A Major League Mistake

The long-ago stadium referendum seemed like a win-win-win—shiny new stadiums, money for the schools, lower property taxes. But 15 years later, there’s only one winner.
1609

Illustration by Heads of State

Early this summer, on one of those sweltering Cincinnati afternoons, Mike Brown walked into a meeting. The Bengals owner, along with a troupe of lawyers and staff, needed to review the new agreement that would finally bring some stability to Hamilton County’s beleaguered stadium fund. Every year that fund, and the half-cent sales tax that sustained it, paid off a little more of the Bengals’ Paul Brown Stadium and the Reds’ Great American Ball Park. But the fund paid for a lot more besides, and after years of patches and accounting tricks, the county was now staring at an annual shortfall of around $30 million.

So Brown stepped into a private downtown boardroom—a neutral site—to find even more lawyers, along with the one county commissioner Ohio’s Sunshine Laws would permit. Air-conditioning pumped through the room, but no one seemed comfortable. After all, the years since the Bengals had signed their lease had been filled with bad blood and bad football. Brown cleared his throat. “Look, I may know a thing or two about bad management,” he said to some nervous chuckles. “You guys—well, previous administrations—made too many promises. And this economy’s not helping any of us. But that doesn’t mean the Bengals can’t help our community.”

The lawyers sat down and began going through the agreement, which called for cuts from each part of the stadium fund. The biggest annual cut came from taxpayers, who would see their property-tax rollback drop by two-thirds—that saved $12 million right there. The Cincinnati Public Schools would reduce their payout by 15 percent, freeing up $1.5 million. The Reds and the Bengals would add a small 6 percent surcharge to their ticket prices, generating another $3 million. And the Bengals would pay $4 million in rent for each of the next four years—still less than half the cost of PBS’s maintenance and operations, which the county would continue to cover, but enough to keep the fund solvent until the state’s casinos started chipping in $8 million per year.

There were other concessions: the county would return its private suite and its share of PBS’s naming rights to the Bengals; the Bengals would forgo the controversial “reverse rent” payments at the end of the lease, saving the county some money and the team another nasty lawsuit. Both sides also agreed that they wanted a public relations flourish for the deal’s announcement. At the last meeting, the county had suggested the Bengals might pay for half of the stadium’s new $8 million, high-definition scoreboard. The lawyers paused and looked at Mike Brown. Brown nodded.

The previous section is fiction. None of that actually happened. If you’ve turned on a TV or picked up The Cincinnati Enquirer lately, you know that instead the Bengals and Hamilton County have continued squabbling—and the stadium fund has continued hurtling toward financial disaster.

One reason, of course, is the economy. Since 1996, when voters agreed to increase the sales tax and build two new stadiums, Hamilton County has seen a lot of shops close or move to the exurbs (and a lot of shoppers shift their attention online). Tax revenues haven’t met projections, and each year the stadium fund has fallen further behind. Another reason is the Bengals lease, which requires the county to pay for everything from that new scoreboard to the stadium’s electric bill. Forget the team’s losing record—it’s the lease that earns national derision. In 2009, The New York Times devoted a long story to PBS’s “particularly lopsided lease.” This year, The Wall Street Journal devoted an even longer story to “one of the worst professional sports deals ever struck by a local government.”

This certainly wasn’t what the team or the county had in mind when they signed the lease in 1997. There’s no way to change the past, but the truly puzzling question is why—with all the budget crises and bad press—the two sides haven’t found a way to work together. Both parties would benefit from a compromise. So why do such compromises occur only in the realm of fiction? To answer that question, I reviewed more than a decade’s worth of media coverage and legal documents (and there have been a lot of lawsuits). I talked with current and former commissioners, county employees, judges, lawyers, journalists—everyone but Mike Brown or anyone in the Bengals organization, who declined to be interviewed for this story.

You can almost understand their reticence. At the stadium’s groundbreaking, Brown said the new facility deserved “a winning team. That’s what we plan to do.” Well, they haven’t, even as Brown has continued to turn enormous profits and to manhandle Hamilton County with a mix of business savvy and litigious bullying. But the county deserves some blame, too—and not just the previous administrations. “One of the challenges we’ve inherited was created prior to my arrival,” says Greg Hartmann, who was elected commissioner in 2008, “and that’s that the leases have been in court twice.” Hartmann is taking a shot here at Todd Portune, who was elected commissioner in 2000 and sued the Bengals in state and federal court. But Hartmann is also indulging in a preferred excuse among politicians. Ask Portune why the stadium fund hasn’t been fixed and he’ll say, “I think you’re going to have to ask the other commissioners.” Even the newest commissioner, Chris Monzel, knows the drill: “You’d have to ask some former commissioners.”

