(The Center Square) – The Haslam Sports Group’s proposal for $600 million in bonded subsidy from the state of Ohio for a new $2.4 billion roofed Cleveland Browns stadium in Brook Park was filled with inconsistencies and incorrect information, according to a memo from Ohio’s Office of Budget Management.
The ownership group included salaries that currently exist as “net new” for income tax purposes, changed the scope of its overall commitment to the development from a $3.8 billion to $3.4 billion while only committing to the $2.4 billion in Phase 1, included tax-exempt work under its math on projects where tax would be collected and left the state with ownership and responsibility for maintenance on a stadium where it does not earn revenue, the report showed.
“Ohio would own or partially own a sports stadium and the responsibility for maintenance, with no additional revenue,” the OBM report says. “The state does not currently own any professional sports stadiums/fields/arenas.
“If this amendment is enacted, OBM recommends that the state receive revenue-sharing from events commensurate with our property ownership share.”
The National Football League does not allow teams to share financial data and stadium projects do not include a revenue share with the local governments that subsidize and own the facilities, including as it relates to stadium naming rights and personal seat licenses sold by the teams.
The memo was sent from OBM Director Kimberly Murnieks to Gov. Mike DeWine’s staff on March 26 related to the $600 million proposal, which it called the largest potential bond issuance in state history.
The bonds would not fit the requirements to be tax exempt, which would cost the state an additional $200 million, the memo says.
“The projected economic impact runs directly counter to decades of research and evidence about the cost and benefits of professional sports stadiums,” Murnieks wrote in conclusion. “The structure of the proposed revenue is a complicated method that carves out General Revenue Fund receipts of a specific geographic location of the state. The unprecedented $600 million in taxable bonds, backed with GRF dollars, would be the single most expensive bond issuance in our state history with a structure that violates the prudent policy set by the Treasurer of State, OBM, and the Ohio Public Facilities Commission.
“The total cost of this structure would exceed $1 billion. Ohio would own a sports stadium and the responsibility for maintenance, with no additional revenue. OBM does not support this proposal.”
The memo went on to detail each area of the Haslam Groups proposal it feels was overestimated, including the number of construction jobs necessary for the project.
“The construction jobs predicted by HSG also appear to be wildly overblown,” the memo said. “According to the presentation to the House, HSG claims their project will support 6,000 construction jobs. As a comparison, the Intel project is estimated to support 7,000 construction jobs over the course of the build – a project that is roughly 10 times the size of the Browns’ planned full-phase build-out.”
