Posts Tagged MBNA
We Pay Lucky Lerner… The Billionaire Sport
Posted by Roldo Bartimole in Economic Development on September 2, 2009
September 2, 2009… In 2009, so far, we taxpayers of Cuyahoga County have given $8.8 million to benefit the Billionaire Lucky Lerner family.
Since August 2005, you have generously paid in those sales tax pennies on alcoholic drinks $56.4 million to aid the Lucky Lerners. How lucky some people are. Wonder how that happens.
Actually, you can’t blame anyone but yourselves. You voted for it.
When Cuyahoga taxpayers voted to extend the Gateway sin taxes another 10 years it resulted tens in millions of dollars going for the Lerner family.
Why the family? Because the Lerners, now headed by Randy Lerner, control the Browns Stadium for paltry $250,000 a year rent. The impoverished City of Cleveland actually pays way more than that for property taxes on just the land. Just the land because former Mayor Michael White and County Commissioner Tim Hagan saw to it that sports stadiums pay no property taxes. Tax exempt. Forever, says the law.
Lucky Lerner pays no property taxes on Browns Stadium, which sits empty almost every day of the year. Maybe nine or ten days there are paying fans – paying to Lucky Lerner, of course.
The Browns also run a charity called Cleveland Browns Foundation.
I find it almost unbelievable that the charity makes the statement that an “officer receives compensation” from the Foundation. It names Randolph Lerner. It doesn’t give much of that old transparency that everyone seems to believe would be helpful with credibility. It gives no amount of compensation or any reason for the compensation. So we don’t know how much the Lucky Lerner takes or, indeed, gives if he does.
For a link to the foundation’s IRS documents see: http://www2.guidestar.org/ReportNonProfit.aspx?ein=34-1885593&Mode=NonGx&lid=1165092&dl=True
The documents of the charity also note that “During the year, the Cleveland Browns Foundation may have received services and/or extension of credit from taxable organizations with which the officers, directors or trustees were affiliated. All such transactions were performed at arms length and did not result in any impermissible benefit.” Do we trust them?
We have to that the Browns word for it because it is not further explained.
The Browns foundation states that “the primary purpose of the Cleveland Browns Foundation is to help meet the needs of the disadvantaged youth and inner-city youth in the northeast Ohio area from childhood through teenage years. The Foundation’s goal is to attempt to address the social, cultural, financial and other problems faced by disadvantaged youth and try to cure or minimize such problems before the problems occur.”
A noble cause, indeed.
It always makes me wonder then how one of its largest, if not its largest, donations for a number of years is $100,000 annually to the Hero Fund for the “annual support of the families of police officers and fire fighters who died during the Sept. 11 attack on the World Trade Center.”
Also a noble cause but one that has many other contributors.
Why take from the needy children of Northeast Ohio for this?
And does Lucky Lerner make it appear that this is his contribution to this fund?
Lucky (Randy) Lerner is worth $1.5 billion as of 2008. He was chairman of MBNA, the credit card company which was bought by Bank of America for $35 billion. He has a penthouse “in what many consider to be New York’s most prestigious Park Avenue address. The New York Observer … pegged Mr. Lerner as the buyer of the $27.5 million apartment, which is at 740 Park Avenue and was once owned by the philanthropist Enid A. Haupt.”
So I can see why Lucky Lerner would want to contribute to the New York Fund at $100,000 a year, especially since if it comes not from his pocket but from the pockets of Northeast Ohio kids.
By the way, the fact that the Browns Stadium doesn’t pay property taxes on its structure means also that it takes tens of millions of tax dollars from the Cleveland school children while the Browns play out their lease at the lakefront.
How UNLUCKY some people are.
How Good it Gets for the Lerner Family
Posted by Roldo Bartimole in Economic Development, Media on May 29, 2009
Here’s a case where Cleveland people subsidize one of its wealthiest families. The reverse philanthropy has gone over the $100-million mark so far. And yet, so long a way to go.
I asked the City of Cleveland for an accounting of how much the city has paid to bondholders for the Browns Stadium since 1997. The total came to $102,823,948.58, according to the Finance Dept. documents.
The city faces financing costs of another $160,367,109.48 in bond payments to be made until November 15, 2027, according to a refinancing done in 2007.
The Browns Stadium – a property tax free facility – is used almost exclusively used by the team owner. That means Randy Lerner and his family. Randy – worth a billion and a half dollars – is the son of Al Lerner. Al ironically was the principal person who helped Art Modell move the team to Baltimore. Not only will the stadium never pay property taxes but the lakefront land was donated free by the city.
