Why are you just addressing Paul Brown Stadium and not GABP?
Based on current information, debt service, operating expenses and repair and maintenance expenses for Paul Brown Stadium (PBS) represent about 67% of the expenses. Great American Ballpark (GABP) represents the remaining 33%. Secondly PBS is estimated to be used less than 20 days per year. In comparison, GABP is estimated to be used more that 80 days per year. Finally, the lease agreement with the Bengals requires more significant expenditures for stadium enhancements than the lease agreement with the Reds.
Is selling the stadium anti-Bengals?
Just the Contrary. The County, Bengals and users of the Stadium deserve a state-of- the industry experience. We want the Bengals and Reds to stay in Cincinnati. They are part of our culture. The numbers clearly show that the County cannot own, operate, and maintain two stadiums. By selling Paul Brown Stadium, the County will be putting the Bengals in the position of having a Landlord who can make the needed enhancements and keep up with the repair and maintenance to ensure the life of the stadium for the next 30 years. To close, to keep the Bengals in town, we need to make sure the Stadium is consistent with other stadiums around the league.
Why can't we just renegotiate the lease?
Renegotiating the lease does not address the issue of needing to make some major enhancements to the stadium to maintain a competitive stance/consistency with other NFL stadiums. Given the need to increase use of the stadium, address the revenue sharing, and operating cost sharing; it is impractical to expect that the improvements (which are estimated to be between $300M and $400M in 2027) would be fully paid for by the team given their current lease. We need dramatic changes, and expert entertainment facility management of the Stadium to drive revenue, and refine expenses. Renegotiating the least is necessary, but it is only a part of the solution.
How would an interested buyer make this work?
With the recently enacted Opportunity Zone classifications in the Tax Cuts and Jobs Act of 2017, capital gains taxes can be deferred or in some cases reduced and even eliminated if they are invested in an opportunity zone fund. The Stadiums and the Banks have been designated as being in just such a zone. This approach has been touted by many developers as a way to turn around older, poor performing resort areas. However, this program will expire in 2023, so the time is now to act. Additionally, an entity with entertainment facility management and operations could identify ways to increase the use of the stadium, and thus increase revenue.
Won't this still require the renegotiation of the lease?
That is absolutely the case, but even shifting 75% of the enhancements to the teams still results in a deficit in the sales tax reserve account. It is a smaller deficit, but it also does not acknowledge other significant repair and maintenance issues that could and likely will arise. It also does not consider any major improvements to Great American Ballpark. In effect, just re-negotiating the leases is a bandage similar to prior, multiple actions by the County. A renegotiation could kick the can down the road for the next Commission.
How will the Bengals respond to this proposal?
We have attempted to meet with or at least discuss this with the with them, but due to the restrictions caused by the COVID-19, we have not been able to have a meeting.. We believe that it is imperative to keep the Bengals and Reds here. However, we need to face the economic realities and we believe this proposal is in the best interest of the County and the Bengals. --- It will allow the Team to stay here and provides funding for the enhancements that may/will be required in the not to distant future.
What's in it for the taxpayer?
The good news is that we will be able to stabilize the sales tax fund for the stadiums. This will put an end to the continuous re-negotiation of items because the County cannot pay. It is also anticipated that there will even be some surplus funds that the County can investigate using for other sources. Essentially it means that the County will have adjusted or right sized the stadium ownership for the next 30 years to a level that does not place undue burden on the taxpayers. Additionally, it will allow the County to keep the teams here for hopefully the next 30 years (to 2050) and possibly beyond.
The County has indicated that by 2032 they will be generating more than an $80 million surplus. So why do we need to do anything?
First of all, I think the taxpayers and the Bengals and Reds are interested in maintaining the stadiums in good repair & maintenance and in keeping them competitive with other stadiums in the country. The projections the County has discussed indicate no stadium enhancements after the $20M for the LED Display in PBS in 2027. This means the enhancements that the County already owes the Bengals, estimated at more than $250M and potentially plus $125M will not be done for another 12-13 years (after 2032). I think we all know that is unrealistic. The Bengals committed to delay discussions about the enhancements until 2024!
We also know that the sales tax revenue increased by a little more than1.6% from 2000 to 2019. The current County financial model is more realistic than the original projected 3% sales tax growth.
How will selling the stadium address the Bengal's concerns about enhancement, repairs, and maintenance?
As part of the requirements of the Opportunity Zone, the developer is required to make improvements equal to or more than the purchase price. This means that capital improvements (Enhancements) will be required. We understand that some capital repair and maintenance can serve as part of the commitment. That is critical to making sure the stadiums are not only enhanced but maintained.