Dan Gilbert is ranked as one of the world’s 500 richest people, according to Forbes, with a net worth in excess of $3.7 billion. So he can pay for his own repairs to Quicken Loans Arena, right?
Wrong. Well, sort of wrong.
In fact, Gilbert and the Cavaliers have already covered 100 percent of the maintenance costs and capital repairs associated with Quicken Loans Arena since purchasing the team, Cavs CEO Len Komoroski said this week. When Gilbert didn’t particularly like the arena’s original blue seats, for example, he tore them out using money from his own pocket.
But now that the Gateway facilities are 20 years old and major repairs are looming, the teams are looking to the city to cover the costs.
As parties on both sides of the Issue 7 sin tax dig in for a fight in advance of the May ballot, local political leaders and team officials are making it clear: The city owns the venues and is, therefore, on the hook for the repairs to Progressive Field, FirstEnergy Stadium and Quicken Loans Arena. If the ballot issue in May fails, the money will simply come out of the general fund, Cleveland City Council President Kevin Kelley warned. That fund is typically reserved to pay police officers and firefighters, maintain city parks and repair streets and potholes.
“These are publicly owned facilities and we have a public obligation to maintain them,” Kelley said.
The ballot issue is an extension of the sin tax scheduled to expire in 2015, but it’s being met with considerable opposition. In a recent Cleveland.com poll of nearly 20,000 participants, an overwhelming 99 percent said they will vote against it.
Supporters received a boost this week, however, when 55 of the 57 representatives of the Cuyahoga County Mayors and City Managers Association voted to endorse Issue 7.
The majority of you reading this probably reside outside Cuyahoga County and believe you’re unaffected by all of this, but if you buy a beer at a Browns, Indians or Cavs game — or purchase alcohol or cigarettes anywhere in Cuyahoga County — you’re already paying the tax.
Proponents of the tax argue it’s the same amount today as it was when it originally passed in 1990: 4.5 cents per pack of cigarettes, 1.5 cents per 12-ounce bottle of beer, 6 cents per 750-milliliter bottle of wine, 32 cents per gallon of mixed beverages, 24 cents per gallon of cider and $3 per gallon of hard liquor.
“I don’t think anyone thinks the price of a beer would go from $3 to $2.99 if this weren’t to take place,” Komoroski said. “It’s becoming a smaller and smaller portion of these unit transactions as time goes on and certainly 10 years from now it will be even smaller.”
One of the common misconceptions is the revenue raised from the tax goes directly to the teams, but it doesn’t. It goes to the state and then to the county council and is used on capital repairs.
Among the repairs the Cavs and Indians are seeking are new scoreboards and escalator/elevator refurbishments to both Progressive Field and Quicken Loans Arena. The Cavs are also seeking a new roof. The repairs to both facilities total about $135 million.
Opponents of the bill want to explore alternatives to a sin tax renewal, such as widening the tax to include surrounding counties or abolishing it altogether and simply charging a $3-$5 facility fee per ticket to ensure that those using the facilities are the ones funding it.
But Marty McGann of the Greater Cleveland Partnership said a multi-county tax was explored several decades ago when the sin tax was first created. There isn’t adequate authority within state law for such a proposal, he said, adding no one in Columbus seems interested in changing it.
“The idea of trying to go back to the general assembly and get them to approve a multi-county new tax essentially for these facilities is pretty much a non-starter,” McGann said, “and is not going to happen according to the timeline that would be needed to make sure we can live up to the obligations we currently have in place.”
As for the added per-ticket facility tax, McGann said that is an additional tax that doesn’t currently exist. This ballot issue is simply an extension of a tax already in place and twice previously approved by voters.
Besides, Komoroski said Quicken Loans Arena already has an admissions tax of 8 percent, one of the highest in the country. He fears any additional tax will prevent performers and other events, such as the NCAA Tournament, from considering Cleveland.
When performers choose where they’re going to tour, he said, they’ll group cities such as Cleveland, Buffalo, Pittsburgh, Columbus, Cincinnati, Detroit, Indianapolis and Louisville into one region and then choose two or three of those cities. The 8 percent admissions tax is less revenue for the performers, and Komoroski believes any additional taxes would drive away future concerts and events.
“The market can only bear so much,” he said. “We already have in essence one arm tied behind our back. … Anything else would certainly have the unintended consequence of making us less competitive and having less activity.”
The sin tax as presently constructed already isn’t enough to cover the county’s financial obligations in relation to the facilities, but Kelley warns failure of the levy will result in cuts elsewhere.
“This isn’t enough to cover our obligation, but it’s an essential component of covering our obligation,” he said. “The bottom line is we’d still have obligations and we’d still meet them, but the services we’d have to take them from would suffer.”
Jason Lloyd can be reached at firstname.lastname@example.org. Read the Cavs blog at https://ohio.com/cavs. Follow him on Twitter http://www.twitter.com/JasonLloydABJ. Follow ABJ sports on Facebook at http://www.facebook.com/sports.abj.