Cuyahoga County Sin Tax

[BimboColesHair]

sell

vote no

 

[CornerThree]

well?

 

[Deezus]

This is just too ironic... :chuckles:

Deezus' argument. "Stop subsidizing billionaire owners!"


1996: Cleveland couldn't approve funding for a new stadium. Browns moved to Baltimore.

2008: Seattle couldn't approve funding for a new stadium. Sonics moved to OKC.

Two of the best fan bases had their teams ripped away from them because they couldn't secure funding for a new stadium. I doubt Cleveland ever votes down stadium funding again.

You really think Art model moved the team out of Cleveland because of a lack of funding for a stadium? Really? ...and multiple (semi) respected posters thanked this post?!

You call yourselves Cleveland fans?

Educate yourselves:

Up until 1973, Cleveland Stadium was owned by the city of Cleveland. The problem was that the stadium was expensive to operate and maintain and the city of Cleveland needed help. Art Modell offered the city of Cleveland a deal. Modell's new company, Stadium Corporation, would lease Cleveland Stadium from the city, for $1 dollar per year. Modell would then sublease the stadium to the two teams that played there, his own Cleveland Browns, and the Cleveland Indians.

The city of Cleveland accepted the deal. Art Modell now not only owned the Browns, but he also owned the home of the Cleveland Indians, for nothing more than a dollar a year and operating costs. This deal gave Modell a lot of power in the city of Cleveland.

Modell did some good things with the stadium. He added a huge electronic scoreboard in the end zone above the Dawg Pound. He also built luxury boxes around the stadium. He added advertisements (look at the above link) all over the stadium. All of these were bringing in money for Modell.

This deal looked great for everyone, except the Cleveland Indians.

Stadium Corp. was the Indians landlord. If the Indians needed something in their locker room, they had to ask Modell. If they needed a new batting cage at the ball park, it was up to Modell. Modell didn't care if the Indians needed something, they weren't his team. Additions to the Indians clubhouse were minimal. It was like a scene from the movie Major League, just without a naked Cerrano. The Indians had one of the worst clubhouses in all the MLB. The Indians believed that this was a major reason that they were unable to attract any big time free agents.

For example, starting in 1974 Stadium Corp booked a mid-summer outdoor rock concert, called the World Series of Rock, to be played on the Indians home field. Modell collects a ton of money for tickets and concessions from the rock concert, and the Indians receive nothing more than a field destroyed by a rock show that was held on the infield. Yes, Stadium Corp. did some repairs, but if you have ever been to a rock concert, you have some idea on how poor of condition the field was in.

But this wasn't the biggest issue with Indian owners. Art Modell was collecting the money from the Indians luxury boxes. People were paying Modell to watch the Indians! Modell tried to explain that the luxury boxes weren't profitable because Modell financed their construction with loans that carried prevailing high interest rates, even though he never proved that this was true. In other words, Modell didn't want to share the money raised by the luxury boxes because he made a poor business decision! How that makes any sense, only Modell knows.

Modell was sitting on a golden goose. He was paying rent as the owner of the Browns to himself. He was collecting rent on the Indians with the bonus of the luxury boxes on top. He was getting money from the NFL's TV deals (in 1990 the NFL signed a 900 million dollar a year deal with ABC, CBS, ESPN, NBC, and TNT). All Modell was paying was to upkeep the stadium (a dump) and the costs and salaries of the Browns (Just to give you and idea, Joe Montana signed a 3 year 10 million dollar deal in 1993. In other words, Modell should have had money everywhere.)

The Indians had grown tired of Modell's penny pinching ways. Dick Jacobs, the Indians owner since '86, and Gordon Gund, the Cavs owner, went to the city of Cleveland and asked for new stadiums. In May of 1990 the Cuyahoga County voters approved of a 15 year "sin tax" on cigarettes and alcohol (That's right, if you buy a pack of smokes in the 'Hoga before 2005, you helped pay for those two stadiums). Cleveland's sports teams all played in outdated dumps, and the city wanted to fix this.

Enter Gateway Sports and Entertainment Group (GSEG).

The GSEG appointed a nine member board, with Thomas V. Chema named as executive director. This groups job was to allocate money in order to build new sporting venues in the downtown Cleveland area.

It wasn't just for the Cavs and Indians. The GSEG approached Art Modell about building a new Cleveland Browns stadium. In fact, the land on which Progressive Field sits was originally supposed to be for the new Browns Stadium. Here the city was offering to build him a stadium in which he would have to pay NOTHING to get.

