CLEVELAND — Two state agencies are raising questions about whether a $600 million investment in a new Cleveland Browns stadium will be a good deal for Ohio and its taxpayers.
In a memo released Monday, the nonpartisan Legislative Service Commission warns that the team’s predictions about traffic and events at a new, domed stadium in Brook Park might be “overly optimistic.”
In a separate letter, obtained by News 5, the state’s budget director says her office does not support a plan to issue $600 million in bonds for construction.
The documents show that state policy analysts have big concerns about the public’s proposed role in the $2.4 billion stadium project. They’re skeptical about the Browns’ math on everything from construction jobs to spending at the 176-acre planned stadium district, where renderings also show apartments, hotels, offices, restaurants, retail and parking.
Team owner Haslam Sports Group “inappropriately overstates projections of future taxes generated by the project, over-inflating positive impacts,” wrote Kimberly Murnieks, the state’s budget director, in a letter addressed to other public officials last month.
The Browns pushed back late Monday, with a point-by-point response to the budget office’s report. In an emailed statement, the team also challenged the Legislative Service Commission’s analysis, saying it contained inaccuracies and misinformation.
A Browns spokesman said the team has already addressed many of the agencies’ concerns in direct conversations with Gov. Mike DeWine and other officials.
“We question many of the memos’ assertions and have worked with our team of national experts to prepare relevant information and responses,” Peter John-Baptiste, the team’s chief communications officer, wrote in an email.
“We understand and welcome Governor DeWine’s commitment to creating a responsible funding mechanism for sports facilities across Ohio, as he has consistently communicated the positive impact Ohio’s teams and their venues have on the state,” he added. “We look forward to more ongoing, collaborative dialogue with the governor and other state officials to create the best solution to bring our transformative project to the state and Northeast Ohio.”
The General Assembly is considering a proposal to borrow $600 million for the Brook Park stadium. The state would repay that debt, with interest, using tax revenues from the entire mixed-use stadium district.
The total cost to the state could approach $1 billion over 25 years.
RELATED: Browns reveal more details about Brook Park plans in a pitch to state lawmakers
The Browns say Ohio will more than recoup its investment in the project. But state policy analysts – and financing experts interviewed by News 5 – say it’s impossible to properly vet those claims.
They want to see the assumptions and math behind the team’s headline numbers.
RELATED:'No more pretty pictures': Finance experts, lawmakers ask Browns to explain their math
“The academic literature on publicly funded sports stadiums is vast, covering many decades, sports, states and municipalities,” staffers at the Legislative Service Commission wrote in their memo. “The overwhelming conclusion from this body of research is that there are little to no tangible impacts of sports teams and facilities on local economic activity. A second conclusion is that the level of government subsidies given for the construction of facilities far exceeds any observed economic benefits when they do exist.”
The state budget director, meanwhile, wrote that Haslam Sports Group’s forecast for construction hiring seems “wildly overblown.”
She added that the state is facing many large capital projects – public buildings and infrastructure – and “does not have the capacity to accommodate these priorities plus $600 million in bonds for a single sports facility.”
'An incredibly huge decision'
The Ohio House included the bond package in its version of the biennial budget bill in early April.
At the time, Rep. Brian Stewart, an Ashville Republican who leads the House finance committee, called it “the most conservative stadium funding proposal in America.”
He said the state has a long history of issuing bonds for major projects, as part of its capital budget bill. Stewart added that the Browns’ plan is “backed up by detailed financial metrics under which the new tax revenue generated by this project will pay the cost of the bonds, with no out-of-pocket expense for our taxpayers.”
On Monday, Stewart said he was not available to talk about the concerns raised by state policy analysts.
The memos released Monday show that the budget office raised its concerns about the stadium financing plan weeks before the House voted on the budget.
Now the debate over the budget – and stadium funding more broadly – has moved to the Senate, which expects to vote on its version of the mammoth spending bill by mid-June.
After that, the chambers will hash out any differences between their versions. The final budget needs to go to DeWine’s desk for his signature – and any vetoes – by June 30.
The governor favors a plan to double the tax rate on sports-gaming companies' profits to pay for stadiums and youth sports education.
Sen. Nickie Antonio, the chamber’s minority leader, recently asked the Legislative Service Commission to weigh in on the Browns' proposal. The Lakewood Democrat released the agency's memo Monday.
During an interview, she said the analysis just leaves her with more questions and concerns.
“We’ve been asked to make an incredibly huge decision. … That’s a lot of money to be able to be working off the back of a napkin, which is what this feels like sometimes right now,” she said. “So any time that we can add to the information about this for our decision-making, I think it’s really important.”
Antonio wants clarity on what will happen if state tax revenues from the project fall short of covering the debt payments. The House budget bill requires the Browns to put up $50 million as a sort of security deposit – money Haslam Sports Group would get back if the state doesn’t need to tap it. But Antonio isn’t sure that’s enough.
She’s also worried about the impact a Brook Park stadium could have on Cleveland.
“To cannibalize and gut the city of Cleveland, and take these resources away, I don’t think serves anyone well,” said Antonio, who represents much of the city.
The Browns also want Cuyahoga County to issue $600 million in bonds for the project. But County Executive Chris Ronayne has said that request is far too large – and too risky for the county and taxpayers to take on. He's been urging the Browns to stay Downtown.
'Not simply a world-class stadium'
Until this week, the only economic-impact reports about the stadium came from the city of Cleveland and the Browns.
A study commissioned by the city last year said losing the team would be a blow to a fragile Downtown, where fans spend money on transit, hotels, bar tabs and restaurant bills. The report also said an enclosed suburban stadium could siphon events away from Rocket Arena and other Downtown venues.
RELATED: A Browns move to Brook Park will deal an economic blow to Cleveland, study says
A consultant said the city would lose $11 million in annual tax collections. But the report did not include how much Cleveland is spending on debt service and other expenses each year for Huntington Bank Field, which is city-owned. The Browns’ stadium lease is set to end in early 2029.
The Browns, meanwhile, say the Brook Park stadium district would be a net gain for Cleveland and the region. In December, the team released headline findings from a report showing the project could bring up to 1.5 million more visitors here each year, luring major concerts that are skipping Ohio and pumping $1.2 billion into the local economy.
RELATED: Browns say new Brook Park stadium district will add $1.2 billion to the local economy
The Legislative Service Commission cited both reports in its analysis – but said it wasn’t able to get a full copy of the Browns’ economic-impact study, prepared by a real estate consulting firm called RCLCO. The team has only released an executive summary.
The agency believes the Brook Park project will take jobs and activity away from Cleveland – and could pull sporting events from other Ohio venues, too. In the memo, the researchers noted that Haslam Sports Group, which also owns the Columbus Crew soccer team, recently moved a game from Columbus to Cleveland to capture a much larger crowd flocking to see superstar Lionel Messi.
“The increase in economic activity in Cleveland was therefore created at the cost of revenue that would otherwise have been generated in Columbus,” the memo said.
The researchers also said they didn’t have a clear answer to lawmakers’ questions about whether issuing stadium bonds might run afoul of the Ohio constitution. Ultimately, they wrote, only a court can make that decision.
The Browns say the new stadium would be owned by a New Community Authority, a special governmental entity that has special powers to develop and finance projects. In a response to the state budget office, the team and its consultants said the structure aligns with Ohio law and the state’s borrowing policies.
“Our project is not simply a world-class stadium that would be Ohio’s first dome and the easternmost dome in the United States,” the team wrote. “It is a transformative … sports-anchored, mixed-use development project.”
