Wednesday, January 13, 2010
"Years after a wave of construction brought publicly financed stadiums costing billions of dollars to cities across the country, taxpayers are once again being asked to reach into their pockets. From New Jersey to Ohio to Arizona, ther stadiums were sold as a key to redevelopment and as the only way to retain sports franchises. But the deals that were used to persuade taxpayers to finance their construction have in many cases backfired, the results of overly optimistic revenue assumptions and the recession. ... In 1996, voters in Hamilton County approved an increase of half of one percent in the sales tax that promised to build and maintain stadiums for the Bengals and the Reds, pay Cincinnati's public schools and give homeowners an annual property tax rebate. The stadiums were supposed to spur development of the city's dilapidated riverfront. ... The teams have not volunteered to rewrite their leases. So in the coming weeks, the county plans to cut back basic services, lower its legal bills and drain a bond reserve fund with no plan for paying it back. ... Mark Rosentraub, the author of the book 'Major League Losers,' said many of the stadium deals included 'revenue bombs,' with financial traps like balloon payments on debt in later years and sweetners like the Hamilton County property tax rebate to win public support", Ken Belson at the NYT, 25 December 2009, link: http://www.nytimes.com/2009/12/25/sports/25stadium.html.
No one should be surprised by this. My answer: default the muni bonds supporting these deals. Let the Bengals leave Cincinnati. Who needs 'em? Taxpayers support billionaire sports franchise owners and milionaire players with concessionary finance. Disgusting. Where are the supposed spinoffs? About 12 years ago we discussed these deals in my LA finanical group and concluded they made no sense and the projections that rationalized them were nonsense.