Modell wouldn't have it. Modell wanted to own the stadium. He wanted the people of Cleveland to pay for a stadium that he would own. I can't fathom a reason why he expected Cleveland to accept those terms. GSEG told Modell that his terms were not going to make it.

Modell believed that he would be fine without the Indians. This couldn't have been further from the truth. Modell had a stadium that just had 81 nights open up. Stadium Corps luxury box revenues went into the crapper, and with a stadium empty night in and night out during the summer, Modell's money evaporated before his eyes.

Modell needed help and he needed it quickly. He now had an empty and old stadium that was in need of repairs and refurbishing that he could not afford. He reached out to the city of Cleveland and asked for help. In '73 the city of Cleveland needed help, now it was flipped. The city of Cleveland approved a 10 year extension of the sin tax. It had to be voted on, but no one in their right mind thought that the people of Cleveland wouldn't pass the motion. Modell was promised $175 million dollars, which was almost equal to the amount of money that GSEG put aside for Gund Arena and Jacobs Field combined (Jacobs cost $128 million, and Gund cost $75 million).

All the sudden Modell would not discuss the future of his team. He wouldn't discuss the stadium. Nothing. He went into lock down mode. The vote for Modell to get his money was in the near future, yet you couldn't get a peep out of Modell. Modell said that the moratorium on the talks until after the season were because he wanted to focus on football, but that he would continue talks after the season.

There was another reason. Modell was in secret negotiations with the state of Maryland to move the Browns to Baltimore for the '96 season. Baltimore had been without an NFL team since '84 when the Colts went to Indy in the dark of the night. One of the most outspoken owners against the Colts moving to Indy was, you guessed it, Art Modell. Modell also voted against Al Davis being allowed to move Raiders from Oakland to Los Angeles. But when it came to saving his own ass, loyalty didn't apply to Modell.

The week before the City of Cleveland was to vote the referendum giving Modell $175 Million, Modell announced that he had struck a deal to move the Browns. Starting with the '96 season, Modell would be the owner of the Baltimore Browns. The deal Modell took was great for him. He was promised a $200 million dollar stadium to be built by the state, state paid improvements to Baltimore's Memorial Stadium, which would be the Ravens home field for the next two seasons, and to top it all off, Art Modell was given $75 Million dollars for "moving expenses". Everyone knew that the moving expenses was pretty much a nice little thank you to Art. The number thrown around is that Art cleared $50 million, but nothing has been proven.

Many people believed that the timing of Art's announcement was to try and sway the people of Cleveland to vote down the proposed tax addition. He could then claim that the Cleveland wasn't willing to help him in getting a new stadium which would help him in convincing the other NFL owners to allow him to move. Never mind that Modell himself was the one who walked from GSEG. The people of Cleveland went out the following week and overwhelming passed the sin tax extension. The people of Cleveland answered Modell's financial S.O.S. Modell didn't care, he had a sweetheart of a deal from Baltimore.

Source

Read the bolded part again... Modell moved the team in spite of a "Sin Tax" that was passed and designed to subsidize a new stadium, not because of it! ...and this is completely ignoring your terrible argument about the Supersonics.

 

[macbdog]

Oh, Modell certainly did his part in getting the team to move- but the city of Cleveland was not as forthcoming as folks want to think. I do remember all of this, the city fought with Modell about how a refurbishing was going to be good enough. Which is fine, frankly I agreed with the city... but once he announced his plans to leave, the city government went bat-shit crazy and ended up spending 3x that on a stadium for the expansion team that replaced him.

Modell's demand for a football-only stadium was how the rest of the league was going- and how baseball was going, too. Did he fail to factor in the losses it would incur for him as the manager of the stadium? Yep. But that was going to happen one way or the other.

While Lerner didn't own the stadium, he was given a sweetheart lease along with taxpayer money for all those empty days of no revenue. So while Modell's demand seemed silly, what the city ended up extending to Lerner was not more advantageous- probably worse.

Sorry, but the city DID drop the ball when it came to financing a new stadium for Modell- primarily because they ended up spending considerably more later on not only for a different, brand new stadium but also in the incredibly NFL friendly lease that was negotiated. Modell was a snake but Cuyahoga county and Cleveland city govt more than share their blame how the fiasco came to be.

 

[Deezus]

The Pittsburgh Steelers just agreed to finance $40 million worth of stadium improvements after the city's leaders fought in court for a better deal for the City.

