Call for increased private investment by sports teams to balance large public subsidies that will need to continue through 2028.
|Renderings from FirstEnergy Corp. of Browns Stadium. |
FirstEnergy Corp.has bought the naming rights of the stadium.
[Updated Friday 1.18.13: to include sin tax spreadsheet published by the Plain Dealer as well as property value and tax information.]
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.
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.
FirstEnergy Stadium, Home of the Cleveland Browns
- Approximate construction cost: $330 million.
- Total cost estimates range from $308 - $352 million not include financing costs
(see Plain Dealer article dated 2.24.2000).
- Percentage of public funding: 76%.
- Private Funding: $84.9 million
- Total Principal Municipal Bonds Issuance: $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 capital repairs obligations, City of Cleveland: $52.5 million (see Schedule 14f below).
- Browns naming rights revenue: $102 million ($6 million x 17 years).
- Sin Tax revenue received to-date: $116 million: $87 million for debt service; $29 million for capital repair requirements of which $5 million was advanced in 2012.
- Additional Revenue Sources: 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).
- Property Taxes: City of Cleveland pays taxes on the land value, currently $19 million value, annual taxes of $646,923. The stadium building is valued by the County at $276.2 million. The building is exempt from taxes that are valued at $9.3 million.
The following two documents (below the excerpts) represent the lease agreement between the NFL and the City of Cleveland (4-26-96) and the assignment and assumption of that lease to the Browns from the NFL (10-23-98).
Here are two relevant sections - naming rights (for the benefit of the Browns) and maintenance requirements (required from the City). [click on the images to view in larger format]
Section 12. g. Naming Rights for the New Stadium
Section 14. Capital Repairs [$52.5 million Total]
Ordinance to approve Cleveland Browns Proposed $120 million capital repairs and improvements to FirstEnergy Stadium and authorize a new obligation by the City of Cleveland of $30 million.
Other Legal Documents:
- Franchise Commitment Agreement Cleveland & NFL, dated 6.12.96 (Agreement that set forth conditions for retaining an NFL team (Cleveland Browns) in Cleveland and releasing Modell).
who vote socialist [on football]”
What portion of sin tax is being collected for what purpose?
There are questions or calls for clarification from readers that the sin tax, as we generalize, is not only collected for the Browns, Cavaliers and Indians sport teams and venues but for other benefits as well. The term "sin tax" has been used predominately to describe the funds used to pay for Gateway and the Browns Stadium.
What other taxes are being paid by the public and for what purpose?
But, in addition to what is collected to support professional sports, for the sin of smoking the government has collected an additional $100 million or so for arts and culture since passage of that additional tax in 2006.
The Plain Dealer ran the numbers back in 2010 not just on sin taxes (alcohol and cigarettes) but all of those other pesky taxes and fees - Admission tax; tax on video game machines; bed tax for our hotels, parking taxes (which we thankfully have gotten better at collecting), and vehicle registration fees. See Taxes add up for a night on the town in Cleveland, by Laura Johnston, The Plain Dealer, 4.18.2011. [click on the images to view the chart in larger format]
References to applicable sections of the Ohio Revised Code --
- 307.673 Cooperative agreement for sales tax levy and bond issuance for construction or renovation of professional sports facilities.
- 307.696 Agreement for sales tax levy and bond issuance to construct and operate a sports facility.
- 307.697 Voting on question of levying liquor tax to support facility.
- 4301.421 Tax levies to finance sports facilities.
- 5709.081 Exempting public recreational facility used for athletic events.
- 5743.024 County cigarette sales tax - local excise tax administrative fund.
- 5743.323 County tax on use, consumption, or storage for consumption of cigarettes.
Relevant Media reports
- Cleveland Browns' stadium deal with FirstEnergy averages about $6 million a year for 17 years, By John Funk, The Plain Dealer, 1.17.2013.
- Cleveland's Sports Dealings a Boon to Skadden, Regional Firms, by Brian Baxter, The Am Law Daily, 1.17.2013.
- Cleveland Browns Stadium naming rights sold: Welcome to FirstEnergy Stadium, by Tom Reed, The Plain Dealer, 1.15.2013.
- Why Won’t Plain Dealer Tell Truth of Sports Dollars?, by Roldo Bartimole, 9.18.2012.
- Browns talk of seeking extension of sin tax, Officials expect help from other teams in effort to retain source of cash to keep sports venues fresh, by Jay Miller, Crain's Cleveland Business, 2.27.2012.
- Browns and city punt for now on long-term solution to Cleveland Browns Stadium repairs, by Mark Naymik, The Plain Dealer, 2.9.2012.
- Cleveland City Council OKs $5.8 million for stadium repairs,by Thomas Ott, The Plain Dealer, 2.6.2012.
- Cleveland Browns Stadium is about to put a big hit on the city, by Mark Naymik, The Plain Dealer, 1.26.2012.
- New JobsOhio liquor agreement won't affect Cuyahoga County's sin tax, by Reginald Fields, The Plain Dealer, 1.25.2012.
- How good it gets for the Lerner family, by Roldo Bartimole, 5.29.2009.
- 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, 2001 (PDF).
- Mayor's Final Cost at Stadium 25% Over, by Christopher Quinn, Plain Dealer, 6.24.2000
- Price Tag of Losing the Browns is Hard to Decipher, by Becky Yerak, Plain Dealer, Cleveland, Ohio, 1.14.96
- Voters Extend 'Sin Tax' to Rehab Browns' Stadium, by Rich Harris, Associated Press, 11.8.1995.
EXCERPT from -
Major League Losers: The Real Cost Of Sports And Who's Paying For It,
by Mark S. Rosentraub, 1999, page 6: