Jason Russell of the Civic Commons, in his piece ?Let he who is without sin cast the first stone?, suggests spreading the dirty deed of the sin tax and to, ?extend the sin tax to all counties that touch Cuyahoga County?. He points out that the facilities draw spectators from the region so why shouldn?t the expense of the facilities be shared by the region?
What should we consider in terms of the 2015 expiration of the sin tax?
Currently the Browns have the best deal of the three teams.? The City?s responsible for the debt and financing for construction and capital repairs and they keep all of the revenue generated except some fees paid to the NFL and a share of NFL media revenue.
The Indians and Cavaliers renegotiated their leases with the Gateway Economic Development Corporation in 2004 so the teams cover the debt.? But, there are major capital repairs and improvements anticipated that are not covered under agreements. ?The City is stuck with expenses for the parking lot.
The main considerations are what are the revenues needed by the teams to be successful and what payments can the City and County, and possibly the region afford?? So what are our options?
- Do nothing ? the City of Cleveland will be on the hook for hundreds of millions of dollars for the debt, financing cost, capital repair requirements, and property taxes associated with the stadium and property.
The Gateway Economic Development Corporation and Cuyahoga County will need to come up with funding for capital repairs and improvements that are being considered.? The debts for construction of the gateway facilities have been reported as being taken care of by rents from the teams that were renegotiated in 2004.? They include approximately $70 million for arena not including finance cost, with payments through 2023 and, a remaining $6 million in ballpark debt is anticipated to be paid-off by 2014. - Ask voters to renew the sin-tax ? Continue applying what is generally accepted as a regressive tax ? has a greater impact on lower-income persons than higher.? The current sin taxes being levied for the sports facilities are:
- ?4.5 cents per pack of cigarettes;
? ?16.0 cents per gallon of beer, or 3 cents per 12 ounce bottle; and,
? ?12.7 cents per 740 ml bottle of wine - Ask sports teams to pay more under their lease agreements ? an unlikely scenario due to existing contract terms, although the Indians and Cavaliers renegotiate their lease terms in 2004.? Would the Browns be willing to do the same?? And, what about the capital expenses anticipated but not covered for the Gateway arena and ballpark?
- Increase the admission tax for all three sports teams ? The City would have the authority to carry this out.? How much money would be needed?? The three teams and facilities have different needs in terms of the liabilities, costs and revenue requirements.? The Browns are reported to have one of the lowest seat pricings in the league.? Would they accept a higher admission tax on seats that would then limit their own ability to raise admission taxes?? And, what about premium, club seating and loge revenues?
- Better utilize revenue potential for City sponsored events ? The City of Cleveland has the rights under the lease to use the Browns Stadium eight times per year.? What is the net-revenue potential for using all eight days, and how could the stadium be better utilized by the City?
- Other revenue generating resources ? At the time the deals were made for the facilities there were increases to parking and rental car taxes.? The new Cleveland Convention Center and Medical Mart are being funded by a Cuyahoga County sales Tax? (.25 cents ? another regressive tax).? Property taxes just took a hit in Cleveland via the CMSD (15 mill school levy).? What other sources are there?
- What am I missing?
REF:
Call for increased private investment by sports teams to balance large public subsidies that will need to continue through 2028. ?1.18.2013
Last 5 posts by Brian Cummins
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