Guess how they're going to pay for it? ... With a surcharge to the ticket prices. THE EXACT ALTERNATIVE THAT WAS PROPOSED IN CLEVELAND.

WEIRD.

Steelers, sports authority seal deal for the expansion of Heinz Field

The city-county Sports & Exhibition Authority is expected to approve a deal on Tuesday morning that will allow the Pittsburgh Steelers to pack more fans into Heinz Field without sacking taxpayers, officials said.

The deal would end more than a year of legal wrangling over who would pay for an estimated $40 million in improvements to the 13-year-old stadium, built for $281 million largely with public money.

“I am pleased that this project at Heinz Field is being completed without any public dollars, which are increasingly scarce,” said Pittsburgh Mayor Bill Peduto.

Steelers President Art Rooney II said the team's lease payment to SEA will increase to $2.1 million a year under the deal, running from 2015 through 2031. It will be used to pay off a bond to cover the cost of adding 3,000 seats in time for the 2015 season, a scoreboard for the upcoming season and completed improvements to the stadium's control room. The bond will be issued through SEA and guaranteed by the Allegheny Regional Asset District.

The deal will boost money going into a reserve fund for repairs at SEA-owned facilities, which include the 65,050-seat Heinz Field, PNC Park, Consol Energy Center and the David L. Lawrence Convention Center. The teams will kick in more money, said Allegheny County Executive Rich Fitzgerald, who couldn't provide details.

Approximately $800,000 a year that RAD contributes to pay off debt related to the former Civic Arena is expected to start supplementing the reserve fund in about five years, Fitzgerald said.

The Steelers, doing business as PSSI Stadium LLC, will add a $1 ticket surcharge starting in 2015 to help pay for the improvements, Rooney said. It will be applied to tickets for Steelers and Pitt Panthers football games, along with stadium events such as concerts.

Steelers tickets have a surcharge of up to $3, while surcharges for other events are capped at $2. Proceeds of up to $1.4 million are used for debt service, and additional money will go into a capital reserve fund.

The deal will allow the Steelers to sell personal seat licenses on the new seats.

Ticket prices are going up this season with variable pricing depending on the opponent expected to boost season ticket prices 2.5 percent to 4.5 percent.

“With the new general reserved seats, club seats and new high-definition scoreboard, we believe these additions will play an important part in making sure Heinz Field continues to be a state-of-the-art facility for our fans,” Rooney said.

Fitzgerald called the deal “a positive outcome for everyone involved.”

The Steelers sued SEA in late 2012 when a deal to finance the stadium improvements fell apart. One proposal would have slapped a $2 to $3 surcharge to the cost of parking near Heinz Field during home games.

Merrill Stabile, president of Alco Parking Corp. and a vocal opponent of the parking surcharge, said, “I applaud the deal. We didn't feel (the parking surcharge) was a fair deal. We have our own needs in terms of generating revenue for capital revenue for capital projects.”

Read more: http://triblive.com/news/adminpage/6141305-74/steelers-field-heinz#ixzz33DY3rlQC

Pittsburgh Steelers' stadium deal is one more reason for Cleveland fans to be jealous
Blog Entry: May 20, 2014 9:56 AM | Author: SCOTT SUTTELL

Here’s another reason for Cleveland football fans to be jealous of Pittsburgh.

The city-county Sports & Exhibition Authority in Pittsburgh “is expected to approve a deal on Tuesday morning that will allow the Pittsburgh Steelers to pack more fans into Heinz Field without sacking taxpayers, officials said,” TribLive.com reports.

The deal “would end more than a year of legal wrangling over who would pay for an estimated $40 million in improvements to the 13-year-old stadium, built for $281 million largely with public money,” according to the story.

“I am pleased that this project at Heinz Field is being completed without any public dollars, which are increasingly scarce,” says Pittsburgh Mayor Bill Peduto.

Steelers President Art Rooney II said the team's lease payment to the sports authority “will increase to $2.1 million a year under the deal, running from 2015 through 2031,” according to the story.

TribLive.com reports that the increased payment “will be used to pay off a bond to cover the cost of adding 3,000 seats in time for the 2015 season, a scoreboard for the upcoming season and completed improvements to the stadium's control room. The bond will be issued through SEA and guaranteed by the Allegheny Regional Asset District.”

The deal will boost money going into a reserve fund for repairs at SEA-owned facilities, which include the 65,050-seat Heinz Field, PNC Park, Consol Energy Center and the David L. Lawrence Convention Center.

