin even though the spin doctors advocating passage of this nonsense are already doing a pretty good job of hypnotizing the voters to actually consider supporting it. At least the Robber Barons of the previous centuries provided something tangible such as oil, steel, railroads etcetera. These team owners do not even provide one tangible thing that could ever be considered with the term “value added.” Almost everyone discusses this “enterprise” as though it is the same thing as industry {which it is not}. The price of admission is essentially a voluntary tax paid by those who can afford it to pay those who don’t need it. If this isn’t a transfer of wealth I don’t know what is.

The real outrage here is the fact that taxes on alcohol and cigarettes will not be used to aid in the reduction of addiction {hence the reference to “sin”} but rather to stuff the pockets of all three teams who could easily afford to pay for the repairs themselves. The vote was rammed through the last time {under somewhat suspicious circumstances} and hear we go again. But this time...not so fast!!! We the voters of Cuyahoga County are going to fight the proponents on this one and we don't care if the teams up and go somewhere else {please see my views on entertainment below} because quite frankly there are simply more important things than sports and the unearned money that comes with it. Those in public office who are too stupid and lazy to find other ways to grow a major American city need to resign and leave their self-seeking political ambitions on the scrapheap of history. Don’t ever let it be said that this was time when the tide ran out on Cuyahoga County but rather was the time when the voters rose up to welcome the rising tide of change and rebuked this pathetic paradigm our previous elected leaders embraced. Let the battle be joined.

And now to the real underlying issue at hand:

One of the most disturbing facts about our capitalist nation is the misappropriation of funds directed to the salaries of entertainers. Everyone should agree that the value an athlete, movie star, talk-show host, team-owner, etcetera brings to the average citizen is very small. Granted, they do offer a minuscule of diversion from our daily trials and tribulations as did the jesters in the king's court during the middle ages. But to allow these entertainers to horde such great amounts of wealth at the expense of more benevolent societal programs is unacceptable. They do not provide a product or a service so why are they rewarded as such?

Our society is also subjected to the "profound wisdom" of these people because it equates wealth with influence. Perhaps a solution to this problem and a alternative to defeated school levies, crumbling infrastructures, as well as all the programs established to help feed, clothe and shelter those who cannot help themselves would be to tax this undeserved wealth. Entertainers could keep 1% of the gross earnings reaped from their endeavor and 99% could be deposited into the public coffers.

The old ideas of the redistribution of wealth have failed, and it is time to adapt to modern-day preferences. People put their money into entertainment above everything else; isn't it time to tap that wealth? Does anyone think this will reduce the quality of entertainment? It seems to me that when entertainers received less income, the quality was much higher.

 
Ronald Markowitz
on Jan 29, 2013 - 11:21 am

Great idea but unlikely. If the Michael White administration had any competence they would have sold the stadium to Lerner for $1.00 when it was first built. It was built with minimum specs and poor features, and being a municipal investment probably wasn't built properly anyway.

 

I don't think the Browns would do it. Haslam is too smart. What we need to start doing is telling sports franchise owners they have to pay their appropriate share. When they threaten to leave of not come say O.K. Owner's have taken advantage of needy and poorlry run cities for years and will continue to do so as long as we let them.

