Whose Team Is It? Cleveland Sports & Sinful Taxes

2015-01-28T12:08:39+00:00September 3rd, 2013|

By Peter Pattakos.

Thanks to some lobbying by the Greater Cleveland Partnership, “one of the largest chambers of commerce in the United States,” a proposed 20-year extension of Cuyahoga County’s “sin tax” — an additional tax on alcohol and cigarettes that’s set to expire in 2015 after 25 years — could hit the ballot as early as next May. The first sin tax was used to pay for the construction of Cleveland’s professional sport facilities now known as Progressive Field, Quicken Loans Arena, and First Energy Stadium. The proposed extension would fund “upcoming major structural and core system elements and improvements” to these facilities.

Which of course raises questions about why the County’s poorest residents or anyone at all should be forced to subsidize the privately held for-profit businesses of the plutocrats who own the Cleveland franchises, Larry Dolan, Dan Gilbert and Jimmy Haslam. Local entrepreneur Alan Glazen has been an early opponent of the proposed extension, and wrote in the Plain Dealer last week that, “a sin tax, by nature, is how we stoop to our lowest ethical levels by making a minority pay for something enjoyed mostly by the majority.” A sales tax on alcohol and cigarettes is regressive by definition, and last week on WRUW’sDefend Cleveland show Glazen explained that Cuyahoga County’s sin tax is especially so, with 80% of the collected tax coming from cigarette sales, and 50% of Cuyahoga County smokers earning less than $25,000 a year. Glazen and others also point out that the facilities are “enjoyed” not just by Cuyahoga County residents, but to a great extent by folks from surrounding counties, and even globally when accounting for broadcast rights and Cleveland fandom at large.

In an August 26 column on the subject, Cleveland Journalism Hall of Famer Roldo Bartimole gets to the heart of the farcical concept that the public “owns” the sport facilities (Note: Haslam just pocketed $100 million for selling the naming rights to “the public’s” Cleveland Browns Stadium) in proposing a simple solution:

“The City of Cleveland and Cuyahoga County should do one thing: Sell each of the sport facilities to the respective team owners for $1 each. A great bargain. The facilities cost hundreds of millions to build. So, give ‘em away. Then, as every other business, they pay their bills and get off welfare.”

Bartimole goes on to detail a litany of broken promises made by government officials and business leaders in pushing for the sin tax the first time around, and crunches some numbers to conclude that the sin tax ultimately costs the community more than it benefits. In doing so, he relies on the work of Mark Rosentraub, now a professor at the University of Michigan, formerly dean of Cleveland State’s urban affairs department and a Gateway board member, who wrote a book called, “Major League Losers: The Real Cost of Sports and Who’s Paying For It.”

According to Rosentraub, proponents routinely oversell claims about the impact of professional sports on a local economy. “In no county do professional sports teams account for as much as 1 percent of the county’s private sector payroll or 1 percent of all the private sector’s jobs,” he says. And the “spinoff” effect on local businesses “is quite small … merely a transfer of economic activity within your community.”

These conclusions are supported by a study by Jordan Rappaport and Chad Wilkerson, economists from the Federal Reserve Bank of Kansas City, showing that “the job creation and tax revenue benefits from hosting a major league franchise fall short of typical public outlays on constructing a new sports facility.”

All of which directly contradicts the Greater Cleveland Partnership’s claim that the sport facilities have “generat[ed] several billion dollars of economic payback to the community.”

Apart from economic benefits, Rappaport and Wilkerson also conclude that when “the impact of a sports franchise on a metro area’s quality-of-life … are included in the calculation, public spending may not appear to be such a bad investment for some metro areas.” Which is a special kind of laugh when it comes to Cleveland, even apart from the general difficulties in measuring such benefits. But more to the point, investment in the arts, parks, and education carry quality of life benefits as well (to say nothing of things like a social safety net), and these mainly not-for-profit endeavors don’t benefit from more than a small fraction of sin tax revenue that goes to the for-profit sports franchises.

