Questions about the Greater Cleveland Partnership’s Proposed Cuyahoga County Sin Tax Extension

by Cleveland Frowns on August 29, 2013

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’s Defend 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.

quality of life benefits

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 the 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.

UPDATE/RELATED: Mayor Jackson’s secret ass-kicking of Joe Banner and the Cleveland Browns


Here’s more on the sin tax issue at the Civic Commons.

  • Angie Schmitt

    Page 1 of a one-page playbook: the answer is always to transfer wealth upward, so long as the city gets a cut.

    • Believelander

      Hut! Hut! HIKE! …the cost of living for the poor and middle class while giving welfare checks to the rich! Disenfranchise on three! ONE TWO THREE DISENFRANCHISE!

  • Steve White

    Here’s a suggestion: if one insists on taxing the poorest residents of a region to pay for the toys owned by the richest residents, why not a sin tax on gambling?

    As in, an entry tax to any of Mr. Gilbert’s casinos. You wanna pull the handle? Sure buddy but it’ll cost you (say) five dollars to get in the door.

    You could extend this, of course. How about a state-wide tax on trucking fuel to fund improvements for the Browns?

    Tie any new funding to things that would affect the owners’ pockets and then sit back to enjoy the fun.

    • Believelander

      Love it.

    • jpftribe

      In Singapore they do just that, $100 for a resident or citizen to enter.

    • Mike Schneider

      Look at the numbers on who gambles, and you’ll find that it’s even more disadvantageous to the poor.

  • Chris Mc

    Speaking of the rich man bending over the poor man. I saw this report on TV last night, and it was pretty well put together. I hope everyone is ready for the James Haslam II era.

    • BIKI024

      it seems likely that even the guys who got skimmed were making hand over fist as well, which is probably why they didn’t notice the scheme sooner. not necessarily “the poor man” but certainly much poorer than Haslam.

  • St.Chem

    I guess the sin tax (or any kind of sales tax) isn’t a very fair way to raise revenue to meet Gateway’s or Stadium Corp’s debt service and maintenance obligations, but the local governments are on the hook and have been for a long time. We got here because the community wanted to keep the sports teams. These taxes are based on successful ballot issues (albeit barely in the case of the original sin tax). Sin taxes are meant to be taxes on discretionary spending. In this case to to tune of 4.5 cents per pack of cigarettes, 6.0 cents per gallon of beer, or 3 cents per 12 oz. bottle, and 12.7 cents per 740ml bottle of wine. That means a Cuyahoga county resident with a pack-a-day habit is spending an additional $16.43 cents a year. In the aggregate it does add up, and yes it represents a upward redistribution of wealth, but if you are interested at all in professional sports you are greatly aiding and abetting that transfer of wealth. Its the popular interest in the Browns, Cavs, and Indians that gives the teams the leverage to put the city/county “over the knee”. The culpability for whatever injustice is represented here does not end with the government or the city/regional leadership. It ends with us. We do it to ourselves.

    • Cleveland Frowns

      Don’t disagree with any of this.

      • St.Chem

        Makes me feel especially conflicted because I do care about this stuff, I suppose a personal offset of some sort is in order.

    • bupalos

      >>>if you are interested at all in professional sports you are greatly aiding and abetting that transfer of wealth.>>>>

      Liked, but as always I have a problem with this particular part. I’m not saying it’s not technically true, but would you ever accuse the father of a child who was kidnapped and wants to pay the ransom of greatly aiding and abetting the crime of kidnapping? Technically true I guess. But it’s such a distortion of the real moral equation as to be a truth that is worse than the lie. It’s only through an assumption that civic sport has no potential positive value that this kind of guilty analysis makes any sense at all. That assumption in turn only looks remotely credible AFTER you figure in the ills that flow from private ownership of the public trust.

      I just think the ire should be focused in the right place, and that place is squarely and simply the clauses in the various league’s by-laws that prevent public ownership. Congress could evaporate those clauses yesterday with antitrust action.

      • St.Chem

        I guess I was primarily sticking up for local leadership, but I see your point there are varying degrees of culpability here. As to public ownership vs. the Haslams and Gilberts, its definitely a no-brainer. But doesn’t NCAA football also suggest that public ownership of major sports doesn’t really fix the problem? Almost all of the major programs are state-owned there is a lot not to like in terms of priorities and how resources are allocated, etc.