The Steelers will add a $1 ticket surcharge starting in 2015 to help pay for the improvements, according to the story. Steelers tickets already have a surcharge of up to $3.

Source

 

[Deezus]

Oh, Modell certainly did his part in getting the team to move- but the city of Cleveland was not as forthcoming as folks want to think. I do remember all of this, the city fought with Modell about how a refurbishing was going to be good enough. Which is fine, frankly I agreed with the city... but once he announced his plans to leave, the city government went bat-shit crazy and ended up spending 3x that on a stadium for the expansion team that replaced him.

Modell's demand for a football-only stadium was how the rest of the league was going- and how baseball was going, too. Did he fail to factor in the losses it would incur for him as the manager of the stadium? Yep. But that was going to happen one way or the other.

While Lerner didn't own the stadium, he was given a sweetheart lease along with taxpayer money for all those empty days of no revenue. So while Modell's demand seemed silly, what the city ended up extending to Lerner was not more advantageous- probably worse.

Sorry, but the city DID drop the ball when it came to financing a new stadium for Modell- primarily because they ended up spending considerably more later on not only for a different, brand new stadium but also in the incredibly NFL friendly lease that was negotiated. Modell was a snake but Cuyahoga county and Cleveland city govt more than share their blame how the fiasco came to be.

I agree with you regarding the fact that what Cleveland/Cuyahoga County ultimately ended up paying was much worse than if we had just been able to keep the Browns, I COMPLETELY disagree regarding who is primarily responsible.

The blame is primarily on Art Modell. Could the City's leaders have been more "cooperative"? Sure. But he followed the money plain and simple.

Here's more evidence:

Art Modell was offered a stadium for the Cleveland Browns and passed: Mark Naymik

CLEVELAND, Ohio -- What you think you know about Art Modell's decision to take the Browns out of Cleveland for a shiny new stadium in Baltimore is legend.

Today, the consciences of a couple of old-guard Cleveland politicians give us a long-hidden fact about Modell's departure. Specifically, when Modell claimed he would have stayed if city leaders had offered to build him a stadium, he was lying.

He was offered a new stadium.

At the Gateway sports complex.

He rejected the offer, years before leaving.

Since the former Browns and Ravens team owner died last week, we have rehashed the famous narrative that Modell left town out of frustration with political leaders who stuck him with the dumpy, history-rich Cleveland Municipal Stadium, which lacked the revenue-generating luxury suites and other amenities of newer stadiums.

Modell was particularly upset that leaders here bent over backward for Dick Jacobs and Gordon Gund, the former owners of the Indians and the Cavaliers, respectively, who were getting new homes -- courtesy of the taxpayers, at the Gateway sports complex completed in 1994 just north of the Inner Belt downtown.

The story of the stadium snub for years has left us asking: Why didn't city leaders just offer to build Modell a new stadium along with the others?

After leaving town in 1996, Modell reinforced the snub story in interviews with news outlets, though he was not speaking at the time to The Plain Dealer, which he saw as part of the conspiracy against him.

"My major regret is that I should not have acceded to their request to stay on the side on Gateway," Modell told Cleveland Magazine in August 1996. He told the magazine he should have forced a football stadium into the Gateway conversation.

"I should have made my demands known at that time. Then we wouldn't be here now. . . . Had they even mumbled the word 'new stadium' I would have said, 'Let's talk.' "

It turns out that officials at the time tried to talk with him. Modell wouldn't listen.

George Forbes, who was Cleveland's council president during the late 1980s and a key player in negotiations with team owners during planning for Gateway, said he and others asked Modell to be a part of the project.

Forbes said leaders proposed building a third Gateway sports facility for the Browns, just south of the Inner Belt a couple of blocks from what is now Progressive Field.

Forbes' memory for detail is hazy. But he said then-Cuyahoga County Commissioner Tim Hagan, Jacobs and lawyers familiar with the financing options were present with Modell at a meeting when the offer was made.

"Tim and I were saying, 'While we are doing this, we might as well clear up the whole damn thing and build all three stadiums,' " Forbes told me. "This way we don't have to go back, and future councilmen and commissioners won't have to deal with the issue. Let's clear it up once and for all, was our thinking."

Jacobs died in 2009.

Forbes said he remained quiet for decades out of respect for Modell, whom he considered a friend.

"Art was my friend and a good man, and I didn't want to get into it," Forbes said. "I didn't want to pour hot water on a scalding dog."

But Forbes said he's long been bothered by the narrative that government failed Modell.

