Thought bubble: Ohio's $600 million for Browns stadium
👋 Sam here, offering some context on the money the state of Ohio may allocate to the proposed Browns stadium in Brook Park.
State of play: House Republicans passed the biennial state budget last week, which included $600 million in state-backed bonds for the Haslams' project.
The Senate and Gov. Mike DeWine must also approve before it's formally adopted.
Friction point: Paying back those bonds could cost Ohio taxpayers nearly $1 billion, once interest is included, according to DeWine.
That money will not be repaid by the Browns in the same way that you or I repay a loan.
What they're saying: The team argues the stadium and surrounding new development will generate sufficient tax revenue to pay back the debt over the next 25 years.
By the numbers: The Browns have agreed to pay $38 million up front in what they're characterizing as "prepaid rent" to alleviate state risk. (Lawmakers amended that figure to $50 million.)
But other than that, the team itself is not paying off the bonds at all. Revenue from parking taxes, admissions taxes, and income taxes will be used.
Between the lines: History tells us that the economic projections of pro teams tend to be overstated to justify public subsidies. Remember when Gateway initially promised 28,000 jobs?
Between 1989 and 1996, the entire central business district only grew by 6,300 jobs, including the menial, low-wage jobs the stadiums created.
The state's foremost stadium financing expert, Ken Silliman, believes the Browns revenue projections are "way too optimistic."
Plus: Economists have published studies for years showing that pro stadiums are great at shifting economic activity, but not at creating new spending.
In other words: Even if the Browns' projections are accurate, it would likely come at the expense of the rest of the region — leeching spending (and tax revenue) from other places where we already spend our money.
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