 
Brian Cummins
on Jan 26, 2013 - 8:13 am
What to do when the sin tax for the sports facilities ends in 2015? Jason Russell of the Civic Commons, in his piece “Let he who is without sin cast the first stone”, suggests spreading the dirty deed of the sin tax and to, "extend the sin tax to all counties that touch Cuyahoga County". He points out that the facilities draw spectators from the region so why shouldn't the expense of the facilities be shared by the region? What should we consider in terms of the 2015 expiration of the sin tax?   Currently the Browns have the best deal of the three teams.  The City’s responsible for the debt and financing for construction and capital repairs and they keep all of the revenue generated except some fees paid to the NFL and a share of NFL media revenue.  The Indians and Cavaliers renegotiated their leases with the Gateway Economic Development Corporation in 2004 so the teams cover the debt.  But, there are major capital repairs and improvements anticipated that are not covered under agreements. The City is stuck with expenses for the parking lot. The main considerations are what are the revenues needed by the teams to be successful and what payments can the City and County, and possibly the region afford?  So what are our options? 
  1. Do nothing - the City of Cleveland will be on the hook for hundreds of millions of dollars for the debt, financing cost, capital repair requirements, and property taxes associated with the stadium and property.      The Gateway Economic Development Corporation and Cuyahoga County will need to come up with funding for capital repairs and improvements that are being considered.  The debts for construction of the gateway facilities have been reported as being taken care of by rents from the teams that were renegotiated in 2004.  They include approximately $70 million for arena not including finance cost, with payments through 2023 and, a remaining $6 million in ballpark debt is anticipated to be paid-off by 2014.
  2. Ask voters to renew the sin-tax - Continue applying what is generally accepted as a regressive tax – has a greater impact on lower-income persons than higher.  The current sin taxes being levied for the sports facilities are:  - 4.5 cents per pack of cigarettes;   - 6.0 cents per gallon of beer, or 3 cents per 12 ounce bottle; and,   - 12.7 cents per 740 ml bottle of wine.
  3. Ask sports teams to pay more under their lease agreements – an unlikely scenario due to existing contract terms, although the Indians and Cavaliers renegotiate their lease terms in 2004.  Would the Browns be willing to do the same?  And, what about the capital expenses anticipated but not covered for the Gateway arena and ballpark?
  4. Increase the admission tax for all three sports teams – The City would have the authority to carry this out.  How much money would be needed?  The three teams and facilities have different needs in terms of the liabilities, costs and revenue requirements.  The Browns are reported to have one of the lowest seat pricings in the league.  Would they accept a higher admission tax on seats that would then limit their own ability to raise admission taxes?  And, what about premium, club seating and loge revenues?
  5. Better utilize revenue potential for City sponsored events – The City of Cleveland has the rights under the lease to use the Browns Stadium eight times per year.  What is the net-revenue potential for using all eight days, and how could the stadium be better utilized by the City?
  6. Other revenue generating resources - At the time the deals were made for the facilities there were increases to parking and rental car taxes.  The new Cleveland Convention Center and Medical Mart are being funded by a Cuyahoga County sales Tax  (.25 cents – another regressive tax).  Property taxes just took a hit in Cleveland via the CMSD (15 mill school levy).  What other sources are there?
  7. What am I missing?
 REF: Cleveland Browns Stadium gets new name as old sin tax expires in 2015Call for increased private investment by sports teams to balance large public subsidies that will need to continue through 2028.  1.18.2013 

Responses(6)

Brian Cummins
on Jan 26, 2013

Pro Sports Player Salaries & Anticipted NFL TV/Media Revenue come 2014

On our facebook conversation, someone suggested - "Pay the players a little less. I know this will not be popular. But, alot of people take paycuts." Pro-sports players make a lot of money so I can understand her sentiment of hey, let them kick in some money! Some make more in one year than an average person would earn in their life time. But of all the pro sports, people have commented that the NFL where players can get beat-up and injured the most and the risk of their career being cut short is high.Here are the average salaries per player per year for the 2010-11 seasons; number of players in each league and amount of money they make for each game played:

  1. NBA, $5.5 million (450 players, $61k per game)
  2. MLB $3.3 million (750 players, $20k per game)
  3. NFL $1.9 million (1,606 players, $119k per game)

Overall, NFL players get a 47% cut of total NFL revenues (4.6 billion of $9.7 billion) and apart from their salaries, a good size chunk is used for benefits, former players pensions and care etc...

For those curious to know what their favorate player is making see the following links:

  1. Cleveland Indians Player Salaries 2012-2013 - $74 million
  2. Cleveland Browns Player Salaries 2012-2013 - $69 million
  3. Cleveland Cavaliers Player Salaries 2012-2013 - $63 million

Team owners get 53% of Total NFL revenues, or $5.1 billion, and these owners are who the City, County and Gateway Econ. Dvlp. Corp have agreements with.

