While football fans might see the Cleveland Browns as a charity case, the team is actually a for-profit enterprise. Since Dee and Jimmy Haslam bought the team in August 2012, the franchise has increased in value fivefold from less than $1 billion to more than $5 billion, outpacing the stock market by about 50%.
The Browns’ product, football games, is fairly easy to monetize: Charge television stations for the right to broadcast games, and charge fans for the right to enter the stadium to watch home games live. Plus, get a cut of the action anytime someone buys Browns merchandise.
This profitable company wants to move out of the stadium owned by the City of Cleveland once the current lease is up in 2028. So far, this all makes sense.
The odd part is that Ohio politicians want to make taxpayers foot the bill for the new stadium.
The state’s House of Representatives just passed a two-year, $60 billion budget that includes $600 million of new borrowing to pay for a new domed Browns stadium in the suburbs.
This bill passed just after the state’s Office of Budget and Management threw some cold water on the plan.
The team and its allies justify the taxpayer subsidy by claiming that the new stadium and a newly built-up neighborhood around the stadium will pay for themselves. All the new stuff will generate new tax revenue, which will more than pay back the $600 million in bonds (plus the interest taxpayers will pay).
Ohio’s OBM concluded that the study justifying the state subsidy “inappropriately overstates projections of future taxes generated by the project, and over inflates the development’s positive impacts.”
Likewise, the legislature’s non-partisan budget analyst found the team’s assumptions “overly optimistic.”
The history of stadium subsidies would bolster these conclusions. Subsidizing an arena or stadium and the surrounding neighborhood typically means more business in that one neighborhood, but where does that business come from? It’s pretty hard to increase the net entertainment spending in a region.
If more people spend their money at or near a new stadium, it generally means they are not spending it on food, drinks, movies, or bowling in other parts of town.
Increasing entertainment spending requires pulling in people from out of town. But if Akronites are driving up to Cleveland, that just reduces entertainment spending in Akron.
To believe a massive revenue boost from this new suburban dome, one would have to imagine out-of-town fans coming to Cleveland to catch a Browns’ game in droves.
MARRIAGE IN THE AGE OF AUTONOMY
Dear reader, would you ever do that?
Gov. Mike DeWine, a Republican, opposes the Browns’ proposal. The state House of Representatives, which Republicans control, has endorsed it. Will Republican senators side with subsidies for this for-profit business on the assumption Americans will flock to watch their own team beat the Browns?