With the collapse of the Quicken Loans Arena deal, Cleveland joined St. Louis and San Diego on the list of cities in which public sports projects have recently fallen through.
San Diego voters in November last year with hotel tax dollars. In April this year, a bid for a Major League Soccer stadium .
Now the Cavaliers say they will back out of a public-private financing deal to renovate the Q. The groundbreaking had been delayed for brought by Greater Cleveland Congregations and other groups. The team said the project would face higher construction costs and interest rates as a result.
The Cavaliers would have paid off half of the $140 million in bonds sold to finance the deal. Cleveland, Cuyahoga County and Destination Cleveland would have paid for the other half, with additional money flowing into reserve funds. The total public cost was roughly estimated to reach as high as $160 million over 18 years.
It鈥檚 not entirely unusual for the public to reject some stadium deals, Smith College Professor Andrew Zimbalist said. What鈥檚 different from past decades, he said, is that many cities and states are facing more difficult fiscal situations.
鈥淭here鈥檚 certainly an increased sensitivity to public financing, and there have been more and more deals that have been privately financed,鈥� Zimbalist said. 鈥淗owever, the privately financed deals tend to have hidden public subsidies.鈥�
While there may be growing public discontent with stadium deals, Stanford University Professor Roger Noll said cities don鈥檛 usually see so much pushback on proposals that cost less than building a new arena.
鈥淭hat鈥檚 why it鈥檚 a bit strange that this one has fallen through,鈥� Noll said, 鈥渂ecause it really isn鈥檛 as much as many other teams have gotten just in the last couple of years.鈥�
Noll also questioned whether higher construction costs in the near future would have been prohibitive for the Cavaliers.
鈥淐onstruction costs do go up on an annual basis, but they go up in the range of three to five percent,鈥� Noll said. 鈥淪o it鈥檚 hard for me to figure out why, if it鈥檚 going to cost an extra $7 million, you just say, 鈥楾o hell with it, I鈥檓 not going to do it.鈥欌��
Noll said he believes the Cavaliers may have more to say in the near future.
鈥淚t seems to me they鈥檙e unlikely to say, 鈥極h, okay, forget about it, we鈥檙e going to play in this old facility for 20 more years,鈥欌�� he said. 鈥淚 doubt that that鈥檚 going to happen.鈥�
The Q deal would have extended the end of Cavaliers鈥� lease from 2027 to 2034.
Cleveland would have divided admission tax collections at the Q between its general fund and debt service on the project.
Those payments would have started in 2024. With the Cavaliers鈥� lease now set to expire just three years later, it鈥檚 uncertain what will become of that money. City spokesman Dan Williams said it鈥檚 too early to tell.
Destination Cleveland would have pitched in $44 million over 18 years from the hotel bed tax money it receives.
鈥淲ith the dissolution of the Q renovation funding packaging, the funds will continue to flow to Destination Cleveland as required by law and will be utilized for travel and tourism-related capital projects that contribute to the continued growth of the industry,鈥� the group鈥檚 president, David Gilbert, said in a statement provided through a spokesperson.
Cuyahoga County would also have contributed money from arena sales tax collections and a fund associated with the convention center and downtown hotel.
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