And that just about sums up the state of the stadium fund. The local media love to trumpet the county’s long-term projections—a $700 million deficit by 2032!—but that doesn’t make sense when the fund includes so many moving parts. In reality, we’re facing something far worse: a bruising annual argument in which the county looks bad, the Bengals look worse, and everyone wastes time and money. Christian Sigman, Hamilton County’s administrator, says he spends 40 percent of his time dealing with the stadium fund. “Would you rather get kicked in the shins 50 times, or take one shot to the jaw?” Sigman asks. “We’ve been kicking ourselves in the shins for 10 years.”

Actually, the shin-kicking started much earlier. In 1970, the Bengals signed a 30-year lease at Riverfront Stadium, then spent 15 of the next 23 years suing Cincinnati over maintenance and revenues. By 1993, Brown was making the first of several public threats about his desperate need for a new stadium—and his willingness to move in order to get one. The city quickly agreed to renegotiate the team’s lease, handing Brown an extra $2.75 million per year and promising him a new home by 2000.

That’s the first thing to remember about the stadium debate: The Bengals played rough from the beginning. The second is that a small and incestuous group has always driven the discussion. Here’s one example: When Brown made that first threat in 1993, John Williams, the president of the Greater Cincinnati Chamber of Commerce, backed him up. “To even think of it as a bluff would be naïve,” Williams told the Enquirer at the time. Williams happened to be the nephew of John Sawyer, at one time one of the Bengals’ major shareholders; Williams was also a former partner at Taft Stettinius & Hollister, the downtown firm that represented the team in its various lawsuits.

In 1995, Brown threatened more legal action. The city, he announced, had been a couple of days late with a payment of $167,000. That meant they’d broken their generously renegotiated lease—and as Brown saw it, he was now free to leave. City and county officials panicked. While Brown began flirting with Baltimore, Bob Bedinghaus, a new Hamilton County commissioner—and a close political ally of Stuart Dornette, the Bengals’ lawyer at Taft—unveiled his plan for two new stadiums paid for by a sales tax increase.

Polls from this period show that between 65 and 80 percent of local residents opposed the new tax. In fact, when Bedinghaus and another commissioner passed the plan—by this point, the city had turned the stadium mess over to the county—voters collected enough signatures to force a referendum. The Bengals and their allies reacted calmly. They formed Citizens for a Major League Future, a pseudo-grassroots organization that held fund-raisers at local sports bars—but actually relied on the clout of Procter & Gamble, PNC Bank, Fifth Third Bank, and the Cincinnati chamber. With the help of an ad agency and a D.C. pollster, the Citizens preyed on fears that, without its sports teams, Cincinnati would sink to the level of Dayton or Louisville. “Keep Cincinnati a Major League City” sprang up on T-shirts. The Enquirer’s opinion page ran pro-stadium commentary at a ratio of 19 to 1. And Bedinghaus kept adding incentives to his plan: money for schools, a property tax rollback, the promise of a revitalized riverfront.

All told, Citizens for a Major League Future spent more than a million dollars on yard signs and TV commercials. That’s one of the ironies here: The same banks and Fortune 500 companies that make Cincinnati a real “major league city” had to leverage this concept to get voters behind the referendum. Another irony is that Baltimore did end up helping the Bengals—by poaching the Cleveland Browns just four months before Hamilton County’s vote. On March 19, 1996, the referendum passed with 61 percent in favor. Two weeks later, the sales tax jumped half a percent. Everyone agreed this would easily pay for two stadiums—PBS would cost $170 million, Great American Ball Park would cost $160 million—within 20 years.*

We all know how that turned out. Paul Brown Stadium ended up costing $455 million. Dornette and the Bengals wrangled a lease so lopsided it left the county responsible not only for maintenance costs but also for a wildly open-ended guarantee mandating future state of the art enhancements. (How open-ended? The lease mentions such possible “enhancements” as a “ticketless entry system,” “stadium self-cleaning machines,” and a “holographic replay system.”) These were two provisions that Baltimore did not offer to the Cleveland Browns. “Shoot Me, I Voted for the Stadium Tax” now became a popular T-shirt. By the time the stadium opened, in 2000, even Bedinghaus sounded worn down by the whole process—not to mention his tough re-election campaign. “They’re an organization that’s run by lawyers, and they look for every penny,” Bedinghaus told the Enquirer. “It’s going to be a difficult relationship going forward for the next 30 years.”


