How Cleveland can make $11 million a year

Submitted by Roldo on Mon, 03/24/2008 - 13:18.

$11 MILLION REVENUE SOURCE

The way government works – because the people who control it are the money people – typically rewards those who already have money.

 

It doesn’t have to be that way. However, usually taxing ideas come from those who want to shift taxes from the big guy to the little guy.

I’d suggest a method of shifting the burden to where it belongs.

For example, the city of Cleveland bears much of the cost of entertaining suburbanites and exurbanites with sports and entertainment venues and facilities, most of which are highly subsidized and pay no or little in property taxes.

Special police protection is given to the visitors of these venues, better protection, unfortunately, than the residents in some cases. Mayor Michael White, as an example, even specified by contract that the number attendees at Jacobs Field would insure a certain number of police officers on duty. As I remember it, attendance of 35,000 or more would require assignment up to 40 traffic and other police. The first few years Jacobs Field enjoyed sellouts of more than 40,000, thus requiring the maximum number of police. I know that the police cut back on those numbers but there are still many officers working the games.

That agreement certainly has meant a drain on police services to Cleveland’s neighborhoods, good and bad.

Probably most of the people who shell out big bucks to go to Browns, Cavs and Indians games come from outside the city, which pays the bill for security, roads, other services and to build the facilities. The Browns stadium costs are borne entirely by city residents while they share heavily in the costs of the baseball stadium and the basketball arena. The city indebted itself to build two parking garages specifically to serve the baseball stadium and arena. And they lose money annually.

So the playgrounds of millionaires, the profit centers of billionaires, and the entertainment venues of many of our well-off citizens are at the courtesy of city residents, mostly poor. The fungoers are all high-class welfare clients, to be truthful.

I believe they should pay their fair share.

So take this into consideration:

The Cleveland Indians in 2007 drew 2,275,911 fans that paid an average ticket price of $21.32. That earned revenue of $48,522,422. (The team, according to listing in Forbes magazine is worth $352 million (2005), thanks much to the county taxpayers providing free workplaces.)

The Cleveland Browns drew 584,006 fans that paid an average $48.79. That earned revenue of $28,493,652 for eight games. I guess it doesn’t include exhibition games. (The Browns are worth $892 million (2005), according to Forbes.)

The Cleveland Cavaliers for the 2006-07 season drew 654,515 with a seat average cost of $50.02. That makes earning of $32,738,840. (The Cavs are worth $305 million (2005) and likely much more these now.)

In total for the three teams, ticket sales (and this doesn’t count loge revenue) gross revenue of $109 million. Nice money if you can get it.

And they couldn’t get it if the taxpayers of Cuyahoga County and Cleveland didn’t pay for their workplace. No other business gets this very special service – a free place to work and no property taxes.

So it would seem that the city is missing a great opportunity to make some money itself.

How?

For an example, by charging a 10 percent EXTRA admission tax on these highly subsidized businesses.

From just these three private business venues the surcharge would produce close to $11 million a year. That’s a considerable amount. Since ticket prices go up annually, more as the years pass.

Such a surcharge could raise even more revenue were applied to other venues, such as the Rock & Roll Hall of Fame, which taxpayers continue to shell out via property taxes at Tower City (many Tower City parcels are under TIF arrangement, meaning its property taxes go to pay off bonds for the Rock hall).

At least those who use these taxpayer funded facilities would pay a small amount of the public cost.

But that might be considered fair, something not in the vocabulary of our public officials and corporate people.

The sports teams will yowl greatly if anything such as this were proposed by a city official.

Why? Because it would raise the price of the tickets to their games.

It might make it difficult for the teams each year to raise the ticket prices themselves and pocket the dough.

Yet, in fairness to the taxpayer, the burden will be where it should be – with the teams and their fans.

Does Mayor Frank Jackson have the guts to propose such a surcharge? Does any Council member have the guts?

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which Indians, Cavs and Browns are paying Cleveland property tax

Good point, Roldo.

This raises another question for me.

When discussions of the medmart convention center were going on last summer, I asked a question on the medical mart website. The question never was answered. Will the folks who operate the medical mart live here in Cuyahoga County and pay taxes (income and property tax) or will they remain in Chicago?

