NEW SPORTS FACILITY DESIRED BY CAVS?

November 29th, 2016

[Update at 0401 on 9 December: Sometime this morning ping backs began flowing in for Roldo’s piece on Cavs owner Dan Gilbert’s desire for a new facility as tribute for winning a single championship as if a single win in 40-plus years was a momentous achievement.

The first link to arrive came from Even when Cleveland sports teams win, the city loses by Jason Notte.

Notte brings Roldo into the story in the fifth paragraph, about 250 words into the piece:

Roldo Bartimole, a reporter and blogger who’s been covering Cleveland for the better part of half a century, notes that the county took in $240 million from the initial sin tax, but has since extended it twice to reel in another $375 million to cover cost overruns on those projects. It has also offered tax abatements for Quicken Loans Arena, Progressive Field and the FirstEnergy Stadium (home of the National Football League’s Cleveland Browns since opening in 1999) that take $16 million out of the county’s coffers each year, half of which Bartimole says would go to Cleveland schools.

The second obstacle between Gilbert and the county’s money is that it has none left to give. By throwing public money at everything including the three sports facilities mentioned above, hotels, the Ohio Theater, the Rock and Roll Hall of Fame, the House of Blues and an aquarium, Cuyahoga County has plunged itself into nearly $1.1 billion in debt. Now, Gilbert, who threw the county some free arena renovations when he bought the Cavaliers in 2005, wants more and is likely going to get it. County executives are now suggesting that Destination Cleveland, the county’s tax-funded tourist agency, can step in and help pay the $70 million that Gilbert’s seeking. Considering that Cavaliers Chief Executive Officer Len Komoroski sits on Destination Cleveland’s board — and that nobody seems to care about conflicts of interest anymore — there’s a good chance the Cavs get what they’re looking for.

Considering that Bartimole puts the payoff date for the city’s current stadium and arena debt sometime in 2023 — and that the Gateway projects were already bailed out of bankruptcy [Notte’s link to Roldo’s piece, JH] once before — this is an obviously terrible deal for both Cleveland and Cuyahoga County. Throw in the fact that Gilbert alone is worth $4.9 billion and there shouldn’t be one additional dime of public money dropped into that facility.

Dan Gilbert does not come out smelling so sweet in Notte’s story.

Notte’s piece was republished in rapid succession on seven additional websites: QuanTwo; Jeffrey Lipton Barbados; OpenFinTech; Open-Banking; AsianFinTech; Sport Fine Mall; and Stocks And Trading.

What all seven seem to have in common is that they are looking for investors suckers to risk their money on the stock market. Still, from my read, Notte’s has done a credible, if derivative, job in reporting.]

How would you like to buy Billionaire Dan “Casino” Gilbert a brand new arena here in Cleveland?

Well, he and LeBron James may just want that from Cuyahoga County taxpayers before long.

The same tax payers still haven’t nearly paid for JUST the overruns on the first arena—Quicken Arena. That bill was presented to taxpayers in 1994. We owe until 2023.

In a panel a week ago, Len Komoroski, Cavs and Quicken Loan Arena CEO and a principal in Gilbert’s casino business, answered a question from moderator Peter Krouse of the Plain Dealer.

The panel, sponsored by the League of Voters of Greater Cleveland Women, seemed a prelude to the usual sports moguls’ quest for more public money.

Krouse, who had recently spoken to County Executive Armond Budish, asked whether the Cavs are looking for a new facility or a revamping of Quicken Arena.

Budish told Krouse the County had no borrowing power left. No wonder. A study recently revealed Cuyahoga County had debt outstanding of $1,082,395,000. That a debt of $861 for every one of us residents. It also faces a budget debt, according to a study by William Tarter of the Center for Community Solutions.

But the billionaires want more.

Komoroski cited a list of cities where facilities as old as the Q were replaced by a newly built facility that ranged in cost from $500 to $600 million. Komoroski continually referred to the County and City as “partners.” More like suckers.

The forum was packed, not with much of an audience, but with lots of propaganda from the sport owner reps.

