Browns owners Dee and Jimmy Haslam are going to the public with their pitch for half the cost of a $2.4 billion stadium to fall on the state, Cuyahoga County and Brook Park.
The Haslams and other team officials made their case for taxpayer funding in a roundtable interview with Cleveland-area news outlets Thursday afternoon.
“The time to do this is now,” Jimmy Haslam said. “We have the property, we have the energy, we think we have the financing.”
Cleveland Mayor Justin Bibb and Cuyahoga County Executive Chris Ronayne oppose the move to Brook Park. The city and county have cast a skeptical eye on the Browns’ projections of a major-dollar economic impact. But if Cleveland is wary of team owners bearing big promises, Haslam pleaded for optimism.
“This is an area that is inherently, maybe, looks at things half-empty rather than half-full at times,” he said. “And I think if we take the half-full approach, we can develop something that will be really special and will benefit all Northeast Ohio.”
Here’s how the Browns propose footing the $2.4 billion bill for a roofed stadium just outside Cleveland’s boundaries:
The State of Ohio and Cuyahoga County would each issue $600 million in bonds – similar to taking out a mortgage to pay construction costs. That would provide the $1.2 billion in up-front money to take care of half the stadium’s price. The Browns would finance the other half.
The team argues that the public could draw on revenues from the project itself to pay down that debt. The state could use income, sales and commercial activity taxes from the stadium and surrounding development to pay off its share of the bonds.
Brook Park would pay off $422 million of the county’s bonds with revenue from city income tax on players and staff at the stadium site, parking tax and an increased admission tax.
Cuyahoga County would handle the remaining $178 million with an added 1% countywide hotel bed tax. A new $6 daily charge on car rentals would also go toward paying down the debt.
Cuyahoga County executive: Browns plan a ‘Hail Mary’
Whether state or county leaders go along with the Haslams’ plan is another question. Ronayne, like Bibb, favors a renovation of the lakefront stadium. That would keep all three major sports stadiums downtown.
Asked about Ronayne’s opposition to allowing county money to follow the Browns to Brook Park, Haslam laughed.
“We’ve been having productive conversations with the county executive, and he’s been a good partner in this,” he said.
Ronayne called the Browns’ news conference a “Hail Mary.” He said the team was overestimating the county’s bed tax revenue and that adding a charge to rental cars was not as legislatively straightforward as it seemed.
“The numbers don’t add up,” he said in a phone interview Thursday. “And the numbers would only put the taxpayers at risk, put our bond ratings in jeopardy. It’s a bridge too far.”
DeWine’s gambling tax hike
The team rolled out the financing proposal just as state lawmakers are starting to dig into Gov. Mike DeWine’s budget proposal.
The governor this month proposed doubling the state’s tax on sports betting from 20% to 40% to pay for professional stadiums and youth athletics. DeWine told Cleveland.com that he would prefer to pay Browns stadium costs with cash rather than bonds, avoiding the added hit of interest payments.
The Haslams’ proposal does not incorporate DeWine’s ideas. Jimmy Haslam said the team needed the state’s high-rated bonds in order to get enough cash up front for construction.
As for DeWine’s gambling tax increase, Haslam said, “We applaud the governor for being creative.”
The tax would produce a significant amount of money each year, he said. But Haslam indicated he was waiting to see how the budget process plays out.
New development – and plenty of parking for the Browns – in Brook Park
What do the Browns get out of a Brook Park stadium? They get a new, enclosed venue for events and concerts year round. They get developable land for restaurants, apartments, hotels and possibly office space.
Crucially, the Browns would also get 12,000 to 14,000 surface parking spots.
“We would control the parking,” Haslam said. “And that’s obviously another key revenue source.”
Parking for the lakefront stadium is spread across multiple lots and garages owned by the city and private companies. Fans trek to the stadium across roads and bridges in fall and winter weather.
“Unfortunately, being on the lakefront initially sounds good, but you have all been to our games, it is a hassle to get in and out of there,” Haslam said. “And there’s no real way to fix it.”
Team executives showed off a video rendering of the stadium designs, with a sweeping view of a grassy promenade leading up to the stadium. Buildings, offices and parking lots ring the stadium.
The team proposes 450 hotel rooms, 576 to 1,100 apartment units and 275,000 square feet of retail space. There could also be 500,000 square feet of office space.
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A promise of spillover revenue
Although a new stadium would cost the public $1.2 billion plus interest payments on the bonds, the team argued local governments would still make money off of the project.
Browns officials said they project $1.3 billion in additional state revenue over 30 years, not including the money going to stadium costs. Cuyahoga County and Brook Park could see $2.1 billion in excess revenue over that period, the team said.
The team did not provide detailed calculations showing how it arrived at those numbers. But the Browns’ presentation suggested that the extra revenue could go to other local projects, such as the new county jail and courthouse, Cleveland-Hopkins International Airport or lakefront development.
Over 30 years, about $400 million in local tax revenue from the project would need to be set aside for capital repairs at the stadium.
What if the revenue doesn’t come through?
As the issuers of the bonds, the State of Ohio and Cuyahoga County would be on the hook for paying them back.
Both governments have seen what happens when tax revenues fall short of stadium costs. Gateway Economic Development Corporation successfully lobbied for $40 million last year to cover repair costs at Progressive Field and Rocket Mortgage FieldHouse. The county’s sin tax on alcohol and cigarettes hasn’t been enough to meet the facilities’ growing repair needs.
While Cleveland and county officials have questioned whether the Brook Park project is financially feasible, Browns brass argued that their estimates are conservative enough to be reassuring. After all, team leaders said, the Browns have their own financial exposure on the project.
“It’s in our interest for these numbers to be right, too,” Haslam said. “We’re not going to have some crazy, wild projection, because half the money going into the dome is ours.”
Read a summary of the Browns’ proposal below.