The arena and stadium complex campaign is in full swing. Columbus Dispatch headlines touted contribution after contribution from major Columbus-based corporations the last few weeks. On Tuesday, January 28, the Dispatch juxtaposed the two following headlines on page one: “Kasich setting his sights on corporate welfare” and “Gift meets goal for complex.” A $17.5 million pledge from Nationwide Insurance, plus previous pledges of $35 million from Bank One and $5 million from Worthington Industries brought the private sector gifts for the arena/stadium project to $57.5 million. These highly hailed corporate gifts constitute only about 20 percent of the estimated project costs.
Arena and stadium complex foe Richard Sheir found this headline combination ironic, to say the least. He believes that the project’s funding represents robbing the poor and schoolchildren and ultimately giving to the rich, the wealthy sports team owners.
In Sheir’s analysis the arena/stadium project is “corporate welfare” in its most blatant form, and he’s using the Franklin County Convention Facilities Authority’s own numbers to prove his case to the public. He argues that the 80 percent of the public funding comes from perhaps the most “regressive” form of taxation-the sales tax. According to Sheir, an individual’s gross income is $9,000 or less, an absurdly high 8.5 percent of it will be eaten up by the sales tax increase under normal spending conditions. By contrast, this translates into only 1.2 percent of the incomes of the wealthiest fifth of the population. Sheir bases his conclusions on income and expenditure figures released by the state annually.
Sheir said that the public should look at the recent “corporate gifts” as little more than a transfer of funds from local school districts to the arena/stadium project. “Let’s be honest, they’re taking from the schools and giving to the arena and stadium.” Sheir explained that the now-infamous 75 percent, 10-year tax abatement granted to Banc One by the Olentangy School District that amounts to $12 million lost to the school district over 10 years, is one of the reasons why Banc One can give $35 million over 18 years to put its name on the stadium. Banc One reported a $1.43 billion profit in its last tax statement. Sheir pointed out, “Why do they need to do this to their community? This question needs to be asked.” He also noted that Nationwide was a past recipient of a large tax break as well.
Cliff Wiltshire, the assistant managing editor of Suburban News Publications, made the same argument in a December 25 column. “By agreeing to relocate to an otherwise undesirable location at Polaris (sarcasm yellow alert) the financially struggling company (sarcasm red alert!) was granted a 75 percent tax abatement on property improvements for 10 years. Instead of shelling out an estimated $1.6 million annually-most into the Olentangy school district coffers-Banc One will pay about $400,000 per year.”
Sheir stressed that a close reading of the convention authority’s own numbers does not stand up to scrutiny. “It’s totally outrageous to have a $15 million slush fund from taxpayer’s dollars that’s going to go to some wealthy owner,” he commented. His reference to the $14,755,000 Operating Reserves projection can be found on page 118 of the Multi-purpose and Sports Facilities Work Group Report issued December 14, 1995.
“If you’re projecting over half a million dollars in profit the first year, why would you need $15 million in operating reserves?” asked Sheir. “It’s ludicrous; I suspect it’s really a hidden ‘locator fee,’ masquerading as ‘operating reserve,’ to lure some franchise.” Sheir predicted that the “revenue streams” such as concession sales and parking fees will be “stripped away just like they were at Cleveland’s Gateway Stadium” to lure some professional sports owners or league to relocate in Columbus. He contended that instead of the money from parking and concessions going back into the arena/stadium project, it’ll be diverted to the pockets of the owners. “They’re not bonding the parking garage. Why? Why not pay for it over time if there’s a steady revenue stream as they project? I’ll tell you why. Because I suspect they want it as an enticement to give to whatever franchise will locate here,” Sheir said.
Already, sports entrepreneur Lamar Hunt, Columbus businessmen Ron Pizzuti and John H. McConnell, Wolfe Enterprises, and Ameritech have formed an investment group attempting to acquire a National Hockey League expansion team for Columbus. Brian Fitzgerald, director of internal affairs for Ameritech, told the Dispatch: “Because you don’t have the building yet in Columbus, we can’t give them much, other than to say we’ll negotiate a good one,” in reference to a team lease of the proposed arena.
Sheir also suggested that two investors in potential arena/stadium land appear to have a good deal going. Colomet, Inc. and C.P.-Maple Street are apparently the big winners in the land acquisition game. Both bought the land right after the last arena proposal was turned down by voters a decade ago. A tour of the site shows that the vast majority of the land is currently being used as pay-in-advance parking lots.
Colomet was incorporated in 1962 and is a real estate subsidiary of Columbus Southern Power, according to John DiLorenzo of American Electric Power. The property is adjacent to the AEP headquarters on Front Street.
The arena and stadium are budgeted for $2.5 million apiece in “Site Development Costs.” Curiously, the Franklin County Convention Facilities Authority, established by the Franklin County Commissioners, has given the joint arena/stadium project a bizarrely low overrun estimate, Sheir emphasized. “Their Project Contingency is only 4 percent. It’s right on page 115. Remember, they [Franklin County Commissioners] estimated the Franklin County jail at $2.2 million and they’re now at $12 million. That’s closer to 600 percent.”
Perhaps most frightening, in Sheir’s view, is the “field of dreams” nature of the project. The numbers being tossed around by arena/stadium advocates from the Deloitte & Touche Economic Impact Report are based on the following assumptions: that the fledgling Major League Soccer (MLS) will survive, and that Columbus will obtain both a Canadian Football League (CFL) franchise and a National Hockey League franchise. These are big “build it and they will come” assumptions.
And what if they don’t? Sheir has the answer. “Read their own report. They’ll be losing a million to a million four-hundred thousand dollars a year hosting high school sporting events and band competitions.”