Wall Street Journal and Cincinnati.com Cite Faulty Financial Projections and a Failed Maintenance Plan as the Reasons
Cincinnati.com reports that the Bengals are have requested a $43 Million infusion for repairs and improvements to Paul Brown Stadium that was only opened 10 years ago. This figure is reported to be four times the amount budgeted by Hamilton County and the City of Cincinnati when the two stadium complex for the Reds and Bengals was built 10 years ago. The amount does not include an $8 Million scoreboard that the Bengals also say is necessary to remain competitive in offering a good NFL experience.
The total upkeep on the two stadiums over the ten year period has only amounted to $12.4 Million or $1.24 Million per year. Mark Rosentraub, a professor of sports management at the University of Michigan, said stadium maintenance is no different than making home repairs – just on a larger scale. Rosentraub estimates that the annual maintenance for the Cincinnati stadiums could be as high as $4 Million per year and that ignoring a maintenance program will just lead to deterioration and big ticket items in the future.
At the same time the Wall Street Journal is reporting that the sales tax revenues in Hamilton County, where one in seven people lives beneath the poverty line and budget cuts have left gaps in the schools and sheriffs department, has residents bracing for more belt-tightening. The county is being forced to consider a rollback of a property-tax break promised as part of a 1996 plan to entice voters to pay for two new stadiums.
The tax hit is just the latest in a string of unforeseen consequences from what has turned into one of the worst professional sports deals ever struck by a local government—soaking up unprecedented tax dollars and county resources while returning little economic benefit the Journal went on to report.
Excerpts from the WSJ Article.
“A preliminary PricewaterhouseCoopers audit of construction costs, reviewed by the Journal, found that there were insufficient financial controls on the part of various project managers and contractors hired by the county.”
“The auditors, citing “blurred accountability,” said they hadn’t been given enough information for a full accounting. “Each party suggested that we speak to other parties about specific details of the changes,” they said in the report.”
“It’s the monster that ate the public sector,” says Mark Reed, Hamilton County’s juvenile court administrator.”
“County Auditor Dusty Rhodes initially supported the stadium deal—partly as a matter of civic pride. But now he feels differently about the costly legacy that has grown in the arenas’ shadow—and believes there’s plenty of blame to go around. The county, he underscores, has used some of the tax dollars earmarked for the stadium on things like a road project and a new waterfront development. “They just went nuts spending this money for stuff that was not envisioned,” he says.”
“Some local officials had cautioned that the stadium expense was too great. They warned that the projected $300 million in economic benefits, outlined in a report commissioned by the county, were exaggerated. Tom Luken, a former Cincinnati mayor and councilman, actively campaigned against the deal. “Anybody with half a brain can figure that this is a bad deal,” he says. “As it turned out, it was even worse than they painted it.””
” Late last year, officials announced they would have to break their promise about reducing property taxes for 2011.”
“Recently, as local officials mulled new ways to stretch the budget, one commissioner suggested making up for the tax hike by cutting another property-tax levy: one that funds health services for the poor.”
“Harold Flaherty, a former schoolteacher, says he is livid about the sports pact. “It staggers my imagination that we should pay for this,” he says. “I think it’s the dumbest thing we ever did.” Mr. Flaherty, 77, will pay about $240 more in property taxes this year due to the rollback.”
In the spirit of exposing surprises before they grow into unmanageable quandaries like the downtown hotel, the McCurdy, and the Evansville Parks have from failed maintenance programs and absence of planning, we encourage our readership to familiarize themselves with the shortcomings of other cities that have chosen to bet their economic futures on investing public dollars into temples of sport. Now it is possible that the due diligence, proper vetting, and exemplary management has gone on in Evansville that was not in Cincinnati. We certainly hope so but as Mrs. Doubtfire once said “Effie, brace yourself.”
Cincinnati.com article
http://news.cincinnati.com/article/AB/20110130/NEWS0108/101300319/Bengals-seek-43M-stadium-fixes
Wall Street Journal Article
http://online.wsj.com/article/SB10001424052748704461304576216330349497852.html