"I have thought about this meeting every time it was written or televised that no one made an offer to build a stadium," he said. "My words are to set the record straight about the governmental institutions and our involvement."

I called Hagan, who championed the Gateway complex and suffered great criticism about its cost to taxpayers. He confirmed Forbes' account. He described the offer as informal but honest.

"There is no question we made an effort," Hagan said.

Exactly why Modell didn't pursue the discussion remains a mystery.

Forbes recalled that Modell said he just wanted to stay in Municipal Stadium. Hagan couldn't add much more detail, nor would he speculate on why Modell didn't look harder at Gateway.

The timing of the Forbes and Hagan offer is critical to sorting out the legend. When Gateway planning was just starting, Modell was told to stay away. City leaders were concerned about appeasing Jacobs, who did not want to share a stadium with the football team and was threatening to move the Indians to a new city.

David Hopcraft, a longtime spokesman for Modell, said leaders planning Gateway were adamant that the Browns owner wait.

"They told him they would take care of him later," Hopcraft told me. Hopcraft also noted that Modell was one of the biggest contributors to the public campaign to persuade taxpayers to support the tax on alcohol and tobacco that paid for Gateway.

But Forbes said that after Jacobs was satisfied with plans for the new baseball stadium, the time was ripe to bring Modell into Gateway. So Forbes and Hagan made their offer.

Years later, politicians had cooled to the idea to asking taxpayers for more money for a football stadium. Modell no doubt became frustrated by his failure to win political backing for refurbishing Municipal Stadium.

Hagan famously quipped in 1995 about a proposed tax for Municipal Stadium: "We all wish Mother Teresa owned the Browns. It'd be an easier sell."

But timing is everything. And there was a time, long before Modell abandoned Cleveland, when he was offered a new stadium.

Whether or not a Gateway deal could have been struck with Modell -- and ultimately sold to voters -- is immaterial. That leaders offered Modell his own stadium at Gateway changes the storyline that has been central to his excuse for leaving. This fundamentally changes our view of one of the biggest moments in the history of this town.

Maybe Forbes and Hagan were wise to keep the Gateway offer quiet all these years. Modell already was viewed by many as the worst villain Cleveland ever saw. And knowing that Modell was offered a stadium deal and still left would have only further damaged our psyche at the very time the city's football fans needed to move on.

I know the latest revelation may revive some fans' anger toward Modell, but I'm glad the record is clear, so we can move on.

We need to focus on the team's history on the field, not off.

Hopefully, this history won't be as painful.

http://www.cleveland.com/naymik/index.ssf/2012/09/art_modell_gateway_stadium.html

 

[Pick6]

Who GAF. The sin tax passed like every rational person thought it would.

 

[Soda]

The Browns' moving had so much to do with a lot. Blaming the Sin Tax for it or acknowledging its role is liken to the "we use peanuts in this restaurant" warning... Minuscule.

 

[Deezus]

The Browns' moving had so much to do with a lot. Blaming the Sin Tax for it or acknowledging its role is liken to the "we use peanuts in this restaurant" warning... Minuscule.

No one blamed the Sin Tax for the Browns moving. I responded to Caf's assertion that the Browns moved due to a lack of funding by stating that a Sin Tax was passed to fund a new stadium and Modell moved the Browns in spite of that fact.

Why didn't you respond to the fact that Pittsburgh just got the Steelers to renovate their stadium without a dime of public funding while using the exact alternative that was proposed in Cleveland? I'm guessing that its because it completely vindicates my position why firmly slapping yours on its proverbial ass.

Who GAF. The sin tax passed like every rational person thought it would.

I GAF. I GAF because billionaire sports team owners being subsidized by public funding is a ridiculous thing to just go along with and is a bad deal, economically, for cities (as multiple studies I posted earlier in this thread have shown). I GAF because there was a viable alternative (as has been proven in Pittsburgh and Miami), and Cleveland/Cuyahoga county's government officials didn't have the backbone to take a step back, look at their alternatives, and fight for the best deal for the public at large. Hell, I don't even live near Cleveland... I just love the city and want to see it bounce back. IMO, this was a step in the wrong direction. That Sin Tax money could have been used so much more constructively...

 

[Soda]

Or because it's irrelevant to discuss for the next 15 years.

 

[Deezus]

@Soda

http://www.usatoday.com/story/news/...taxpayer-subsidized-sports-stadiums/24845355/

If President Obama has his way, the nation's taxpayers would not help finance a new arena proposed for the Milwaukee Bucks professional basketball team.