NFL TV/Media Revenue

The NFL negotiated most of their TV/Media contracts in 2011 for contracts that will expire this year.  For the new contract period 2014 - 2022 the NFL is expected to collect about $6 billion per year, or $187.5 million per year per team.  This represents a 173% increase in annual team TV/Media revenues from the 1998 - 2005 period.

To compare, here are the approximate figures for TV/Media revenue generated for the years beginning the time the new Cleveland Browns Stadium was opened (1999)

  • 1998 - 2005; $2.2 billion ($68.8 million per team)
  • 2006 - 2012; $3.1 billion ($96.9 million per team) 

A little levity - NFL team owners money problems:

 

 

 
Roldo Bartimole
on Jan 26, 2013

Brian: I believe the only answer to this situation is  for the people of Cleveland and Cuyahoga County tell the very wealthy sports owners and their weathy ball players to begin to pay for their own costs.

 

The wrong way to start this conversation is to even give consideration to extending the sin tax, now in existence for 25 years. That should be enough.

 

I have said before the Browns stadium should be "sold" to its owner, Jimmy Haslam, for $1. He should then assume the cost of running his own facility on his own dime. He also should begin paying property taxes on the stadium. These property taxes have been stolen from the school system primarily for years at a cost of tens of millions of dollars in revenue.

Here is an outline of what it has cost taxpayers for the three major sports (and it is continuing) and now they want to extend the tax and take tens of million more dollars. Enough here is beyond enough.

Here is what I published elsewhere, all from official county documents:

$240.5 Million (1st 15 years of sin tax)

$116.0 Million (County general fund payments for Gateway bonds)

$38.2 Million (City admission tax for Gateway Bonds)

$8.6 Million (County Bed Taxes for Gateway Bonds)

$8.8 Million (excess from sin taxes for Gateway Bonds)

$21.3 Million (labeled as "other" for County Gateway Bonds)

$3.75 Million (County to reimburse State Loan for Gateway)

$3.75 Million (City to reimburse State Loan for Gateway)

$5.8 Million (City advance to Browns for Capital Improvements)

$2.0 Million (Repay loan from Cleveland Foundation for Gateway)

$11.5 Million (County payment on Gateway overruns)

Yeah, that much.

Total Cost thus far: $460.2 Million. This is the most comprehensive accounting of the public cost of Cleveland's sports venues anyone has produced.

(I wonder if the IRS ever thinks of totting all this free stuff for income tax purposes. They seem ready to do it for Jimmy Dimora.)

Let's stop this madness.

It's not over. Some payments continue to 2023. So it will be more than $460 million.

The tab is even still higher. We could add $37 million from State of Ohio; $3 million RTA; $2.24 million Cleveland Sewer Dept.; $1.2 million City Water Dept. That's just for Browns stadium.

I don't have current figures for what Clevelanders are paying on bonds for the football stadium. However, by May 2009 the city had paid $102,823,947 and still owed $160,367,109 for bonds. Payments extend to 2027.

Roldo

 
Mark Cassell
on Jan 29, 2013

Right on Roldo.  He is absolutely correct.  It is absolutely insane that the citizens of Cleveland still have to subsidize the Browns' owners and players.   Where is the outrage of conservatives or so-called libertarians?!  What government dares to put in place rules that extend health coverage to the other unsured, conservatives and libertarians get jacked up into a frenzy of vile and hate. But subsidize a football team (and a crappy one at that), there's nothing but silence.  Where is the right-wing Buckeye Institute's scathing reports about the misuse of public funds and distortion of markets?  What's even more pathetic is that the patrons of the Browns product are overwhelming citizens of the region not the city.  Even the suburbs really want to "buy" a crappy sports franchise every year, let's make the suburbs or those attend the games pay the full price of the stadium and teams.