Which is to say that we should look forward to a productive public debate on this issue. The County isn’t over the knee like it was with Gateway and the Browns the last time around, the economic climate is night and day different, and the numbers that the Greater Cleveland Partnership is throwing around are somewhere between bonkers and open to a lot of questions. Do Dolan, Gilbert, and Haslam (the latter, at least, a heavily invested proponent of “free markets”) really need a sales tax subsidy or any kind of significant public outlay to run globalized professional sport monopolies in Cleveland? If so, it will be interesting to hear them explain exactly why, and it’s impossible to imagine that the Browns, Cavs, and Indians could continue to get away with keeping their financial statements under wraps if the owners are even going to start to make a case. It will also be interesting to hear politicians and business leaders explain why any such money should come from the County and not the State, and especially interesting to hear about why either the County or State should be spending its residents’ money on privatized professional sport franchises at all and not any of a number of other things. The time is especially ripe for folks in Cleveland with alternative ideas about how public money could be used to enhance quality of life to get busy with some proposals.

 

 Peter Pattakos is a Cleveland attorney and publisher of the website clevelandfrowns.com.

8 Comments

  1. Paul E. September 3, 2013 at 5:47 pm

    Agree with the logic. My concern is that without the subsidy, the owners have no incentive to remain here. If I remember correctly, part of the reason Modell moved the Browns was due to no support or financing for a new stadium. No expert here and my memory is foggy so others may clarify. It’s tough to be a Cleveland sports fan as it is but I don’t think I could handle another move. This is a great topic for further discussion and I hope others will chime in with quality reasoning.

    • Paul E September 4, 2013 at 1:21 am

      The greater Cleveland partnership numbers may not be out in left field or off base. (Pun intended) I am not sure what comprises the figures but if the economic impact of the players and related personnel come into play, the billion dollar figure might be accurate. Imagine the capital expenditures of all these players on homes, autos, furnishings, (including art and fashion) and any thing else you can conjure. The economic impact of the franchises is substantial. Many of the players and owners do give back to the community (community also requires a definition) and add contributions to the betterment of society as a whole. I have many questions about this topic. I hope the discussion expands. Something else to consider…..

      • anastasia p September 16, 2013 at 7:47 pm

        Since players and owners don’t live here, the vas majority of their huge salaries/profits goes out of the area, mostly out of state. Even if every one of them DID live here and bought “homes, autos, furnishings,” that would still have a very small economic impact. You can’t fuel an economy on the earnings of a very wealthy few.

  2. Brian G September 9, 2013 at 10:22 pm

    Certainly not an unpopular or unsupported sentiment. The unfortunate elephant in the room is that Cuyahoga Arts & Culture — which Greater Cleveland is so fortunate to have in these times of declining and realigned corporate engagement of the arts — is funded through just such a sin tax (in this case, only on cigarettes). Hell, Anne Trubek received a grant from CAC (and the same poor cigarette smokers defended above) for “Rust Belt Chic”, which is the whole reason we’re even here. An while the author ascribes the sin tax revenues to the arts as “a small fraction”, Issue 18 amounted to $200 million over 10 years. That’s big even in pro sports terms.

    I don’t necessarily disagree with the premise of the article, but just think it’s a bit disingenuous to leave big-bad pro sports out to dry while ignoring the fact that out great arts are taking the same advantage.

    • Anne Trubek September 9, 2013 at 10:39 pm

      I did indeed receive a CPAC grant–but for my (forthcoming) book on handwriting, not for Rust Belt Chic. Rust Belt Chic came about *after* I received the grant, partially in gratitude for being given such an amazing award for my work. And it is true that I will vote early and often to renew. Despite also siding with Peter. Tough one, this sin tax.

  3. Mick September 19, 2013 at 1:17 am

    I’m a sports fan and love going to baseball and hockey games downtown, but professional sports aren’t the answer to the city’s problems. How about levying a so-called sin tax to generate money for the school system, or fix some old streets, sewers and bridges? Why not offer tax breaks to companies that can provide solid jobs and liveable wages? The local convenience store owner or restaurant proprietor doesn’t get to stick his snout in the public trough. The Dolans and Gilberts of the world have plenty of money to invest in their own for-profit, private enterprises. Every tax dollar that goes to these guys is a dollar that could be used to keep another school building open, fix a pothole, or buy a police cruiser. The joke is on us!

  4. […] year.  80% of the tax revenues came from cigarette sales, and 50% of smokers in the county make less than $25,000 a year.  In other words, poorer people pay more than their share to benefit sports team owners and fans […]

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