Paul Brown
Stadium, the home of the Cincinnati Bengals, is the result of the most fiscally
disastrous stadium deal in American history. The stadium cost more than double
its initial projections, and wound up crippling Hamilton County's budget. In
2008, Paul Brown Stadium debt accounted for 11 percent of the county's general fund. In 2010, it was 16.4 percent.
It is a fiasco.
Also it is not
finished happening. Somehow, Ohio taxpayers aren't done subsidizing the NFL
franchise. This week, the Bengals are installing a new scoreboard; it costs $10 million and Hamilton County taxpayers are
picking up three-quarters of its cost. Why would the county agree to give the
Bengals even more money? It's because of the cherry on top of the sweetest
stadium deal ever made: the state-of-the-art clause.
According to
the Bengals' lease, if 14 NFL
stadiums have something, then taxpayers must buy the Bengals that thing. It's
like if your parents were contractually obligated to buy you a new iPhone if
all your friends got one, every year for 30 years, but if you were a billionaire
and your parents were barely breaking even. Good deal for you, bad for your
parents.
Coincidentally,
14 new NFL stadiums for 15 teams—MetLife Stadium hosts the Giants and Jets—have
been built since Paul Brown Stadium opened, meaning any technology in these new
stadiums has to be retroactively installed in Paul Brown Stadium as well. The
taxpayers have zero recourse in this. The Bengals can simply bill the county
for any qualifying state-of-the-art improvements, including a
yet-to-be-invented "holographic replay system," which they snuck into the lease for good measure.
The Bengals
aren't the only team with a state-of-the-art clause. The Charlotte Hornets,
Kansas City Chiefs, St. Louis Rams, Atlanta Braves, and Minnesota Vikings also
have state-of-the-art clauses in their leases; the Chargers had one until 2004,
when they gave it up in the hopes that they would soon get a completely new
stadium.
The Rams'
clause allows them to break their lease every 10 years should the Edward Jones
Dome fail to qualify as a "first tier" NFL facility. It also means
they can reject less
expensive renovation plans in lieu of their super-ambitious, costly ones. Or,
as Neil deMause of sports stadium financing site Field of Schemes (and a contributor to VICE Sports) put it in 2013,
"either the city needs to spend $700 million to upgrade a stadium that
only cost $280 million to build in the first place 17 years ago, or the team
can bust out of its lease and move elsewhere in 2015." It's no coincidence
the Rams-to-LA situation is unfolding now, during the window in which the Rams
can break their lease with St. Louis under the state-of-the-art clause.
There are so
many problems with these clauses that it's hard to know where to begin. One of
the first problems is how to rank stadia by state-of-the-art-ness. According to
the Rams' lease, such things are measured by at least 15 different components:
"everything from luxury boxes to club seats, lighting, scoreboards...
regular stadium seating, concession areas, common areas (such as concourses or
restrooms), electronic and telecommunications equipment," as well as
locker and training rooms, and the field itself.
But, according
to an analysis by Kristen E.
Knauf in the Marquette Sports Law Review, this doesn't provide much
clarification. What is state-of-the-art lighting? How does one rank NFL locker
rooms? Does a state-of-the-art concession area mean better food, shorter lines,
Apple Pay compatibility? The lease doesn't provide any details. It's up to an
arbitrator to decide, and that arbitrator just so happened to side with the
Rams in 2005. That triggered negotiations for a $30 million stadium upgrade, which was completed in 2009.
Because of the
vagaries of such matters, the Rams have tremendous leverage in negotiations. In
his book Field
of Schemes, deMause estimates that, if the city wanted to keep the
Rams, the city's Convention and Visitors Commission would have to put aside $36
million every year to keep the Edward Jones Dome a
"first-tier" facility.
There is no
good reason for any public official to entertain such a clause, much less grant
it. Teams have state-of-the-art clauses because of two factors: they had the
gall to ask for one, and the politicians had the stupidity to give it to them.
In 2010, Demause conducted an interview with Jim Nagourney, a now-retired sports facility manager and
consultant who was part of the Rams stadium negotiation. The way deMause tells
it, "[the Rams] were just throwing stuff in there and they were amazed
when St. Louis actually went for it."
The only
appealing aspect of state-of-the-art clauses to politicians is that they
probably won't have to deal with it. Even a decade later, most local
governments will experience significant turnover. A state-of-the-art clause
helps get the deal done without ever costing the current government anything.
It's somebody else's problem, by design. Of course, as Hamilton County and
dozens of other municipalities have learned, this is true of publicly financed
stadium deals in general.
The true
absurdity of the state-of-the-art clause is the possibility of every team
having one, generating a Sisyphusean arms race in which all 31 stadiums could
never be "state-of-the-art." Maybe that will never happen, but it could
happen, and doesn't mean politicians have learned their lesson, either. Two new
stadiums for the Braves and Vikings both have
state-of-the-art clauses.
Comments
A professional
sports team is a private sector business feeding at the public trough. Somehow, they have brainwashed politicians
into thinking that they deserve tax dollars, because they bring in visitors to
the local economy. The same can be said for every business. So what’s the scam
? Sports teams promote the identity of
the large cities in which they reside. But it would still make sense for them
to build and maintain their own stadiums, using their own money. They should be
handled the same way you handle any teenager. They need to earn their own
spending money. It’s not like they don’t
make money broadcasting the games on TV.
If we keep this up, we will have all kinds of businesses looking for tax
subsidies. Wouldn’t a Herrods, Tiffany or Chanel bring in visitors ? Like our new building addicted schools and
universities, professional sports thinks they need to rely on having a new
“state of the art” stadium and a brand new one every 20 years, paid for by us
with 30 year Bonds. Did you see a pot hole today ? Taxpayers are getting screwed. I say, Go Braves ! and take them Falcons with
ya.
Norb Leahy,
Dunwoody GA Tea Party Leader
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