Tom Chema, former boss of Gateway Economic Development Corp., the body set-up in the 1990s to supposedly “own” Progressive Field and Quick Arena.

He was a last minute replacement to the panel to double-team the one anti-panelist lawyer Peter Pattakos of the Chandra Law firm and writer of his Cleveland Frowns website.

Chema, who described himself as one who enjoys the sound of his own voice, proved it by speaking for at least the first 20 minutes of the 90 minute panel.

Among the fibs he told was that the teams paid 44 percent of the cost of Gateway. Even that suggests robbery since they should pay 100 percent of facilities that they take 100 percent of profits, as Pattakos proclaimed. Pattakos continually asked for transparency on team earnings, only to be ignored.

Chema told the audience that the teams paid $25 million in naming rights. Unfortunately, he didn’t tell them that naming rights were not a gift but something the sponsor pays in exchange for publicity, as in Progressive Field (Progressive Insurance.)

Even more dishonest, Chema must know that in the mid 1990s Gateway was faced with bankruptcy. The teams paid no rent so Gateway did not have capital to pay its costs.

It would have been a national disgrace of major consequence for not only Gateway but Cleveland, Cuyahoga County and even the teams if it had to declare bankruptcy. It came close.

A deal was worked out, however. It required the teams to at least pay the operational costs of Gateway, saving it from bankruptcy. What is typically ignored in this deal: the teams took over the naming rights as the price went from an original $400,000 a year for each team to nearly $1 million. So this wasn’t charity.

Chema also skipped over one of the major costs upon taxpayers. Voters have chosen to tax themselves three times for $240 million (1st 15 years), $135-million (2nd 10 years) and a third time expected to raise $240-260 million. Further, Chema must know that he had significant overruns on the Q and that each January 15 the County pays bondholders. The sum paid is well more than $150 million presently and has until 2023 before the County ends payments of some $8 to $10 million a year. Most of the money from the County general fund and the rest from other public revenue, including the city’s admission tax revenue.

Chema also mislead with his claim that the Cleveland Foundation contributed $2 million to the original cost, thus a non-governmental contribution. However, the County repaid the loan, as they did with state loans at $3.75 million each.

Chema also knows perfectly well that the major cost these wealthy owners avoid is the cost of DEBT.

We pay the cost of debt via the sin tax, which he stated he tried to get the Plain Dealer to call it a luxury tax.

So he remains, as he was, a faker for the sports owners.

Komoroski also played loosely with the facts.

When the panel was within 15 minutes of ending with not a word from audience, I interrupted (time mark 1:12:31 in the above video, JH) the proceedings, asking for public participation.

I challenged Komoroski to pay the Q’s property taxes, which our political leaders—principally former Mayor Michael White and County Commissioner Tim Hagan—successfully petitioned the state legislature to totally exempt the facilities from property taxes.

Komoroski claimed that the teams paid property taxes. They don’t. The only property tax Gateway pays is on the land and the old property of the former city market where Gateway was built. It does not pay on either the Q or Progressive Field facilities.

The last time I checked a couple of years ago Quicken Arena avoided $3.8 million in taxes, Progressive Field, $4.8 million and FirstEnergy (Browns) stadium $8-million, or in total more than $16 million a year in lost revenue, more than half disgustingly from the Cleveland school system.

I reminded Komoroski, who wasn’t here in 1990 when the sin tax was first proposed that some claims of benefits were made by the proponents.

They promised: No tax abatement, 28,000 “good paying jobs for jobless (wow, what lies), and housing development for the homeless; $15 million annual gift to schools, new revenue for clinics for the sick, and energy assistance to elderly.

You didn’t deliver on any one of these promises, I told Komoroski.

Komoroski bragged that the Q was “Cleveland’s living room,” that it had “200 ticketed events and 550 non-ticketed events. He said that the Q was the 13th most active facilities in the U.S. and 33rd in the world.

He didn’t say that the Cavs owners took the profit from all that plus the Cavalier games with the county sharing none. Gateway built a $2 million plus restaurant in the Q and a $5 million plus restaurant in the baseball stadium. Fully furnished with public funds.