*Here’s a fair question: Why delve into the stadium fund and barely mention the second stadium? (After all, Great American Ball Park ended up costing Hamilton County $349 million.) Because the Reds and GABP present a much different situation. First, the Reds cost less. This year, for example, their lease required the county to pay only $900,000 in stadium operations. (The Bengals’ lease required $8.5 million.) Second, the Reds play baseball, a sport in which small-market teams don’t make nearly as much cash as small-market football teams. Third—and this is the important one—the Reds really seem to care about their community. Last year, the team bought its own new $10 million scoreboard—even though their lease required the county to cover it.


 

Bedinghaus’s opponent in 2000 was Cincinnati councilman Todd Portune. Portune had developed a special interest in the stadium—he kept a file of stadium-specific articles and academic studies in his office—which he smartly turned into the campaign’s defining issue. Bedinghaus got lots of help from his deep-pocketed friends, notably through a last-ditch TV ad that painted the “Liberal Portune” as an advocate for gay marriage and wanton condom distribution. Still, even after the Hamilton County GOP—which received major contributions from the Brown family that year—spent $200,000 on ads, Bedinghaus lost. Portune became Hamilton County’s first Democratic commissioner since Lyndon Johnson’s presidency. Bedinghaus became the Bengals’ newest employee, eventually rising to director of business development. And those ugly TV ads became a portent for the pettiness and nastiness that would define Paul Brown Stadium’s second era.

In their first two years at the stadium, and Portune’s first two years as commissioner, the Bengals played (and drew) miserably. Portune asked them to consider renegotiating the lease. “They never showed a recognition that this was a deal that had to work for the benefit of both parties,” he says. “It was all about them.”

Then in the spring of 2001, a lawsuit between the NFL and another owner led to the leaking of the league’s closely guarded financials. It turned out that the whole time Brown had been begging for a new stadium, he’d also been pocketing millions of dollars in profit.

It’s worth pausing here to consider just how much money Brown made in the mid-1990s. During their push for a new stadium, the Bengals focused on their dwindling “revenues.” And, on this count, they were right: Cincinnati remained one of the NFL’s smallest markets; Riverfront Stadium had only 20 luxury boxes; and according to the financial papers, the Bengals revenues indeed ranked near the bottom of the league. And yet, in 1996, to take one example, the team had an operating income (roughly, profit before taxes and interest) of $10.8 million, which made them the eighth most profitable team in the NFL.

How did the Bengals make this kind of money year after year? By raking in NFL television revenues and cutting costs. Bengals fans love swapping stories about Mike Brown’s stinginess: He flies free agents in on coach and puts them up in hotel rooms without minibars; he employs four ticket reps for every one scout; and so on. Now, fans could see Brown’s penny-pinching in spreadsheet form. Expenses were broken down by category, and the Bengals often ranked lowest in the league—and sometimes absurdly low. When it came to “team expenses”—football costs not related to player salaries, such as coaches, trainers, scouts—the Bengals spent millions less than many teams.

The one thing the Bengals didn’t skimp on was salaries for the Brown family. While the rest of the NFL was becoming more corporate, and more complex, Brown employed his brother Peter, his son Paul, his daughter Katie, and her husband, Troy Blackburn. Thanks to yet another lawsuit, we know that from 1994 to 2000—the very period in which Brown was leaning on taxpayers for help—his family earned more than $50 million in salaries and dividends, including a yearly “general manager” bonus for Brown himself. And none of this accounts for the team’s appreciation, which is how sports owners make their real money. In fact, the Bengals value has soared from $8 million, when Paul Brown founded the team in 1967, to nearly $875 million today, according to Forbes. Despite those gains, the Bengals boasted the NFL’s lowest win total and second lowest payroll in the 1990s.

With the team’s financials out in the open, Portune again asked the Bengals to renegotiate their lease. That went nowhere. In 2003, with the other commissioners showing no desire to join his cause, he decided to sue, in both state and federal court. The state case fell apart, but the federal one reached the court of Arthur Spiegel, a prominent Ohio judge who’d heard cases on everything from Pete Rose’s back taxes to Cincinnati’s race riots. Portune argued that the Bengals, along with the NFL, had violated antitrust laws by “extorting” their stadium from the people of Hamilton County. The lawsuit gained popularity—the Enquirer endorsed it in an editorial—and eventually the county joined Portune as a plaintiff. The Bengals, meanwhile, returned to making threats. “It’s going to get ugly,” Blackburn told the Enquirer. “It’s going to get expensive.”

He was right. The county suffered from infighting and confusion. (At one point, the county prosecutor sued the county commissioners to stop them from suing the Bengals.) The Bengals counter-sued, claiming their new stadium needed $15 million in repairs. As the case stretched on—and as the legal fees mounted—things got even worse. In the 2004 election, Brown again funneled thousands of dollars to Portune’s opponent. In 2005, he trotted out Marvin Lewis to talk about how the lawsuit was “a cloud over our heads.”