Finally, the inevitable response to any challenge to the status quo will be: "Ok, but then the Browns will leave."  Can we please muster the political courage and sense to say, "Great! Let's tear down this giant asphalt elephant that occupies prime real estate on one of our greatest assets in Cleveland - the lakefront. Who's idiotic idea was it anyway to put a giant building and parking lot that used 12 times a year on land with the best view of the lake"?    All the cost estimates of the stadium always omit the opportunity cost of not building something else in its place which I believe is far more valuable.

Thank you Roldo for your pragmatic insight and courage.  I hope it'll prompt the county and city leaders to develop a backbone for the good of the city and the region, not just the owners and players of a football team. 

 

 
Karl Hess
on Jan 29, 2013

Roldo

thanks for your work.  I'm really tired of subsidizing profesional sports in Cleveland. Whatever happened to free enterprise?

And how many freeloaders come in from other counties?

Karl Hess

 

 
Brian Cummins
on Feb 04, 2013

 

The first question in the discussion regarding Cleveland's Pro-sports teams should be:

Do the citizens of Cleveland want to keep the Browns?  Indians?  Cavaliers?

The May 1990 vote on the 15-year sin tax passed with only 51.9% of the vote, with Cleveland voters rejecting it 56% to 44% and suburban, Cuyahoga County voters ultimately carrying the issue 55% for it and 45% against.

 The 1995 10-year extension of the sin tax passed with 72% of voters support, including support within Cleveland.  The support is attributed to the prospect of losing the Browns.

If citizens of Cleveland, the County and event the region want to keep the pro-sports teams, then the next question is at what cost, and who pays?

In the case of the NFL, the legaue has been acurately described as a cartel, think oil and drugs!

Cartel — an agreement or collusion among a small number of business entities with similar products to increase their profits by reducing competition, such as through the allocation of territories or outputs

So, if North East Ohio wants their football fix then there will be a steep price to pay.  We can and should try hard to educate voters about the steep cost, and push the first question - do we want to maintain these pro-sports teams, but if  the collective answer is yes, we’ll need to be prepared to pay the cost.  In any of the other 31 city’s that have NFL teams the cost is high and heavily skewed in favor of the owners.

The Gateway complex is a little more complicated.  Although the MLB and NBA aren't quite the successful cartel the NFL is, they still can command lopsided facility deals.  Also, their presence at Gateway has contributed to more ancillary development of the Gateway district, and what else would the arena or ballpark be used for?

The point is that I’d love to see us make the pro-sports teams pay for the remaining full costs of financing the facilities debt, interest and capital costs, but we would have to go into negotations prepared to losing them if we wanted to make that case.Do taxpayers of Cleveland and Cuyahoga want these teams?  If so, that desire has a huge impact on negotiations. 

 
Joe Bialek
on Apr 05, 2014

This issue is the absurdity of absurdities. Let me get this straight: the purpose of the Sin Tax is to gouge those who purchase alcohol and cigarettes not because anyone is trying to discourage consumption but rather so the County can use that money to pay for sports stadiums that do not produce anything but a fleeting moment witnessing the passing of a football, the dribbling of a basketball and the throwing of a baseball so that such a minute tidbit of diversion can be enjoyed by all. The stupidity of this proposition is enough to make your head spin even though the spin doctors advocating passage of this nonsense are already doing a pretty good job of hypnotizing the voters to actually consider supporting it. At least the Robber Barons of the previous centuries provided something tangible such as oil, steel, railroads etcetera. These team owners do not even provide one tangible thing that could ever be considered with the term “value added.” Almost everyone discusses this “enterprise” as though it is the same thing as industry {which it is not}. The price of admission is essentially a voluntary tax paid by those who can afford it to pay those who don’t need it. If this isn’t a transfer of wealth I don’t know what is.