        • bupalos

          To clarify, I agree with most of your original post and I’m not even advocating paying the ransom– personally I’d rather risk losing the Browns again rather than playing this dirty, losing game. I’m just suggesting the culpability even for those who do cave to the ransom is not in the same (publically funded) ballpark as those who demand the ransom. And rooting interest in the team itself comes with 0 guilt as far as I’m concerned. People should be interested in pro sports and their city’s team. But of course they should also be interested in the wrongs of this ownership and funding structure and encourage their representatives to do something about it.

          As for the NCAA, true there may be a lot not to like, a lot that isn’t absolutely optimal, but in pure dollars-and-cents regressiveness, major college football is nothing like the NFL, just absolutely nothing like it. I can even imagine that it may be net progressive in a lot of instances. Some of the stadium maintenance and renovation are done partly on publicly subsidized bonds, true. But neither the scale nor structure of these projects comes close to the pro version, which is usually focused on creating a new structure that brings higher ticket prices and revenue and lower operating cost to ownership. In the pro case, with much of the rest of revenue and cost fixed, the subsidies are practically direct transfer payments. And the deals are just much much larger, often well over half the total value of the franchise itself.

          From looking at studies and appreciation rates in the era of hostage taking and public funding, I think around 40-50% of NFL franchise values derive solely from the ability to create bidding wars and extract dollars direct from the public coffers. And a whole lot of the rest of the value derives from the civic affiliation (How many folks would ever root for and watch the Haslam Hawks, playing their games in a rotating series of truckstop megafaciiltes?). Ownership brings close to 0 value but departs with most of the pie and a dollop of public-dollar whipped cream on top. NCAA just isn’t in anything like that ballpark.

          • St.Chem

            Major college football doesn’t work like the NFL, but that fact does not make it better. It has similar transfers to the wealthy but they are less recognizable. Starting with the Universities themselves, you have giant tax exempt organizations or non-taxed entities in the case of the publics, that are engaged in a perpetual arms race with each other to build new stadiums, arenas, practice facilities, hire and buy-out coaches, etc. Some of the costs of these activities are defrayed by philantropic contributions (e.g., T. Boone Pickens, Phil Knight, etc.) but by and large the primary source of funding for such projects, and the other day-to-day expenses of your D1 football program comes from student activity fees. This has been pretty well documented in mainstream media outlets like ESPN and USA Today–just google “college football subsidies”.

            The result is higher tuition, which means reduced access to institutions of higher education for some and higher student loan debt for others. And if that portion of the student’s cost of attendance is paid by a federal grant or loan program, then it’s the taxpayer money that is the original input here. Meanwhile, the philanthropists I mentioned above get to reduce their tax liabilities.

            The NCAA generates a ton of revenue because they effectively own the events as the sanctioning body of D1 football. By their own admission they distribute 60ish percent of what they generate back to member institutions. The processes they use to do this are, frankly, a little hard to understand and not exactly equitable in my opinion. More importantly, what does return to the schools isn’t sufficient to allow the programs to operate in the black.

            This is a shame because it comes at the expense of some individuals who don’t necessarily care if their D1 school is competitive in football or not, or who wouldn’t trade a berth in the National Championship game for another $10,000 @ 3.86% interest on a 20 year amortization schedule. To me, that makes it more exploitative than the current NFL model.

          • bupalos

            These are good points, I never considered the degree to which tuition and student public funding dollars may be flowing through the stadiums. But I still would be shocked to find that this occurs on anything like the scale of the pro models. I like to see it all-in quantified, accounting for things like women’s volleyball scholarships. As I understand it, the reason NCAA programs run in the red is that they try to fund a full-spectrum athletic regime off the surplus from FB & BkB. The value of that regime has to be considered in full, as a value that the students receive.

            There also is a question of what level the wealth is coming from and being redistributed to, which maybe we’d call the amplitude. In College, the high end I guess would be the megaprogram coaches (unless there are others profiting more I don’t know about). But this layer isn’t comprised of billionaires. Likewise the money on the whole hasn’t been coming from the most vulnerable class (though both the inputs and outputs on college degrees are changing for the worse). The pro model using sales and sin-tax is an almost perfect direct transfer from the poorest citizens in our society to the wealthiest. As I said, I’d like to see actual numbers (and wonder what the ?@#! the NCAA is doing with 40% of the money?!?!) but it’s hard to see how colleges could be playing in this league.