That same year, Judge Spiegel ordered the team and the county to try mediation. The two sides talked for several days, and according to Pat DeWine, who was commissioner at the time, the Bengals offered a deal that would have been “a much better result for the county.” But instead of taking it, the county pressed on, only to lose on a statute of limitations ruling. “I still believe we had a strong case,” says Stan Chesley, who represented the county. But the lawsuit turned an ugly relationship into an acrimonious one.

Paul Brown Stadium’s third era began when Portune’s lawsuit ended—but for the first few years that era barely involved the Bengals. Costs kept mounting. Even PBS’s maintenance was costing more than expected, with the county paying around $9 million per year, just in upkeep. With the team-county relationship at its lowest point, the commissioners turned to a series of stopgaps to make up for the under-performing sales tax. They raided the stadium fund’s “rainy day” reserves. They refinanced the bond payments. After settling its lawsuit against PBS’s architects, the county dumped the $14 million it received straight into the stadium fund. They persuaded the school system to delay its payouts in exchange for more money down the road.

“Prior commissions kept punting and punting,” says David Pepper, who served as a commissioner from 2006 to 2010. “The 2009 commission caught the punt.”

Actually, the commission caught the punt, then fumbled it. Officials approached the Bengals about a new compromise. When the team sent a nine-point letter outlining its demands, the county took nine months to reply. “We were trying to formulate some sort of response,” says then-county administrator Patrick Thompson. Meanwhile, the commissioners were mulling a reduction of the property tax rollback. Each year, the rollback sent 30 percent of the stadium fund back to Hamilton County homeowners, cutting their property tax bills by around $40 per $100,000 in home value. Reducing the rollback meant breaking a promise to voters, but it also meant keeping the stadium fund afloat. Pepper found himself the only one voting for the plan. “Each one was hoping the other one would vote with me,” he says of Portune and Hartmann. “They had no plan.” (Portune continues to oppose reducing the rollback. Hartmann says, “I had just joined the commission, and I was in the minority.”)

Portune and Hartmann ended up working together, for once, scrounging up one last short-term fix. That made 2010 a make-or-break year for the stadium fund. The county reached out to the Bengals again—and thus began the strangest (and saddest) episode in the stadium fund’s ignominious history.

Throughout the summer of 2010, the county continued negotiating with the Bengals. Thompson says Bedinghaus was his “main contact”—and that the discussions were difficult. “We had to go through their laundry list of items they wanted,” Thompson says. Still, the county was out of options. Then at the start of training camp, Mike Brown held his annual media luncheon—in many years, the only time he talks to the press—and decided to unload on the county. “We made a deal with the county,” Brown told the Enquirer. “We’ve lived up to it, and we expect them to live up to their end of it. They are going to have to figure out some other way.”

It was the latest example of Brown’s bizarrely contradictory behavior. Just two weeks before the luncheon, Hartmann had enjoyed a productive meeting with team officials. Three weeks after, the Bengals agreed to help the county pay for a new $890,000 system of cash registers. Both sides called it a gesture of goodwill, and the negotiations continued. On December 1, the commissioners finally agreed to reduce the property tax rollback—and announced they’d reached a small but meaningful deal with the Bengals. In exchange for a few concessions and promises, the Bengals agreed to pay about $8 million in rent over the next five years. The commissioners could put an optimistic spin on their property tax vote; the stadium fund could stabilize for 2011 and 2012; and the Bengals could bask in some rare positive PR. The team even released a statement: “The Bengals hope that today’s steps will serve the public interest by helping to stabilize the county’s financial picture.”

Then something surreal happened. The Bengals called the county and said they didn’t really have a deal—and that the team wanted a 10-year extension on its lease. That would have meant 10 more years of maintenance; 10 more years of state-of-the-art upgrades; and a total taxpayer cost, to take a conservative estimate, of well over $100 million.

Several weeks went by before news of the non-deal broke. The Bengals accused the county of reneging on the 10-year extension, though they never said why the county would have given up so much for a few million in rent. The commissioners denied that the extension had ever been on the table. “I still can’t for the life of me explain what happened on the Bengals side,” Pepper says. According to several people I spoke with, the Bengals officials did agree to the deal—only to have Brown decide after the fact that he needed the extension.