Nor would taxpayer-financed, tax-free bonds be used to help finance a new stadium being discussed in St. Louis for the NFL Rams, or in Oakland for a new complex aimed at keeping the area's professional football, baseball and basketball franchises from leaving town.

An obscure item in the president's new budget would put an end to the long-standing practice of states and cities using tax-exempt bonds to finance professional sports arenas, a practice that costs the U.S. Treasury $146 million, according to a 2012 Bloomberg analysis.

The proposal comes as many team owners are pressing cities and states for new facilities, with some threatening to move elsewhere if they don't get them. State and local officials are wary of seeing pro teams depart, taking prestige and tax revenue with them. But they are also taxpayer-minded and budget-conscious.


USA TODAY

Koch group flexes conservative muscle in state fights

Dennis Zimmerman, an economist who worked for the Congressional Budget Office and is now director of projects for the American Tax Policy Institute, is a longtime critic of the financing. He said the president is right in proposing to eliminate the subsidies that benefit often wealthy professional team owners.

"I'm glad he put it in the budget," Zimmerman said. "Tax-exempt bonds are supposed to be for state and local infrastructure" and not private business.

But politicians and pro-growth business advocates say stadium construction creates jobs, promotes economic development and boosts ancillary retail businesses, such as restaurants, which benefit from having a team in town. They say the teams generate income and sales tax revenue. For their part, team owners are more than happy to get the financial help.

In Wisconsin, Republican Gov. Scott Walker in January proposed funding a $470 million arena for the Bucks with the help of $220 million in state bonds as part of his budget plan.

Walker said that without a new arena, the Bucks would "likely leave Wisconsin in 2017, costing the state nearly $10 million per year in income tax collections alone."

The proposal is drawing criticism from conservatives such as the Wisconsin chapter of the free-market group Americans for Prosperity. State director David Fladeboe said the group is "disappointed that the (governor's) budget still plans to use public funds on the Milwaukee arena."

Laurel Patrick, Walker's spokeswoman, said that until Congress acts, the governor is undeterred.

"If the president's proposal is approved by Congress, we will review the proposal to determine if there is any impact on the Bucks' … arena plan," Patrick said.

OTHERS WANT NEW FACILITIES

Fearing it could lose the Rams or its designation as an NFL city, St. Louis is looking for a new facility that would meet the requirements the National Football League expects of stadiums its teams play in.

Dave Peacock, a former Anheuser Busch executive who is spearheading the drive to keep St. Louis an NFL city, regardless of whether the Rams stay, told a Missouri House committee earlier this month that building a new stadium is the key.

He told lawmakers that the NFL has made it clear that if there's public financing, a good location and land, and a stadium design that meets the league's criteria, "you control your own destiny.'' The implied threat is that if the city cannot assemble those elements, St. Louis will not have an NFL team.

Missouri Gov. Jay Nixon, a Democrat, has said losing the Rams would cost the state at least $10 million a year.

In California, state and Oakland city officials, along with economic development entities, are working on a plan designed to head off the potential defection of all three of Oakland's major professional teams: The NFL Raiders, Major League Baseball's Athletics and the NBA's Golden State Warriors.

The city is looking to construct "Coliseum City," with new sports facilities for all three teams and retail, residential, commercial and industrial components.

In Minneapolis, construction is underway for a new nearly $1 billion roofed football stadium that has been chosen to host the 2018 Super Bowl and the 2019 Final Four, the climax of the NCAA's annual men's basketball tournament. It's being financed with nearly $500 million from the city and state using federally tax-exempt bonds.

The city maintains that the new construction has also spurred construction of new office space, apartments and a medical clinic near the new stadium.

Michele Kelm-Helgen, chairwoman of the Minnesota Sports Facilities Authority, said the benefits are already evident.

"We already have over $800 million in development in the few plots around the stadium," she said. "All of them have indicated the reason they are making the investment is that they want to be part of this stadium complex."

She said the development includes two office towers being built by Wells Fargo and a hotel project, along with other office buildings and a clinic.

"It's no longer speculation as to what kind of economic development has resulted from the stadium," she said. "It's actual proof."

UP TO CONGRESS

What Congress will do with the president's proposal to eliminate the tax exemption is uncertain. But tax writers have said that making comprehensive tax changes is not out of the question this year.

Obama has changed his mind on the issue. In a 2007 presidential primary debate, he was asked whether he made the right vote in the Illinois legislature to finance an upgrade of Chicago's Soldier Field, where the NFL Chicago Bears play.