          • St.Chem

            Thanks, Your arguments set the bar extremely high and you have really clarified for me a lot of what I felt in my gut was wrong with the professional model. I’d love to find a better way to do all of these things, because contrary to what anyone reading what I’ve said here might think, I really do like pro and college sports.

            I think I’m ready to concede that the benefits that are going to the pro-owners are the most offensive aspect of anything we’ve discussed. It is always a massive amount of money and it comes pretty much all at once, essentially in lump sums. By that I mean, the funds are obligated to the owners that way.

            I also think that the economic damage acutely inflicted upon the vulnerable population concerns me more in the college model than it does the professional. (This is my pack-a-day guy shelling out an extra $18 annually vs. the kid who never gets a college education, or has to go an extra $10,000 + interest in debt to get one).

            By the way I think you are largely correct that football revenues at successful D1 programs do get distributed to fund other sports, but I also think that football expenses seem to be growing at a higher clip than revenues.

            Based on NCAA’s 2012 aggregate reporting for the FBS 56% of the football programs that reported to NCAA (67 schools) generated a profit in FY 2012. The same report shows that 44% football programs reporting took a loss (53 schools). Who knows about the remaining schools who did not report (4), but I think the reason they might have been excluded is because those programs might have joined FBS in 2012. This data can be found here: (See p.28).

  • BIKI024

    so back when they were negotiating bringing the Browns back to Cleveland, i’d have to believe a big nugget for prospective owners was that the city would foot roughly 2/3 of the estimated $350m bill. who knows how long we would’ve had to wait.

    i agree that it seems a bit disingenuous that the Browns would seek $5m from the city that is struggling financially, but if the Browns spend what they are rumored to be on improvements which I believe are in the $100m range, I think that is perfectly reasonable for the city to invest 5% of the budget into one of their biggest tax revenue generators.

    Besides, it seems the city would be in “Big trouble’ without extension

    “Public financing of stadiums and arenas has been a controversial subject since the early 1990s, when first Baltimore and then Cleveland used taxpayer money to build new stadiums for their baseball teams. Opponents argue that the public shouldn’t be providing billionaire team owners with subsidized leases for buildings where millionaire athletes play baseball, basketball and football.

    Yet voters in Cuyahoga County twice voted to tax the drinkers and smokers among them to build the Gateway buildings and Browns Stadium. Issue 2, to create the 15-year tax for Gateway, was approved by 51.7% of voters in May 1990. The second time around, in 1995, 71% of voters approved extending the tax 10 years.

    Now, even Cleveland City Council’s harshest stadium critic says he favors extending the tax.

    “If we don’t get the sin tax extended, we’ll be in big trouble,” said Councilman Michael Polensek, who represents Collinwood.”

    • Cleveland Frowns

      A lot of conclusions here, with zero evidence for any of them.

      • BIKI024

        zero evidence? it’s public information how much money it cost to build the stadium and how much money was used to finance the stadium and the payments they have received.

      • BIKI024

        FirstEnergy Stadium, Home of the Cleveland Browns

        Approximate construction cost: $330 million.
        Total cost estimates range from $308 – $352 million not include financing costs
        (see Plain Dealer article dated 2.24.2000).
        Percentage of public funding: 76%.
        Private Funding: $84.9 million
        Total Principal Municipal Bonds Issuance: $202 million.
        Payments made to date $67.9 million.
        Principal balance owed: $134.1 million.
        Browns’ Stadium Lease: $7.5 million (fixed $250,000 per year, 30 years (1999-2028)).
        Total capital repairs obligations, City of Cleveland: $52.5 million (see Schedule 14f below).
        Browns naming rights revenue: $102 million ($6 million x 17 years).
        Sin Tax revenue received to-date: $116 million: $87 million
        for debt service; $29 million for capital repair requirements of which
        $5 million was advanced in 2012.
        Additional Revenue Sources: 8 percent tax on all parking in
        the city; raised the admission tax on all events by 2 per cent; and
        added a $2 a car rental fee. (source: Roldo Bartimole, 3.5.2012 & 5.29.2009).
        Property Taxes: City of Cleveland pays taxes on the land
        value, currently $19 million value, annual taxes of $646,923. The
        stadium building is valued by the County at $276.2 million. The building
        is exempt from taxes that are valued at $9.3 million.

        • Cleveland Frowns

          How do you conclude from these numbers that the City would be “in big trouble” without a sin tax extension?