Either way, the deal fell through. When Chris Monzel joined the commission in January of this year, Hartmann became the board’s president. One of his first moves was firing Thompson. While Hartmann says that had nothing to do with the Bengals negotiations, it did highlight the tension between him and Portune, who says he was told Thompson would not be fired. “I’ve already begun this year having been lied to directly by Greg,” Portune wrote in an e-mail to Christian Sigman, Thompson’s replacement.

Portune tried (and failed) to get a stadium ticket tax on this November’s ballot as a private citizen. Meanwhile, Hartmann explored other solutions to the stadium fund, even floating the idea of eventually raising the sales tax. Although Portune had championed increasing the sales tax as recently as last year, the two commissioners still can’t seem to find common ground.

“Commissioner Hartmann didn’t make a proposal,” Portune says. “When he makes a proposal, I’ll react to that.” Why hasn’t Portune approached Hartmann to learn more about his idea? “Because I’m in the middle of other things right now.”

Early this summer, on one of those sweltering Cincinnati afternoons, Mike Brown walked into a press conference. It was his annual media luncheon, and he took questions on the NFL lockout and his new quarterback, Andy Dalton. Then someone asked about his old quarterback, Carson Palmer, who announced at the end of last season that he’d rather retire than return to the Bengals. “Carson signed a contract; he made a commitment,” Brown said, a growl edging into his voice. “If he is going to walk away from his commitment, we aren’t going to reward him for doing it.”

That answer tells you everything you need to know about Brown. Palmer was one of the best (and nicest) players in Bengals history. Instead of helping him out—and netting the team some draft picks—Brown took a baffling stand that underscored how, for the Bengals, loyalty and commitment are qualities other people owe them.

At the luncheon, someone also asked about The Wall Street Journal’s bleak story on the stadium lease. “If you’re interested in ancient history,” Brown said, resuming his professorial drone, “…it’s very simple.” Brown blamed the commission for diverting funds to the schools, the riverfront, and Ft. Washington Way, distorting the financial record and ignoring that the county secured grants for many of these extras. He neglected to mention that, without those extras, most of which appeared in even the earliest stadium proposals, his referendum never would have passed.

Over the years, Brown has relied on peculiar logic to make his arguments. (Just one example: While he loves comparing PBS’s cost to that of stadiums in Jacksonville and Cleveland, Brown never mentions that owners in both cities have helpfully renegotiated their leases.) But even if his arguments were completely sound, why would an NFL owner pick such public fights with his city? It’s not classy. It creates heaps of bad press. And it all happens while Brown is earning crazy amounts of money in a stadium paid for by county taxpayers.

The county, for its part, seems to be trying a new strategy. “The issue has nothing to do with the Bengals,” Sigman says. “The issue has to do with there’s not enough revenue.” It’s not just talk. This summer, the Bengals asked for another upgrade: a $307,000 K2 Dyno Replay System. The team refused to help, and Portune continued to protest. But the other commissioners knew they had to pay for it.

There are rumblings of a new deal being hammered out with the team, but there are potential pitfalls on both sides. Even if the Bengals agree to help with the stadium’s capital improvements, it may not be enough. And if Monzel and Portune refuse to reduce the property tax rollback, everyone goes back to square one. Hartmann says that with the 2010 deal “there were miscommunications on both sides.” This time, “we’ve got one negotiator,” he adds, “and all the discussions are running through that one person.”

And yet that one person still has to deal with Mike Brown. Brown remains as stingy as ever. (When the Bengals did HBO’s Hard Knocks, one scene showed a player’s shock that he had to rent a TV if he wanted one in his training camp dorm room.) The team makes more money than ever. (According to Forbes’s estimates—and the Bengals have cited Forbes when arguing with their critics and fans—last year the team ranked fifth in football with an operating income of $44 million.) And he continues to field lackluster teams. (Without Palmer, the Bengals are rebuilding again, and fans are staying home—which means that thanks to the NFL’s blackout policy, local television viewers aren’t enjoying the new K2 replay system they paid for.)

One of Brown’s favorite ways to duck criticism is to claim that once the team starts winning, the complaining will stop. But the stadium fund has never been about wins and losses. It’s about hoary old concepts like citizenship and community. Brown continually stresses that the Bengals rank near the bottom of the league in revenues, without acknowledging that Hamilton County trails other NFL markets in revenues, too. He’s never acknowledged that the stadium fund’s other stakeholders—the schools, the taxpayers, and even the county—have made sacrifices. He’s never admitted that he’s the only one who has the power and money to end the annual squabble and create a long-term solution. Instead, he’s convinced himself that we’re out to get him—that as someone who inherited a taxpayer-subsidized, multi-million dollar business, he’s the victim.

Poor Mike Brown.

Illustration by Heads of State.
Originally published in the November 2011 issue.

Facebook Comments