How Cincinnati got suckered into two stadium deals

A Stadium's Costly Legacy Throws Taxpayers for a Loss

Excerpts:

Here 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, residents are bracing for more belt-tightening: 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.

With a combined estimated cost of $540 million, the stadiums—one for football's Bengals, the other for baseball's Reds—were touted by the teams and county officials as a way to generate cash and jobs. The Bengals, who had threatened to relocate if they didn't secure a new home, drove negotiations. And it is that deal—the more lucrative arrangement struck with the teams—that has fanned the county's current struggles.

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At its completion in 2000, Paul Brown Stadium had soared over its $280 million budget—and the fiscal finger-pointing had already begun.

The county says the final cost was $454 million. The team's estimate, which doesn't include infrastructure work around the stadium, puts the tab at $350 million.

But according to research by Judith Grant Long, a Harvard University professor who studies stadium finance, the cost to the public was closer to $555 million once other expenditures, such as special elevated parking structures, are factored in. No other NFL stadium had ever received that much public financing.

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On top of paying for the stadium, Hamilton County granted the Bengals generous lease terms. It agreed to pick up nearly all operating and capital improvement costs—and to foot the bill for high-tech bells and whistles that have yet to be invented, like a "holographic replay machine." No team had snared such concessions in addition to huge sums of public money, Journal research shows.

To help finance its stadiums, Hamilton County assumed more than $1 billion in debt by issuing its own bonds without any help from the surrounding counties or the state. As debt service ratchets up, officials expect debt payments to create a $30 million budget deficit by 2012.

"The Cincinnati deal combined taking on a gargantuan responsibility with setting new records for optimistic forecasting," says Roger Noll, a professor of economics at Stanford University who has written about the deal. "It takes both to put you in a deep hole, and that's a pretty deep hole."

The stadium's annual tab continues to escalate, according to the county's website. In 2008, the Bengals' stadium cost to taxpayers was $29.9 million, an amount equivalent to 11% of the county's general fund.

Last year, it rose to $34.6 million—a sum equal to 16.4% of the county budget.

Comment: A cautionary tale! And the teams suck too!

Delhi, OH

Dad was promoted and moved to Cincinnati OH in 1960. Dad and Mom bought this house (5408 Alomar Dr, Delhi, OH) for I think $ 21,000. I lived here until I graduated from college in 1971. I painted those wrought iron rails, the gutters, the soffit. My folks lived here until 1987. It's still a nice middle class neighborhood. There was a large farmer's field in the back then. And back to the NW was small wood and past that a pond. A very fun place to live!

Comment:

Shopping: From "fugue state" to "essentials-only mode"

Recession Can Change a Way of Life

Excerpts:

Many studies have shown that when a job is harder to find or less lucrative, people spend more time on self-improvement and relatively inexpensive amusements. During the Depression of the 1930s, that meant listening to the radio and playing parlor and board games, sometimes in lieu of a glamorous night on the town. These stay-at-home tendencies persisted through at least the 1950s.

In today’s recession, we can also expect to turn to less expensive activities — and maybe to keep those habits for years. They may take the form of greater interest in free content on the Internet and the simple pleasures of a daily walk, instead of expensive vacations ...

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Recessions and depressions, of course, are not good for mental health. But it is less widely known that in the United States and other affluent countries, physical health seems to improve, on average, during a downturn. Sure, it’s stressful to miss a paycheck, but eliminating the stresses of a job may have some beneficial effects. Perhaps more important, people may take fewer car trips, thus lowering the risk of accidents, and spend less on alcohol and tobacco. They also have more time for exercise and sleep, and tend to choose home cooking over fast food.

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In addition to trying to get out of the recession — our first priority — many of us will be making do with less and relying more on ourselves and our families. The social changes may well be the next big story of this recession.

Comment: Maybe some of these changes will be good in the long run! Next article highlights the Mall of America (from the NYTimes):

Our Love Affair With Malls Is on the Rocks

Excerpt:

... [The] Mall of America [is] a convenient starting point for rethinking the 50-year marriage between the American shopper and the American mall.

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Here, ladies and gentlemen, is the crux of the problem: We are reliably informed that whatever part of the economic crisis can’t be pinned on Wall Street — or on mortgage-related financial insanity — can be pinned on consumers who overspent. But personal consumption amounts to some 70 percent of the American economy. So if we don’t spend, we don’t recover. Fiscal health isn’t possible until money is again sloshing into cash registers, including those at this mall and every other retailer.

In other words, shopping was part of the problem and now it’s part of the cure. And once we’re cured, economists report, we really need to learn how to save, which suggests that we will need to quit shopping again.

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At Web sites like deadmalls.com, the carcasses of these abandoned buildings are photographed and toe-tagged, along with tributes from former shoppers. All this as the worst retail environment in decades continues to sag in a sickly economy.

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The economic crisis has caused shoppers to go into an essentials-only mode. But the mall has never trafficked in essentials. You can’t, for instance, fill a prescription at the Mall of America, because it doesn’t have a pharmacy. You can, however, buy a vanilla hazelnut fragrance candle in the shape of a miniature cooking skillet. Or a $13 baseball hat that looks as though it’s made of cheddar cheese. A store called Corda-Roy’s sells a variety of bean bags that convert into beds. Magnet Max sells a battery-operated guinea pig that runs continuously on a spinning exercise wheel.

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SPEND enough hours in the Mall of America and you wind up in a sort of fugue state in which the specifics of time and place turn fuzzy. The hope, one assumes, is that you’ll spend more freely in this alternative universe of nonstop distractions.

Comment: From deadmalls.com view the story of Western Woods Mall (Cincinnati) where I worked as a shoe salesmen at Bakers Shoes in the late '60s. Re: "shopping was part of the problem and now it’s part of the cure": A low savings rate is the problem. Tax policies that "disincent" (deter) savings and investment hurt individuals and our society in the long run. This article is somewhat dated (January 2006) but discusses that issue: U.S. savings rate hits lowest level since 1933 - Consumers depleting savings to buy cars, other big-ticket items: "The Commerce Department reported Monday that the savings rate fell into negative territory at minus 0.5 percent, meaning that Americans not only spent all of their after-tax income last year but had to dip into previous savings or increase borrowing. The savings rate has been negative for an entire year only twice before — in 1932 and 1933 — two years when the country was struggling to cope with the Great Depression, a time of massive business failures and job layoffs."