Posts Tagged Quicken Arena
Do Taxpayers of Cleveland & Cuyahoga Have to Always Carry the Cost of Institutions that Serve a Much Wider Area of Northeast Ohio?
Posted by Roldo Bartimole in Economic Development, Politicians on May 6, 2010
May 6, 2010… I read in the New York Times Friday that plans are being formulated to redo Progressive Field. Who knew?
A Gateway official says, however, that there is no big redo coming. Further, at this point, both teams leasing sports facilities are responsible for capital improvements.
But don’t you know that it is coming: We need a new stadium! The Indians might leave town! What we’ve heard before we will hear again. It’s only a matter of time.
It does bring up the question of how Cleveland and Cuyahoga County can continue to afford to build and support major institutions that serve a larger geographic area. Not only sports but cultural.
It does seem past the time for thinking about how we preserve the many facilities, institutions and infrastructure assets of Cleveland. The city is rich in major sports and cultural institutions, relics of a wealthier era. How can they be preserved? Who will pay for them?
Most of the actual institutions servicing Northeastern Ohio residents physically are in Cleveland or Cuyahoga County. Does that mean only those residents enjoy those venues? Of course not.
Progressive Field, Quicken Arena, Browns Stadium, Playhouse Square’s stages (Allen, Ohio, State, Palace theaters), the Cleveland Art Museum, Severance Hall and the Cleveland Orchestra. Even the highly subsidized downtown assets of Cleveland. These are places that serve a wider area of northeast Ohio, not just Cleveland or Cuyahoga residents.
But the bill to pay for these important institutions seems to fall, at least the public portion, most heavily upon Cleveland and Cuyahoga taxpayers. Every day in almost every way. And, unfortunately, they are regressive sales taxes weighing heavily on lower and middle income people. None are progressive taxes. Thanks to people like Tim Hagan and Mike White, George Voinovich and George Forbes.
In the latest County Auditor reports we get an idea of the tax burden here:
- The Medical Mart/Convention Center – Cuyahoga taxpayers have contributed via the quarter percent sale tax hike – $94,379,438.38 since only January 2008. Cuyahoga residents will be paying this tax for 20 years.
- Browns Stadium – Cuyahoga taxpayers have contributed via various alcohol sales taxes – $64,609,806.86 since August 2005. The tax previously amounted to some $266 million to help pay for some of Gateway’s costs at the baseball and basketball facilities. The tax was levied for 15 years for Gateway and 10 more years for the football stadium, taking us to 2015. Hopefully, not to be renewed.
- The Arts & Culture tax – Cuyahoga taxpayers have been paying this tax on cigarettes – $60,724,894.40 – Cuyahoga has been paying this tax since February 2007. It’s a tax that I believe will be extended on and on.
That adds up to some $220 million in taxes (not counting the $266 million for Gateway) on Cuyahoga taxpayers with tens of millions more to be collected before these taxes run out.
These taxes will continue for many years.
Cleveland and Cuyahoga County are both losing population. That means there are fewer people paying these taxes.
We see the effect it has had on RTA. The transit system depends also on the shrinking sales tax, one percent of the 7.75 sales tax, highest of any county in Ohio. Fewer people mean less purchasing thus less sales tax revenue. Population losses and higher percentages of poor people suggest further erosion of sales tax revenue.
The burden of these seemingly small taxes is heavy. They go from taxes on almost all alcoholic drinks, cigarettes, to parking and other revenue, such as the city’s parking revenue.
The latest tax increase county taxpayers are enduring is the added sales tax of one-quarter percent that raises some $40 million a year for a convention center and medical mart. These facilities serve far more than the people of Cleveland or Cuyahoga County. Why should the burden be limited to only Cuyahoga taxpayers?
In addition, almost all of these publicly subsidized institutions pay no property taxes, leaving the costs of fire, police, school, roads and many other services funded by property taxes. Home and commercial property owners pay more in higher property taxes. And tax abatements – which essentially go to higher income housing – to new and renewed housing also eats into revenue sources
But why does Cleveland have to pay the entire public cost of the Cleveland Browns playing field? Why do Cuyahoga County taxpayers have to pay essentially the entire cost of the playgrounds of the Cleveland Cavaliers and Cleveland Indians?
Most of the residents can’t even afford to attend these high-priced events.
The local taxpayers can no longer afford the many publicly-dependent institutions that provide entertainment for a much wider – and much wealthier – audience than the people of Cleveland and Cuyahoga County.
This is a problem of the entire northeast Ohio area, its residents and its taxing structure. The financial burden then should be shared more widely.
We hear a lot of talk about regionalism. This could be a most rewarding form of regionalism.
Why do Cuyahoga County residents alone have to pay for the culture tax that provides funds for some of our major (orchestra, museum) cultural institutions and many smaller arts and culture institutions?
The time is coming – really it has passed – when all the institutions this once wealthy city enjoyed and afforded can be supported by a shrinking and far less wealthy population.
We’re running out of the resources to finance what we have. Too institutionally rich; too economically deprived.
Now is the time to let the people of Lake, Summit, Medina, Lorain, Geauga know that they need to share in the burden of the cost of Cleveland and the treasurer of Cleveland and Cuyahoga County that they enjoy. Of course, some of the same type institutions in outlying areas should share in the wider financing method, whatever that becomes.
It’s time to think about a more regional tax approach to service the wealth of institutions in our communities. It ought to start with capturing taxes on a progressive basis from the beginning.
It’s a matter of fairness. The tax burden must be widened to a larger pool. It should also go where the money is.
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.