"Absolutely, it was the right call because it put a whole bunch of Illinois folks to work, strong labor jobs were created in this stadium, and at the same time, we created an enormous opportunity for economic growth throughout the city of Chicago. And that's good for the state of Illinois," Obama responded.

But according to his budget, he now sees tax-free bond financing as setting up an unfair market.

"Allowing tax-exempt governmental bond financing of stadiums transfers the benefits of tax-exempt financing to private professional sports teams because these private parties benefit from significant use of the facilities," the U.S. Treasury's "Green Book" said in its explanation of the budget. "State and local governments subsidize that use with taxes or other governmental payments to enable the facilities to qualify for tax-exempt governmental bond financing."

The Bloomberg analysis found that in the past 25 years, some 22 NFL teams have played in stadiums that were built or renovated using tax-free public borrowing. Sixty-four other teams — baseball, hockey and basketball — also play in arenas constructed with similar financing.

Over the life of the $17 billion of exempt debt issued to build stadiums since 1986, Bloomberg said, taxpayer subsidies to bondholders will total $4 billion.

The tax-free bond provision dates to the 1986 Tax Reform Act. The authors of the bill actually sought to restrict the use of public subsidies for sports teams. The law said that no more than 10% of tax-exempt bonds' debt could be repaid by ticket sales or concession — a provision its authors thought would deter using them to finance stadiums because cities and states wouldn't want to obligate taxpayers to pay off the rest of the financing.

But it didn't work. The bonds became attractive to investors because states and cities got creative in the ways they paid off the rest of the bond obligations.

According to Zimmerman, they've often stuck tourists with the bill by imposing hotel and rental car taxes that raise "a whopping amount of money that's paying off a stadium." Or, he said, they're "sticking constituents with the tax bill."

Weird.

 

[Soda]

Oh, you again. You love to troll.

Ya, we all know it's a raw deal for Cities to build stadiums. Doesn't mean it's not the reality of this entire country. In every sport.

 

[Deezus]

The NEW YORK TIMES just absolutely killed it!!! @Soda , @SuperSurge , @gourimoko , @caf , @Maximus , @The Oi ,

http://www.nytimes.com/2015/07/22/s...-despite-their-billions-in-the-bank.html?_r=1

Sports Owners Dip Into the Public’s Purse, Despite Their Billions in the Bank

CLEVELAND — The billionaire owner of the Cleveland Cavaliers, Dan Gilbert, is a lucky man. When LeBron James, his transcendent native son, left for Miami, the owner threw an impressive tantrum, going on about “cowardly betrayal.”

Despite that, James felt the tug of home and returned to Cleveland to revive Gilbert’s moribund franchise. In the N.B.A. finals, James resembled a Sherpa as he strapped a depleted team to his back and tried to drag it to the summit.

Gilbert made a splendid pile of cash off the Return. According to Sports Business Daily and Forbes, the Cavaliers’ revenue jumped by $67 million last season, while team salaries increased by just $15.2 million.

In the off-season, Gilbert dug his fingers into another pile of money, this one made up of taxpayer dollars. A year earlier, Gilbert and his fellow sports billionaires here — Larry Dolan, who owns the Indians, and Jimmy Haslam, who owns the Browns — had worked together to push through a referendum that extended a countywide “sin tax” on cigarettes, beer and liquor.

Over the next 20 years, taxpayers in Cleveland and Cuyahoga County will sluice $262 million into improvements for the city’s arenas and stadiums. This straitened city has already pumped $800 million into its sports stadiums.

Sweet deals for team owners are a distinguishing feature of pro sports capitalism. Costs are socialized, and profits remain private. Cleveland’s owners argue that this is only just: The stadium and the arena are publicly owned, and like any landlord, the city and the county should look after repairs and improvements.

Their logic does not apply more broadly. The team owners took control of the process of auctioning off naming rights for these public stadiums. The Browns sold their stadium’s rights for $100 million to FirstEnergy Corporation; the Indians will get $58 million over 16 years from Progressive Insurance; Gilbert’s home loan business paid a terrific sum to Gilbert’s team to name the place Quicken Loans Arena.

The owners shared not a penny with the hard-pressed city.

The Cleveland Indians have their hearts set on a new sound system. The Browns’ Haslam — whose truck-stop company, Pilot Flying J, just last year paid a $92 million fine to avoid a federal fraud prosecution — has compiled a list of improvements to be funded out of the public purse.

That sports teams have an umbilical tie to civic identity is not a fanciful notion. That this means that teams are drivers of economic progress, however, is a hallucination.

