Posts Tagged baseball
Gateway’s $3.2 Million Budget Bargain for Teams in 2010
Posted by Roldo Bartimole in Economic Development on February 8, 2010
February 6, 2010… The Gateway Economic Development Corp., the non-profit entity that operates Progressive Field and Quicken Arena, has set a budget of $3,275,873 for 2010.
As a result of Gateway’s near bankruptcy a few years ago the two team owners decided to “save” Gateway from bankruptcy by agreeing to pay operating costs. They now are multi-millionaires Larry Dolan of the Indians and Dan Gilbert of the Cavaliers.
In exchange, the team owners got the entitlement to income from naming rights. It now looks as if the team owners again got the best of the bargain. By far.
Naming rights revenues now easily exceed the operating costs, as we shall see.
Just how good a deal this was can be seen by the naming rights cost at the former Jacobs Field, now Progressive Field. The naming rights bring Larry Dolan $3.6 million a year. (As Jacobs Field in the final years the rate was some $900,000 a year.) See the $3.6 million deal here: http://cleveland.indians.mlb.com/news/article.jsp?ymd=20080111&content_id=2343558&vkey=news_cle&fext=.jsp&c_id=cle
Dolan’s share of the 2010 proposed budget is $1,890,548, according to Gateway. That sounds like less than $3.6 million a year the naming rights produces. Maybe half?
Quicken Loans – also owned Gilbert – uses the naming rights on the former Gund Arena, which at the end of its life was paying some $900,000 a year. Obviously, the naming rights are far more valuable now but not recorded for publication. In essence, Gilbert is paying himself, however he works it for tax purposes.
Team naming rights here originally were to last until 2013 and would total about $14 million at each facility during that period. This revenue would have gone directly to the Gateway Economic Development Corp.
The rescue deal called for each team to pay a portion of the costs of operation. The major cost is property taxes. (As anyone who reads me knows Gateway is tax exempt. But that only applies to the structures. Land continues to be taxed.)
This year the property tax is set for $1,052,271 with $761,851 for the stadium and $290,420 for the arena.
The next highest cost is security for the two sites with $413,974 for the stadium and $401,761 for the arena. Maintenance is another high cost: $326,398 for the stadium; $356,676 for the arena.
The total operating costs of $3.2 million will be shared by the two teams as follows: Cleveland Indians, $1,890,548 and Cleveland Cavaliers, $1,385,325.
So Gateway – and the taxpayers – got the short end again. Or is it still?
Gilbert, owner of Quicken Loans, enjoys a very lucrative deal for the use of the arena. Data show that Cavs fans spend a game average of $317 for tickets, food and trinkets, according to a site that deals with these sporting teams. The fan index cost is for a family of four.
That suggests that Gilbert has gross revenue of some $65 million from the Cavs’ games alone. (Attendance was some 820,000 last year.) He also enjoys the proceeds of all other events at the taxpayer built arena.
Data can be found here: http://basketball.ballparks.com/NBA/ClevelandCavaliers/index.htm
The Cleveland Indians had revenues of some $181 million last year. They spent a little more than half on players. See here:
http://www.forbes.com/lists/2009/33/baseball-values-09_Cleveland-Indians_333426.html
The cost of building the two facilities was some $154-million for the arena and $181-million for the stadium. Another some $40 million went for land and other costs. Some figure that close to 90 percent was tax subsidized.
Want a Just City Tax… Try Admission Tax on Sports Events, Fair and Proper
Posted by Roldo Bartimole in Economic Development, Politicians on November 24, 2009
November 24, 2009… The most reasonable tax for Cleveland City Council to raise income would be a special admissions tax on all events at Progressive Field, Quicken Arena, and Browns Stadium.
Why?
The reason is mainly because none of the teams pay any property taxes on their sports facilities. Not a penny.
They ride FREE.
Somehow Mayor Frank Jackson and City Council always overlook the guys at the top of the ladder. In this case, all Billionaires. How predictable.
We shall see how it makes sense.
A 10 percent added admission tax would bring in millions of new revenue. The tax would actually probably have an added benefit to sports fans. The teams would have to think twice before raising ticket prices.
So it’s likely that a major part of the cost would have to be borne by the teams and the already – if not over-paid – well paid athletes.
It would be fairer because, although the city pays the high cost of policing the sports events and takes the loss of property taxes, the fan base comes from a wide geographic area. Most likely most fans come from outside Cleveland and many outside Cuyahoga County.
They don’t share the burden of the cost of the stadiums to the city and county taxpayers. They enjoy the benefits, however.
So they should pay.
Even more to the point, the three team owners – Randy Lerner, Dan Gilbert and Larry Dolan – all come from billionaire families.
Who can afford to pay more taxes – billionaire families or an ordinary Cleveland family? It’s a trick question for the mayor and council members.
Even Mayor Jackson and Council President Marty Sweeney can figure that one out. If they want to.
If you can afford to go to games and events at these venues, built largely with government funds and advantaged with full 100 percent property tax relief, you should be willing to pay that extra charge to Cleveland.
After all, Cleveland residents feel the impact of the lost revenue from the exemption of property taxes. Some 15 percent would go to the city for its operation.
If you look at the attendance and average ticket price at events you can get a picture of how much money this could mean for the city.
The Cleveland Cavaliers had attendance in 2008-09 of 820,439, actually down from the previous season of 839,674. At an average price cited for tickets at the arena of $50, the Cavs would have attendance income of $41,983,700.
A 10 percent added admission tax would mean income of some $4.19 million in revenue for the city.
The Cleveland Browns had 578,672 in attendance (latest figures from 2006). At an average price of $55 for football tickets, it would mean revenue income of $31.8 million.
A 10 percent added admission tax would produce $3,182,696 of income for the city.
The Cleveland Indians had 27,110 in average in attendance for 80 games for an attendance of 2,168,800. At an average price of $26 for baseball tickets here, it would mean $56,388,800 in ticket revenue.
At a 10 percent added admission tax it would produce $5,638,880 for the city.
The city would earn more than $13 million in added admission tax revenue. It would produce more revenue than a garbage tax.
It would produce such revenue in a fairer manner. It would likely keep ticket price increases smaller or nonexistent.
The market will bear just so much, although sports fans seem to be unthinking consumers, paying more and more even though the teams reap huge amounts of money from television and radio and other sources. The NFL teams, for example, share some $100,000,000 (yes the zeros are correct) in revenue from broadcast and other sales of team products.
If you charged the 10 percent for ALL events at these tax-subsidized, property tax evaders, the city would earn even more money.
Doesn’t this make more sense and isn’t this fairer than taxing garbage?