The announcement this week by Cavs owner Dan Gilbert to pull out of a deal to make $140 million in upgrades to Quicken Loans Arena leaves the future of the venue in limbo. An Ohio State Supreme Court ruling said that if the petition to get the referendum on the ballot has the valid signatures, it can go forward . Our commentator Terry Pluto explains why the project was good for Cleveland.
Terry Pluto says the Cavs thought they had a deal. Both Cuyahoga County and Cleveland City councils approved financing for half of the project cost -- $88 million in admissions taxes and the county would sell bonds.
"The deal was a sound one because unless you went to an event at Q --- those are the only people who are paying for it."
The Cavs were hoping to start construction this summer on a glass-enclosed facade, an expanded entry and new gathering areas. But, the Supreme Court ordered that a ballot issue on the financing package must go to voters, possibly not until next May.
"The deal would have to be re-negotiated, assuming [the ballot issue] passed," Pluto says. Construction costs and interest rates would have to be reconfigured.
Money for neighborhoods?
Community groups, who collected signatures for the referendum, opposed spending public tax dollars on the upgrades. "If they suddenly wiped out Quicken Loans Arena or Progressive Field, they're not suddenly going to pour all this money into the neighborhoods," Pluto says. "They're just not. In fact, what you're losing is a lot of tax dollars that are being paid."
Pluto says he talked with Cavs Senior Vice President Tad Carper, who said research shows the average lifespan of an NBA arena is 22 years.
"My last year on the NBA beat was 1993," Pluto says. "Since that time, about 80 percent of teams have new arenas. Chicago, Indiana, Boston, L.A. Lakers, L.A. Clippers... and Detroit will have a new one."
Pluto also says the deal ensured that the Cavs would stay in the facility for almost 40 years, until 2037. It would also have taken the Cavs lease from 2027 to 2034. The Cavs also had agreed to cover any project cost over-runs.
"I thought it would have been good for the city, keeping the arena viable."
Pluto says the Cavs will be recalibrating. "They might as well put it on the ballot and see if it passes and see what the Cavs do.
Why should the public pay?
Pluto says the deal made sense because the Q is owned by the city of Cleveland and Cavs owner Dan Gilbert had agreed to pay half the cost -- $70 million. "And when he bought the team, he put in $15 or $20 million out of his own pocket."
And, Pluto circles back to the point that the public funding would have come from admissions taxes, which are only paid by people who are using the facility.