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Blue Jackets Deal Sweet But Can’t Compare To Bengals’ Lease
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The proposed public purchase of Nationwide Arena remains in the hands of Franklin County Commissioners. County officials are still hashing out the details of the agreement which would give free rent to the Columbus Blue Jackets. Nationwide Arena would not be the only publicly owned arena in Ohio, and WOSU takes a look at how the proposed Blue Jackets deal compares to other Ohio pro-sports team leases.
The lease and use agreements are still being drafted. Although the fine print has not been revealed, we do know the basics. The Blue Jackets will not pay rent. The team will not be responsible for arena operations and improvements. And they’ll get some new revenue from concessions sold on game days.
The county and city are paying for the arena through revenue generated from the west side casino, about $10 million a year. The county – city run Convention Facilities Authority will operate the arena and pay for capital repairs and upgrades.
It sounds like a pretty sweet deal. But down in Hamilton County, the lease agreement between the Bengals and the county is even better, well, for the team. The Wall Street Journal dubbed it one of the “worst professional sports deals ever struck by a local government.”
“It makes absolutely no sense to me,” Hamilton County Commissioner Todd Portune said.
Portune is vehemently opposed to the Bengals’ lease which he said strains the county and taxpayers.
“We constantly have to worry about our general fund being affected by this,” he said.
The Bengals paid rent for the first nine years of its lease totaling about $12 million, but the team is currently playing rent free. And it enjoys practically all revenue generated from the stadium, from tickets and advertising to concessions sales and parking. And it gets half of the proceeds produced from non-football events.
A team of county commissioners in the mid-1990s, who are no longer in office, negotiated the Bengals’ generous lease. Many pro-sports teams, during that time, threatened to move their franchises if they did not get new stadiums or better lease arrangements.
Portune said Hamilton County also foots the bills to run the stadium and make upgrades.
“In a normal world, tenants pay rent, they pay utilities. In the fantasy world of professional sports taxpayers cover all of these expenses. If these facilities are owned by the public we should be getting a cut,” Portune said.
And the lease soon will become an even better deal for the Bengals. In five years, Hamilton County will start paying the Bengals to stick around, a total of $30 million.
It’s not just the Bengals’ stadium Hamilton County subsidizes. There’s the Great American Ballpark – home of the Cincinnati Reds. While the Reds’ lease is similar to the Bengals’ deal, its annual rent is only $1, the Reds contributed to their ballpark’s construction costs. And the team also agreed to pay for some of the ballpark’s future improvements. And the Reds bring in more money than the Bengals simply due to the fact they play 81 home games a year, compared to the Bengals 10.
The stadium obligations – and the down economy – have put Hamilton County is in such dire straits it plans to sell a hospital to avoid a more than $14 million short fall in the county stadium fund.
“Don’t believe all the hype about all the money you’re going to make off of professional sports. People only have so many entertainment dollars that they can spend and it really becomes a zero sum game where people will go to a sports game as opposed to spending their dollars in some other way. It’s not as if they’re new dollars that are coming in,” Portune warned.
Moving north to Cleveland, the pro-sports leases are quite different, and are much more balanced than the ones in Hamilton County.
The Browns’ football stadium is owned by the city and the team’s rent payment is $250,000 a year. Like the teams in Cincinnati, the Browns get revenue generated from ticket sales, advertising, concessions and parking. But Mayor Frank Jackson’s chief of staff Ken Sillimun said the Browns pay to operate the stadium, unlike the Bengals or the Reds.
“It’s their responsibility to pair their operating expense out of their team revenues, and therefore it does not require the city to assume that burden,” Sillimun said.
The City of Cleveland pays to maintain the infrastructure around it like walkways. Some of the money for that comes from the team’s profits from seat licenses.
So far, the Browns’ lease, with a mix of public and private funds, has worked out. Sillimun said that’s in large part due to the team’s fan base.
“The attendance and the fans enthusiasm and support on TV that there were enough revenues coming in, in Cleveland that they could afford to do that,” he said.
The Cleveland Indians Progressive Field and the Cavaliers Quicken Loans Arena are owned by the developers, the quasi-public, non-profit Gateway Corporation. Their leases are drastically different than the Browns, Bengals and Reds.
In an email to WOSU, Gateway Corporation executive director Todd Greathouse said all rights for scoreboard advertising, club seats and tickets were waived by the Indians and Cavs. He said the teams sit down with Gateway each year and work out a budget that will cover all costs for site maintenance, security and all costs for capital repairs to the ballpark and arena.
For the last three years the Indians rent has averaged $1.9 million; the Cavs average rent was $1.3 million.
Franklin County Facilities Authority head Bill Jennison said attorneys have reviewed multiple pro-sports team leases as they devise one for the arena deal.
Jennison said while they Jackets would get free rent, they will not get as sweet a deal as the Bengals.
“There’s no instance where we will pay the Blue Jackets. That clearly is not part of our use agreement,” he said.
And Jennison said, unlike in Hamilton County, capital improvements made to Nationwide Arena will be capped.
“We won’t have any open-ended requirements in our use agreement. What we will provide are those fixed amounts for capital improvements. And then we’ll be forced to manage within those limits. We’ll provide an arena that’s well-kept,” he said.
But the Jackets’ deal at Nationwide will be better for the team than their counterparts in Cleveland.