Perhaps more than any other time, the past week showed just how bad of a deal Cincinnati and Hamilton County got when voters approved a sales tax hike just so locals can watch the Cincinnati Bengals lose year after year inside a publicly funded stadium.
While television stations closed the Jan. 5 game with sky-high ratings that most likely titillated sponsors, the costly reality for the rest of the region was a disappointing game that only saw the light of local television screens after local Fortune 500 companies stepped in to sell out the game.
Yet this is why Hamilton County commissioners struggle year after year with the stadium fund.
When voters approved the 1996 plan for Paul Brown Stadium and Great American Ball Park, most locals had little idea that the deal could turn out so badly for the county government. Nearly two decades later, the deal is so bad that it’s garnered the attention of national outlets like The Wall Street Journal, The New York Times and Bloomberg.
“Of those 23 (NFL stadium) deals (between 1992 and 2010), the Bengals pact was unusually lopsided in favor of the team and risky for taxpayers — the result of strained negotiations between a local government and the professional sports team it was anxious to keep,” WSJ wrote on July 12, 2011.
One doesn’t have to look beyond the county budget to see the fiscal constraints brought on by the deal. Problems with the stadium fund almost seem like an annual event at county commissioners’ budget meetings, with each year resulting in another million-dollar gap that needs to be patched up with taxpayer dollars.
In the past few years, county commissioners got through the stadium fund gaps mostly by trimming a property tax rollback promised to voters as part of the stadium deal.
But sometimes they take more drastic steps: In 2011, the county sold its stake of Drake Hospital for $15 million to help cover the gap.
The patches haven’t come close to permanently solving the problem. In fact, the costs keep piling up. The Bengals are now asking for a new scoreboard that will cost the county $10 million. According to the stadium agreement, the county must pay up.
It’s a situation no county official wants to be in. When talking to county officials, discussions over the stadium fund usually break down into wishes that the city and county could go back in time and rework the deal.
One would think the tens of millions going to the stadium deal could at least come to the benefit of the city and county. But after decades of research, dozens of economists argue that while stadiums are commonly sold to the public as catalysts of investment, they often produce no measurable economic impact.
The economists’ conclusion shouldn’t surprise anyone. Just think: For the 10 or so games played by the Bengals each year, is it really worth spending hundreds of millions for a new stadium?
Of course, there are still some clear benefactors of the local stadium deal: the Cincinnati Bengals and its sponsors.
But should these massive franchises — the Bengals are worth $924 million, according to Forbes — really be getting the help of local taxpayers? Is that the best use of public dollars?
What’s essentially happening with all the stadium deals is cities are falling for hostage scenarios. Public officials worry that if they don’t throw taxpayer dollars at the sports teams, they’ll leave.
For Cincinnati, a city that until recently struggled with a deteriorating reputation and a dropping population, losing a sports team seemed completely out of the question for local officials. To many in the region, it looked like a potential deathblow.
Given the gravity of the situation, it’s unsurprising the Bengals and local officials ended up striking an agreement in which the hostage-taker, the Bengals, completely trumped the hostage, the city and county.
None of this is to say that the city and county should have immediately let the Bengals go. But, given how the deal turned out, there’s little doubt local officials could have struck a considerably better agreement.
Besides, if the city had lost the Bengals, it would surely be better off than the current circumstances. Just imagine the potential if the county spent those hundreds of millions going to the stadium on much more productive economic development projects or public safety initiatives.
Really, it’s hard to envision how other development projects would have turned out as badly as Paul Brown Stadium.
CONTACT GERMAN LOPEZ: email@example.com or @germanrlopez