He did make a point of crying about the 8 percent admission tax as if Dan Gilbert took that from his pocket. Of course, the ticket buyer pays that amount. The City by 2013 had paid $38.2 million in admission taxes on Gateway arena bonds.

It’s take a little here; take a little there. It becomes BIG.

Pattakos, who got little time, called for “transparency” from the teams, a sharing with the public how much profit is made from these largely publicly financed facilities. He pointed out that only with the community-owned Green Bay Packers does the public get an idea of the profits of professional teams. He stated in 2014 the team reported profits of $155 million.

The entire panel appears to be a prelude to another grab by the Cavs particularly for more tax subsidies. Krouse, who had talked with Budish, said that a decision was expected by the end of the year.

You will see a Xmas present of some $60 million (half of an expected $120 million fix up at the Q). With the hustle and bustle of a holiday it won’t be questioned by anyone.

The problem: Budish also said, according to Krouse, that the county is “tapped out,” and can’t afford to borrow more money. This is particularly true since the County—with a money-losing Med Mart that was supposed to bring riches here, and a surely to be County-financed money losing 600-room hotel that helped bring the Republican convention here, the county.

The PD bragged that for the final game of the baseball team’s World Series more than 400 private jets were housed at Burke Lakefront airport and others had to be diverted to Hopkins and the County airport.

That tells you something about who benefits after you the public pay for the sports facilities. Ordinary people would find it difficult to even pay parking costs.

I remember as a kid taking a 4 a.m. train to New York City, a subway to Brooklyn and buying tickets to a World Series game that afternoon at Ebbets Field, built by Charles Ebbets with his money.

Chema said one thing that should be remembered. He said during the early 1900s owners built their own stadiums because they didn’t want to deal with mayors of the Progressive era.

Boy, don’t we deserve a trip back to Tom Johnson’s days in Cleveland.

There are no progressives within sight of Cuyahoga County.

What a shame.

By Roldo Bartimole…

2 Responses to “NEW SPORTS FACILITY DESIRED BY CAVS?”

  1. MFiala says:

    I can’t believe i missed this farce.

    This is classic drivel from the ‘powers’ and the system that accepts the gross inequity of paying for stadia (and related subsidy) for wealthy owners.

    The moderator starts out w his beloved sports teams of Cleveland. How can/will he challenge these powerful subsidy-sucking entities, when he wears his fandom as a badge of honor.

    At least, Pattakos walks both sides: loving sports teams and expecting them to pay their way. I personally can no longer stomach that combination. But i am grateful someone, that he, still is stating the issue.

    A few years back, an Atlantic contributing editor, Gregg Easterbrook, wrote How the NFL Fleeces Taxpayers. It documents the gross practices that pervades sports franchises and city government.

    Sports is the last refuge for public commonality, when democracy and religion have been cast off, like the ‘Bread & Circuses’ of the Roman Colosseum. (Ironically, Art Modell in the 90s was accurate in his forthrightness about the financial value of the Browns to cultural harmony, and how libraries pale in comparison.)

    And your efforts, Roldo, to interrupt the ‘sales/snow job’ w participation, real participation, seemed too much for even the moderator. Because polite and severely limited participation is how one is ‘processed’ in this kind of forum. No real challenge allowed, certainly not impolite raising of facts.

    We do not live in a world of infinite entertainment dollars. Sports franchises take more money out of the local economy than they return. That is the consistent economic analysis but that analysis leaves out how sports’ ‘religious feeling’ or ‘meaning’ is produced.

    Just as Jesus stated that not one stone will be left upon another regarding the Jerusalem temple, and made his own body the center of a community rather than a building, just so people, missing the message, went on to build temples/churches in his name that now are abandoned in the city or made into condos.

    And so we must build stadia for our gods, with well-paid patrons and clients.

    There are other options, practiced on the margins, outside the halls of power. As it was, so it continues.

  2. […] current stadium and arena debt sometime in 2023 — and that the Gateway projects were already bailed out of bankruptcy once before — this is an obviously terrible deal for both Cleveland and Cuyahoga County. Throw in […]

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