Gateway to nowhere — Cleveland’s sports subsidies bleed public funds and betray community priorities: Leslie Kouba

CLEVELAND, Ohio — Let’s talk about the complicated codependent relationship between the city of Cleveland, Cuyahoga County, our professional sports teams and the Gateway Economic Development Corporation. It’s a perfect example of how basing long term profitability on uncontrollable projections, wishful thinking and the erroneous belief that pro sports are economic boosters can really fail.

This cluster is rooted in the late 1800s, when baseball emerged as America’s pastime and businesses saw opportunity. Example – tobacco companies included trading cards in cigarette packs to increase sales. In the early 1900s, public money started to help build sports facilities for the Olympics. In 1951, then-baseball commissioner Ford Frick told cities they had to support their teams, because the teams brought so much money into their communities.

In the early 1980s, after a century of monetized professional sports, government officials started singing the song they had been taught – that pro sports teams and their stadiums/fields/arenas were economic development magic for struggling urban areas. But remember, everything always comes down to money and power.

Owning a pro sports organization is an investment. The better the return on an investment, the happier the investor, or so the refrain goes. If a business can get others to help pay for stuff, its bottom line increases.

Now, when the Gund brothers bought the Cavaliers in 1983, the team played at the now-defunct Richfield Coliseum, which was privately owned by former Cavs owner Nick Mileti. It was a long drive out there. The Gunds decided the team should be in the city, but they would need an arena. Working with city and county leadership, the Gateway Entertainment Complex – an estimated $203 million project to build a baseball field and a basketball court – took shape. The Gateway Economic Development Corporation was created to manage the revenue and expenses of the project.

Because the city and county would benefit from the complex, elected officials agreed public money would go into the project. Voters approved a sin tax on tobacco and alcohol products for construction costs. The complex was completed in 1994. Gateway became the proud owner of the whole complex, plus the East 4th Street parking garage.

Everyone was sure Gateway would always have plenty of revenue to provide property maintenance and updates, as any good landlord should. After all, both teams signed multi-decade leases. Gateway would also get a percentage of all game and special event ticket sales, plus all the parking garage income. Meanwhile, the sin tax would pay off the construction loan. All would be spiffy.

But there was trouble. The parking garage only lost money. And over the years, construction and maintenance costs skyrocketed, but sin tax proceeds decreased. Gateway could approve the projects identified through annual assessments and petitioned by the teams, but it didn’t necessarily have the money to cover them. The teams started to pay for needed repairs, and Gateway started to drown in IOUs.

When Cleveland City Council agreed this past week to provide $20 million to pay Gateway’s most recent debts to the sports teams, we all choked on the news. This is a reasonable reaction, given facts like 46% of Cleveland’s children live in poverty.

Council decided $5 million would come from American Rescue Plan Act funds and $10 million from other projects that don’t need the money yet. So, that means $5 million is coming from the general fund. County Council followed suit Tuesday evening, unanimously voting to pull $2.85 million from the county’s general fund, which pays for basic county services, and borrow another $14.5 million to pay off its half of the Gateway debt.

Our public officials have admitted they’ve mortgaged the future and robbed Peter to pay Paul, but a contract is a contract, and just because past projections failed, the city can’t abandon Gateway. There’s too much already invested. Kinda like the good old Med Mart.

Plus, there’s all that economic development magic. Or not.

Data has proven professional sports teams do NOT increase local wealth or provide long term job opportunities. Their presence uses local resources like police time and can support hospitality businesses (hotels, bars, restaurants) and tourism, but they don’t create jobs. Yeah, we get some community identity and pride from the teams, especially when they play well, (we see you, Cavs!) but is that enough?

Families living in abject poverty receive no benefit from all the hubbub. People’s ability to access good healthcare, nutritious food and job training for empowerment and upward growth is unchanged by the bright lights and loud cheers at the Gateway complex. But those bright lights dazzle eyes, spotlighting Cleveland as a destination, a happening city. That’s nice.

But wouldn’t it be great to get national attention for solving homelessness, improving health outcomes or nurturing hurting neighborhoods through education, job training, community programs and improvements? Twenty million dollars could really help.

Leslie Kouba, a lifetime resident of Northeast Ohio and mother of four completely grown humans, enjoys writing, laughing and living in Cleveland with her wife, three cats and a fat-tailed gecko named Zennis. You can reach her at LeslieKoubaPD@gmail.com.