Over the past few months, many articles have questioned how Cleveland will pay for the millions of dollars of upgrades demanded by their local sports owners. Gateway Economic Development Corporation, the owner of the Cleveland Indians ballpark (Progressive Field) and the Cleveland Cavaliers arena (Rocket Arena), is supposed to pay for venue upgrades with revenues from a 1990 voter-approved sin tax. But the sin tax has never come close to producing the revenue needed for venue updates. This means the city had to pay for venue upgrades using other city funds, including the general fund.
Implementing the sin tax as a specific amount (and not a percentage that would increase with inflation) causes the funding gap between venue needs and sin tax revenues to continue growing larger over time. Over the last few years especially, both the Guardians and Cavaliers have continued asking for upgrades with money that is simply not in the city/county’s wallet. In 2023, the Guardians wanted $67 million for upgrades to Progressive Field, while the Cavaliers wanted $80 million for updates to Rocket Arena. The City of Cleveland and Cuyahoga County had to step in directly, approving $20 million each to cover repairs. Last month, both teams informed city officials that even more expensive upgrades to their venues were coming up shortly. In the last few days, an updated facility condition assessment notified Gateway that both venues will soon need over $400 million in capital repairs in the coming years. As Crain’s Cleveland Business summarized, “There isn’t nearly enough money to pay for all those repairs.”
Most rational people would look at this situation and wonder why the billionaire owners are not paying for 100% of these improvements. Most people would also understand that the city of Cleveland cannot continue funding the venues at this financial price. Then again, there are still city board members who believe that the venues are somehow a “good value for the city”…because the teams aren’t demanding new venues? What? Maybe they aren’t demanding new venues, but they sure as hell seem to want a lot of money just about every year.
Let’s see how one local reporter discussed this fantastic deal for taxpayers:
“The Cleveland Cavaliers need upgrades to their arena, and local taxpayers are once again searching for a way to pay for them. Last week…Gateway Economic Development Corporation unanimously approved spending $24.4 million to upgrade broadcast systems, elevators and escalators at Rocket Mortgage FieldHouse. If this multi-million-dollar investment feels like déjà vu, it’s because the Cavs’ request comes just a few years after the arena underwent a $185-million renovation, of which $70 million was supplied by taxpayers. Gateway doesn’t have enough money to fund the upcoming round of upgrades, and neither Gateway nor public officials could tell cleveland.com where the money will come from” – 08/19/23, Cleveland.com
How did Cleveland get into this situation? In 1990, voters in Cleveland approved a new sin tax that would build venues for the Indians and Cavaliers. Many people voted yes, since the Indians and Cavaliers would leave if the tax wasn’t approved. Additionally, people must understand that the needs of sports venues in 1990 were much less costly than the needs of venues today.
Cleveland.com wrote a story recently where the newspaper reviewed articles from 1990 that discussed the sin tax vote. What they found from 1990 is kind of unbelievable:
Reporters wrote many stories to determine whether the sin tax revenue would cover the “public’s committed 50% share” of the venues.
There were some people in the media who actually expected the sin tax to create so much revenue that it would allow the city a profit. Some wondered aloud what other city needs could use this unexpected amount of additional money.
Supporters of the sin tax claimed that taxpayer approval would allow for the creation of 26,000 new jobs. How did that go? The sin tax passed, and the job forecast “fell well short of its target.”
Supporters of the sin tax claimed that taxpayer approval would allow for the creation of new business buildings in downtown Cleveland. How did that go? Well, the people at Gateway tried their best but ended up not building “as many office buildings in the area…as we thought…but we gained in other ways.” Where can we find these gains? No idea. He stopped talking after that sentence.
Those in power at the city discussed the sin tax with the public, right? The city made sure to include language about long-term financial needs, right? Of course not. The 1990 city government had “little, if any, public discussion about setting up a maintenance or long-term capital fund for the facilities.”
It took over a year after the vote to negotiate and sign the legal terms that dictated who was responsible for funding the venue demands. This meant that residents went into the vote without arguably one of the most important pieces of information about this deal. HOW IS THAT POSSIBLE?
Why did the city allow itself to be responsible for all the cost overruns on Progressive Field and Rocket Arena? When both venues were finally built in 1994, they exceeded their budgets, so the initial sin tax could not cover the overruns.
How on earth did the city let these lease agreements get to be so wildly one-sided? It happens when you have idiots inexperienced people working on important financial documents. Especially when dealing with long and complicated sports legal agreements. The lease that Gateway signed with the teams is lunacy. Any repair or replacement over $500,000 at Rocket Arena? The city will take care of that. All capital repairs at Progressive Field? The city will take care of that. In 2018, the Cavaliers CEO, Len Komorowski, insisted that the Cavs pay for “all operating, maintenance, repair, and capital expenses” at the arena. Um, what? You absolutely do not. Are we just making up lies now? Who thought these terms were even remotely fair to taxpayers? How?
When Signal Cleveland went over the team leases, they found out what the teams are usually liable for…and I am not kidding…“replacing light bulbs, doing touch-up painting, and cleaning the stadiums after events.” But even paying for those small expenses is hard for these local teams to accomplish. The teams have been known to demand repairs for the small expenses they are legally obligated to pay. Sometimes, people ask if the team is really paying for upgrades that they are publicly patting themselves on the back for.
Back to 2017. When both venues were needing major renovations, the Cavaliers financed $115 million of the $185 million project. The Guardians agreed to spend $67.5 million on the $202.5 million project. The Cavs were paying for 62% of their construction projects, while the Guardians paid for 33% of their updates. Sadly, I think when most people hear that a team is paying for around half of the project; they consider the deal to be fair. But why? Let’s think about this for a second. High poverty, foreclosure rates, and huge pension/retiree financial issues have literally pegged the city of Cleveland as one of the most “financially stressed” cities. Dan Gilbert, on the other hand, has an estimated net worth of $22.5 billion (according to Forbes from May 2025), which makes him the 88th richest person in the world.
Given this, one would think that a man with Gilbert’s wealth would see the incredible amount of financial issues in the city and therefore pay the venue expenses out of his own pocket. I mean, he used his sports team to lower his taxable income by over $400 million. Oh, no. Not a chance. In 2017, when the Cavaliers were trying to get an arena deal passed by the city council, a coalition called Greater Cleveland Congregations opposed it. The coalition believed that money should not be used on the arena and instead put to use “improving the living and economic conditions in the city’s neighborhoods.” Gilbert threw a hissy fit over someone voicing objection toward his proposal and scrapped the arena upgrade altogether. Gilbert issued a press release, stating his disappointment after they rejected “such a strategic solution”. Last, Gilbert claimed that since the public paid for half of the costs, it “appeared to be a very good deal” for the city.
City leaders have finally begun to ask some basic questions that everyone wants to know…why does Gateway never seem to fight that hard with the teams on contract terms? Just last year, one council member, Michael Polensek, openly mocked the local teams for making a lot of money off their TV deals and other revenue sources yet letting the “public pour money into highly visible stadium overhauls” while also allowing other repairs to be “left for the taxpayers to handle.”
“You had money to do the glitz and glamor, but you didn’t have money to fix your fricking elevator…That ain’t cutting it. You guys got to come up with a better game plan, and Gateway better get with it.” — 11/25/24, Ward 8 Council Member Michael Polensek, Signal Cleveland
Today, the sin tax brings in between $4 million and $5 million per venue. The teams are looking at over $400 million. That means the sin tax will be just a bit short on money. Oh, who cares if the city needs police or firefighters or medics or people like that?