Likewise, do the Browns, Cavs and Indians live in Cleveland fulltime and do they pay income and property taxes here? Do they pay tax where they live and where they work? How much tax I wonder is contributed to the City of Cleveland for folks who work in the City?

In addition to the money that could flow to Cleveland coffers from the tax you suggest, taxes should surely be paid on the high dollar incomes of the silver bullet company salaries of the well paid  players and management of the sports teams and the medmart.

What's the remaining bill on these sports facilities anyway? How many more years will Clevelanders pay their own mortgages and the mortgages of Gund Arena (or is it The Q?), Brown's Stadium and Progressive Field?

What other places are we subsidizing currently? It seems pretty awful that people in the city could lose their homes to foreclosure, but the Browns, Cavs and Indians can't. How is this equitable?

Some answers

Susan: You ask too many questions. It makes for work.

First, the Browns and the Cavs have practice facilities outside their home facilities in Cleveland. So the income taxes of all those over-paid players and others are shared by Cleveland and other cities, though Cleveland provides most of the services. Cleveland only gets half of the city income taxes, the other towns, Berea and Independence, if memory serves, gets the other half.

On the question, are we still paying. Of course, the sin tax, assessed originally for 15 years was extended for the Browns another 10 years. I believe that goes to 2016.

The county let more bonds in the 1990s to pay for Gateway, and I've mentioned these before, but they go to 2023 and take about $10 million in public funds each year. Already, the cost has been more than $100 million.

Cleveland City Council passed a series of taxes or fees for Browns Stadium with no sunset but an assured 30 year duration - no vote by the public. Those taxes are on parking, 8 percent; 2 percent added admission tax; a $2 each for car rentals; and, of course, the sin taxes that were extended.

A number of parcels at Tower City go to help pay for the Rock & Roll Hall of Fame via a TIF on property taxes. I checked some time ago ,and in a three-year period, it was some $3 million in just the loss to the Cleveland schools, never mind the county, city and city libraries.

To give an indication of the tax losses at Gateway the range is in the high $8 million per year with $5 million sliced from the Cleveland schools. The Rock Hall's non-tax status costs about $l.4 million, nearly $900,000 from the schools, each year.

Browns Stadium is worth $285 million, on my last check, and of course pays no  property taxes on that value except an annual  tax of $425,000 on the land which is assessed at only $16 million as its only tax.

By the way, I should have mentioned that Randy Lerner, owner of the Browns and worth $1.5 billion, pays rent of $250,000 a year for use of the stadium. That rent will NEVER GO UP during the 30 year lease. To hell with inflation. When the deal was made, the city agreed, in view of the rent, to pay the insurance on the Stadium. The stadium insurance the city reports this year will be $150,000.

The meaning of this is that Lerner, the billionaire, will really pay less rent for the new Browns 73,000 seat stadium than Art Modell paid for the old Cleveland stadium when he left town.

You'll remember the negotiator for Mayor White: Fred Nance.

We won't go into the significant losses of abated downtown buildings, hotels, and new luxury housing.

I wonder what the budget would look like if

I wonder what the budget would look like if these folks paid taxes - the sports folk and the newbie developers. Surely they have set sites out that far. Right? I mean can we see the budget for 2008, 09, 10,11, 12, etc. until all these debts are paid. That way we could know perhaps when our grandchildren would be out of debt.

I don't like that debt service has become part of the American Dream. I think this is a load of crap foisted upon us by bankers. It is gambling plain and simple. If you've got it spend it. If you don't save til you do or go without. Playing the "if come" is risky as today's financial markets are proving.

Personally I could never sleep at night if I was so mortgaged, leveraged or otherwise strapped to piece of furniture. Maybe it is because my ancestors came to America not as a result of the potato famine in Ireland, but directly from the debtor's prison - yep, I'm a daughter of the revolution and a daughter of the confederacy, too, because my ancestors landed in Georgia. There may have been a recovery period in there somewhere, but for the most part, I come from folks that never had as my Mom would say, a pot to piss in". So I save and scrimp and worry. All this borrowing against future earnings projections seem like hooey to me.

How much would the budget of Cleveland be with and without the taxes not being paid? I wonder...