    • Petefranklin

      It was a lot more than 5 million that Lerner asked the city for before he bailed. I’m sure Lerner asked for the money knowing that any promises would result in more money extracted from Haslem. Thanks for the Cheddar entry Biki,you are a gentleman!

      • BIKI024

        in this next extension, the Browns are asking for $5 million.

    • Believelander

      Football franchises aren’t net revenue gains for their host city. That’s tin foil hat economics, like ‘trickle-down’ economics.

  • Dwhalen

    With the average American who doesn’t know how to best spend their own money, we should entrust them with the responsibility of controlling public funds? CLEARLY!!! Also, only poor people drink and smoke cigarettes. *facts

  • PML

    I really, REALLY want Teddy Bridgewater. In a way that has me questioning everything about myself. That is all.

    • Cleveland Frowns

      As a wise man once said, Teddy Bridgewater > all other water and bridges.

      • PML

        He will be a bridge over our troubled waters.

        – Simon and Garfunkel’d

  • nj0
    • Cleveland Frowns

      Ugh the chart at No. 5.

  • Joe Bialek

    How convenient that this issue is being considered at the same time
    the vast majority of voters in Cuyahoga County are just getting off work. Nice end around County Council. Wow, three issues listed above and so close in their consideration and similarity. Well, as Jack Barry used to say: “Joker, Joker and a Triple!” Folks, the real outrage here is the fact that taxes on alcohol and cigarettes will not be used to aid in the reduction of addiction but rather to stuff the pockets of all three teams who could easily afford to pay for the repairs themselves.

    The vote was rammed through the last time {under somewhat suspicious circumstances} and hear we go again. But this time…not so fast!!! We the voters of Cuyahoga County are going to fight you on this one and we don’t care if the teams up and go somewhere else {please see my views on entertainment below} because quite frankly there are simply more important things than sports and the unearned money that comes with it. Council Members of the 2014 Cuyahoga Council…vote NO on putting the tax proposal before the voters and show that you understand the needs and priorities of the citizens of Cuyahoga County. Don’t sell out as the Cleveland City Council did. Show some backbone and integrity. Vote No.

    One of the most disturbing facts about our capitalist nation is the
    misappropriation of funds directed to the salaries of entertainers.
    Everyone should agree that the value an athlete, movie star, talk-show host, team-owner, etcetera brings to the average citizen is very small. Granted, they do offer a minuscule of diversion from our daily trials and tribulations as did the jesters in the king’s court during the middle ages. But to allow these entertainers to horde such great amounts of wealth at the expense of more benevolent societal programs is unacceptable. They do not provide a product or a service so why are they rewarded as such?

    Our society is also subjected to the “profound wisdom” of these people because it equates wealth with influence. Perhaps a solution to this problem and a alternative to defeated school levies, crumbling
    infrastructures, as well as all the programs established to help feed,
    clothe and shelter those who cannot help themselves would be to tax this undeserved wealth. Entertainers could keep 1% of the gross earnings reaped from their endeavor and 99% could be deposited into the public coffers.

    The old ideas of the redistribution of wealth have failed, and it is time to adapt to modern-day preferences. People put their money into entertainment above everything else; isn’t it time to tap that wealth? Does anyone think this will reduce the quality of entertainment? It seems to me that when entertainers received less income, the quality was much higher.

  • RedBloodAmerican

    Ms. Lesic is the hired gun to ram this nonsense down the voters throats. She will be compensated quite well, but won’t get the extra bonus for delivering the bacon. Voters, it’s time to wake up and see this for what it is. The promises?…. made are sheer fantasies. Jobs created? Blah, blah, blah! I can’t wait for all the hoopla that they are dreaming up to convince us to be stupid enough to continue to be naive! How many times can we be fooled. VOTE NO on this issue!…more

  • RedBloodAmerican

    Citizens, let us not forget that our government was formed to be Of the
    People, For the People and By the People…..ALL people (not just the powerful)!
    We the common people need to remember we have as much power as the fat cats. We
    all have the right of having different opinions, but we also need to not let a
    slick ad campaign convince us of misleading gibberish that threatens and
    promises facts that are unfounded . We
    can make things right by voting right. Remember we have the power of reasoning,
    so use your reasoning skills and do not be led down a primrose path by the high
    paid media. Let’s stand up and vote NO
    on Issue 7 and do all the citizens a justice of making this right. Thank you
    for your consideration.

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