When James decided to return to Cleveland, city leaders and a few journalists retailed a narrative about L’Effect LeBron. They estimated that his return would pour many tens of millions of dollars into the city and speed the “Cleveland Renaissance.”

Cleveland has charming, leafy neighborhoods, fine museums and theaters and splendid lake views. More college-educated young adults are moving downtown. At the same time, in the last month for which figures are available, Cuyahoga County’s job growth rate was 0.0.

The city’s poverty rate hovers near 37 percent, and the infant mortality rate is 13.0 per thousand births, compared with about 4.0 in New York City, which has no shortage of poverty.

Public schools have absorbed cut after cut.

I called George Zeller, who has analyzed the economy here for decades. He declined to talk renaissance, saying no such animal existed. “The theory that all of these sports teams are producing a gigantic boom is completely false,” he said.

Yet sin-tax dollars tumble into the hands of billionaires who employ millionaires.

The day after the end of the N.B.A. finals, I walked into the Cleveland office of Peter Pattakos. An ebullient lawyer, a sports fan and an Akron native, he helped lead the battle against the sin-tax extension. Ask a question, and he’s off at a sprint.

“It’s outrageous that these are public entities and we let these billionaires derive untold profits,” he said. “They kept saying, ‘Keep Cleveland strong,’ with the implied threat that they’d leave town if we didn’t underwrite their stadiums.”

The anti-sin-tax campaign was a peasant crusade. Pattakos’s ragtag band suggested a $3 surcharge on sports tickets. The owners rolled their collective eyes.

“Proposing to punish Cuyahoga County families and sports fans by imposing a new, large ticket tax to pay for major repairs,” the owners complained in a news release, “is terribly flawed.”

A surcharge, they complained, would make it even more difficult for families to buy tickets. That argument has an out-of-body quality, as the owners set the prices. (The Cavaliers will raise ticket prices 15 percent next year).

The teams’ owners and supporters outspent opponents, $3 million to $30,000. The vote to extend the sin tax, however, was not a blowout. Voters in the city of Cleveland rejected it; suburban voters carried the election.

Pattakos motioned for me to follow him, and we clattered downstairs. He led a walking tour of the Warehouse District. We passed handsome restaurants and bars, and lots of for-rent signs on vacant storefronts. Job losses are like a river eroding the shore.

“You’re telling me we should spend our tax money fixing up stadiums?” he asked, over his shoulder.

The Gateway Economic Development Corporation of Greater Cleveland runs the basketball arena and the Indians’ field. I placed phone calls and sent detailed emails to its executive director, Todd Greathouse. The next peep I hear from that office will be the first.

In editorializing for the sin tax, The Cleveland Plain Dealer argued that the city had a landlord’s responsibility to pay for upkeep. Left unexplained was why the landlord had never tried to renegotiate terms with ever more wealthy teams.

(Note: The Indians offer a sort of exception. They rank next to last in the American League in attendance. The night I attended a game, the crowd had the feel of an extra-large backyard barbecue, and 25 percent of the fans seemed to be rooting for the visiting Chicago Cubs.)

Over the winter, the Cavaliers’ emissaries arrived with a new proposal. They wanted locals to split the cost — in addition to the sin-tax dollars — of overhauling their arena. Adam Silver, the N.B.A. commissioner, added his voice, saying that the league would love to have the All-Star Game in Cleveland, if only its burghers would ante up again for the billionaire owner.

The Cavaliers’ chief executive says the overhaul would add to Cleveland’s “economic momentum.”

To be a wealthy sports owner is to feel no burn of embarrassment.

 

[gourimoko]

The NEW YORK TIMES just absolutely killed it!!! @Soda , @SuperSurge , @gourimoko , @caf , @Maximus , @The Oi ,

http://www.nytimes.com/2015/07/22/s...-despite-their-billions-in-the-bank.html?_r=1

Preaching to the choir... Cities should have financial vested interests in team ownership, just like any other owner.

Perhaps not complete ownership or even majority ownership (really depends on the locality), but they should not be handing over taxpayer dollars just for the "privilege" of having a team.

 

[KI4MVP]

if the city owned even a significant part of the team, what do you do when the city balks at paying the enormous luxury tax bill that Gilbert is apparently willing to spend? Doesn't having the NBA playoffs/finals, nba all star game, etc, bring money into the city? Doesn't the city already tax tickets?

http://www.bankrate.com/financing/taxes/no-nba-title-but-big-cleveland-tax-take/