The real outrage here is the fact that taxes on alcohol and cigarettes will not be used to aid in the reduction of addiction {hence the reference to “sin”} but rather to stuff the pockets of all three teams who could easily afford to pay for the repairs themselves. The vote was rammed through the last time {under somewhat suspicious circumstances} and hear we go again. But this time...not so fast!!! We the voters of Cuyahoga County are going to fight the proponents on this one and we don't care if the teams up and go somewhere else {please see my views on entertainment below} because quite frankly there are simply more important things than sports and the unearned money that comes with it. Those in public office who are too stupid and lazy to find other ways to grow a major American city need to resign and leave their self-seeking political ambitions on the scrapheap of history. Don’t ever let it be said that this was time when the tide ran out on Cuyahoga County but rather was the time when the voters rose up to welcome the rising tide of change and rebuked this pathetic paradigm our previous elected leaders embraced. Let the battle be joined.

And now to the real underlying issue at hand:

One of the most disturbing facts about our capitalist nation is the misappropriation of funds directed to the salaries of entertainers. Everyone should agree that the value an athlete, movie star, talk-show host, team-owner, etcetera brings to the average citizen is very small. Granted, they do offer a minuscule of diversion from our daily trials and tribulations as did the jesters in the king's court during the middle ages. But to allow these entertainers to horde such great amounts of wealth at the expense of more benevolent societal programs is unacceptable. They do not provide a product or a service so why are they rewarded as such?

Our society is also subjected to the "profound wisdom" of these people because it equates wealth with influence. Perhaps a solution to this problem and a alternative to defeated school levies, crumbling infrastructures, as well as all the programs established to help feed, clothe and shelter those who cannot help themselves would be to tax this undeserved wealth. Entertainers could keep 1% of the gross earnings reaped from their endeavor and 99% could be deposited into the public coffers.

The old ideas of the redistribution of wealth have failed, and it is time to adapt to modern-day preferences. People put their money into entertainment above everything else; isn't it time to tap that wealth? Does anyone think this will reduce the quality of entertainment? It seems to me that when entertainers received less income, the quality was much higher.

 
Expand This Thread
Brian Cummins
on Jan 18, 2013 - 2:12 pm

Thanks for bringing that up Kevin!  I've added the following chart as well as link to the Plain Dealer article (4.18.20110) that lists out all the various taxes and fees being collected by the county and city, including the sin tax.Most people are unaware of the various collections and use of these taxes - $856 million collected in the ten year peariod from 2000 - 2010.REF: http://brian-cummins.blogspot.com/2013/01/cleveland-browns-stadium-gets-new-name.html 

 
Taxes-cleveland-entertainment-chart%20%20-%20plain%20dealer

Responses(9)

Dan Moulthrop
on Jan 18, 2013

Brian, I'm very glad you have gotten this conversation started. There's so much that people don't understand about the sin tax and the way our public investments in our sports complexes are structured. 

 
Jason Russell
on Jan 20, 2013

Brian,

I am glad that you brought this up, because I too have felt that the general public has gotten the raw end of the deal in all the stadium construction projects in Cleveland. It seems like the city is on the hook for a lot of money in the near future especially if the sin tax is not renewed. If that were to to occur, the city of Cleveland would be support the maintainence and debt obligation of the facilities that arguably benefit more suburbanites than city residents. However, I think it is also important to think about what the city gets from the presence of the stadiums. Does the city collect income tax on the player's salaries? How much admission tax is collected from the 3 stadiums? How many more beds are used because of the stadiums? How much parking is consumed because of their presence. I guess what I am saying, is the City getting it's money back elsewhere?

This doesn't change my desire for a fairer deal for the public sector in the stadium deals, but I think knowing the income side can strengthen our argument.

 

 
Brian Cummins
on Jan 23, 2013

Jason,

You ask - 

Q. what does the city get from the presence of the pro-sports stadiums?

Challenging question.  

A. The last time boosters tried to answer that was in 1996 and they came up with $79 million per year.  But that is too easy and goodness know how they came up with it.The quality-of-life benefits are often referred to when the quantitative data doesn't necessarily add up.  In Cleveland's case the fact that all three are within the central core of the City is beneficial.  The gateway complex was done in a way that assisted the redevelopment of the Huron and Prospect Avenue areas.  The Browns Stadium has lacked spin off value and continues to occupy a very valuable space on the lakefront.  I'm working on a more comprehensive answer.