Randy Lerner also owns an English football team from Birmingham. He paid some $100 million pounds for the team. He’s got the team name, Aston Villa, tattooed on his right ankle, it has been reported.
Really endearing.
This exclusive stadium use by the billionaire Lerner family means there are maybe 10 games a year. Ten days a year when Cleveland likely makes a little money from visitors who make purchases.
Now who would make that kind of investment except our sports-minded public officials with the help of our civic leaders? You would have to be a sucker. Oh….
This represents a puny return on a huge city investment. The city says that the cost to construct the stadium was $287 million. However, many believe that the cost was well more than $300 million. There was a strong belief that Mayor Michael White used city resources to cover extra costs. White had said at the time something to the effect “Let me drive this sucker.” He drove it.
He didn’t pay for it however. Now we pay.
The taxes to pay this money come from, of course, the “sin” tax, which was extended for 10 extra years, and Cleveland taxes – an 8 percent parking tax, a 2 percent increase in admission tax for all events in the city; and a $2 fee on motor vehicle rentals. Passed by City Council in 1996.
The Lerner family pays $250,000 in rent for its near exclusive use of the Stadium. The minimum rent doesn’t ever increase over the 30 year lease. Thanks Fred Nance. The city has the right to use the stadium less than 10 times a year but hasn’t much taken advantage of this economic opportunity.
By the way, the latest financing was counseled by Squire, Sanders & Dempsey. Would you expect anyone else? Yes, the game is rigged.
Browns Stadium, of course, has no naming rights. Just as well. However, that means NO income for the city.
However, Al Lerner did a dance around that issue. He put up two huge electronic signs that freely used the MBNA signal. MBNA, his credit card company, was the base of the Lerner family fortune. The large electronic signs face east and west as Shoreway drivers see every day. Free publicity.
This is the way the bond document describes the original funding for construction of the stadium…
Funding for the construction of the Stadium was provided by the City, the NFL and the Browns, the State of Ohio and by in-kind contributions of the City Department of Utilities as well as the Northeast Ohio Regional Sewer District and the RTA. The City’s contribution totaled approximately $190 million (not counting interest) generated by City cash contributions together with public issuance of various obligations paid by the City and County contribution. Approximately $10 million of the above total was originally lent by the Cleveland Development Partnership and subsequently refinanced in 2004 by the City. The NFL and Browns contributed nearly $64 million to the initial construction and the State of Ohio contributed nearly $37 million.
The city alone pays the debt incurred for the Stadium.
It doesn’t stop there.
The city is also required to feed the capital repair fund for major repairs to the Stadium. The payment schedule is as follows: From 2008 to 2020, the city deposits $850,000 annually; in 2021, $5.9 million; 2022, $6.3 million; in 2023, $6.7 million; in 2024, $7.1 million and finally in 2025, $7.5 million.
Do we think the city will be able to keep this burden?
That’s another $44.55 million cost that the city has to pay.
The city ran into a little trouble when the interest rate recently jumped to 12 per cent. A number of cities, including Cleveland, had been in the auction rate bond market. Bloomberg.com reported that the “auction rate market is now backfiring on hundreds of borrowers as fallout from the collapse of the subprime mortgage market threatens credit ratings of the world’s largest bond insurers, deterring investors from even the safest bets.” It named Cleveland among those cities using these tax exempt bonds for stadiums.
A city representative said that the interest rate rose to 12 percent for Cleveland. However, that lasted, she said, only about two weeks as the city refinanced its debt.
Of course, the city doesn’t share in the revenue from tickets sold, usually 72,000 attendance, the 8,000 club seats or the loge revenue, food concessions, parking or advertising in the stadium. All that revenue goes to the needy Lerners.
You might notice that the Browns get a lot of media attention.
However, you never see Jim Donovan jumping up and down reporting about the financial aspect of the Browns, or the Cavs, or the Indians. No spastic reporting that might do us some civic good.
The Plain Dealer seems to be able to devote lots of space to our sports teams. Front page? We’ll give you it all. But neither the news section nor the business section ever seems to touch upon the financial aspects of the teams. When it comes to the financial burden on citizens, especially for an impoverished city as Cleveland, there’s a news blackout. Silence.
It’s out of bounds. Foul ball. Yes, foul. But in another way.