I've asked the City's Administration to confirm what quantitative information we can in terms of what the City actually receives, e.g., payroll taxes, admission tax, additional revenue raised from increased taxes on parking and rental cars.  I’ll make that information public when I receive it and also want to speak to a variety of other interested parties.

Back to the boosters - an impact study was done by the Greater Cleveland Partnership in 1996 to calculate what the City would lose if the Browns were to leave.  The number they settled on was $79 million.  The number started out a year earlier in 1995 at $36 million and was revised a second time to $48 million before settling to the higher amount.  I don’t have a copy of the study, but I reproduced the Plain Dealer article from January 14, 1996 that describes that the, “Price Tag of Losing the Browns is Hard to Decipher”.

Of the various articles and studies I could find that deal with valuing sports facilities this one seemed to be the most useful:

What Are the Benefits of Hosting a Major League Sports Franchise?by Jordan Rappaport an economist and Chad Wilkerson an associate economist at the Federal Reserve Bank of Kansas City

Written in early 2001 they provide a useful assessment of the stadium building boom.  They go over the arguments both in favor of and against using public funds, show why the job creation and tax revenue benefits from hosting a major league franchise fall far short of typical public outlays on constructing a new sports facility and, argue that the large quality-of-life benefits associated with hosting a major league team may justify the public outlays.

The public outlays and the largess of private benefit are what bother me the most.  The fact that we collectively are coming up on the end of the sin tax that passed is a challenging opportunity.  We could roll-over and play by the team's play books or we could have some public discourse and explore possibilities for more equitably sharing future expenses, realizing that it is unlikely that contracted use and benefits will likely  be shared.

Possible solutions: 1) renew a sin tax; 2) levy a higher admissions fee for all pro-sports venues or events; 3) Some combination of revenues from the City, County and sports team...what are some other ideas?Returning to quality of life issues - some make a case that a pro-sports franchise  can create  a local  identity, bring national  press and media  exposure, provide entertainment value, community  pride, and help with business  location decisions.  

The question is at what cost and in what condition is the local economy to shoulder the expenses of the facilities.

Trivia Q., what was so special about the 1948 Browns? 

 
1948team
Ken Kalynchuk
on Jan 23, 2013

Thanks for sharing this, Brian. 

I'm curious if you have the details available on municipal spending for the Q Arena and Progressive Field? 

This questioning of public funding should be extended to the indians and Cavs as well, with Dan Gilbert's new casino adding profits to his empire and the Indians and MLB's latest TV deals that will provide them with millions a year in income. 

It's incredible that all of these taxes since 2000 will reach $1 B in revenue by 2015. 

With that kind of money the county & city could have collaborated to:

-Build a new port in the lake to open up the lakefront for development and still have $500 million to redesign the whole lakefront

-Close Burke Lakefront Airport and pay the federal gov't back for expenses before they'd sue us, AND install proper infrastructure to develop it

-Contribute $80 M a year to the Cleveland School District to educate parents, shrink class sizes, provide extracurricular activities for students, run AP courses in magnet schools that exist on both sides of town, and run neighborhood schools that feed students directly to trade schools, colleges and universities. 

-Put more police on the streets, with proper equipment like DASH CAMS

-Fill all the pot holes

-Provide enough resources to every neighborhood in the city of Cleveland so that each neighborhood has $2 million a year for cultural events, community development and capital improvements

OR - Redesign public square and develop the Flats from the river to I-90 to resemble a uniquely-Cleveland Amsterdam/Copenhagen/Stockholm-esque walkable, water-based neighborhood. 

 

There might be a better place for these ideas . . . my point is, our region is paying a ransom to these sports teams. If there is a way that their new revenue can help loosen up our funds so we can lower taxes OR invest in better things, we must find it and execute. 

 
Jason Russell
on Jan 23, 2013

Ken,

You have good ideas for what the tax revenue could have been used for, but I think an important fact remember in all our discussions is that the general public approved the taxes for this specific purpose.

I think the recent failure of the port levy highlights how the community won't support an idea they don't agree with or understand.