Last Tuesday afternoon, Cuyahoga County Executive Armond Budish stood at a packed County Council meeting and emotionally pleaded for Council to approve the most recently proposed $70 million public handout to Dan Gilbert for upgrades to Quicken Loans Arena. Even though there is no legal obligation for the public to provide the proposed subsidy, the County Exec went as far as to say, “we stand a very good chance of losing the Cavaliers and the Q … at the end of the lease if we don’t make this deal now.”
Here, Budish explicitly communicated on Gilbert’s behalf the absurd threat that Gilbert and his surrogates have been hinting at for years to justify the constant flow of nine-figure subsidies to the Cavaliers and Cleveland’s other two professional sports teams (all three, of course, privately-owned): “Give us your money, even though we don’t need it, because if you don’t we’ll pack up our balls and leave town just like Art Modell did.”
The message here is nothing short of extortion, defined by Ohio law (Revised Code 5924.127) as the “communication of threats to another person with the intention thereby to obtain anything of value or any acquittance, advantage, or immunity.” It’s outrageous enough that Gilbert and his brethren consistently hint at this threat while never making any effort to disclaim it. Much worse when the County’s top elected official—who should be calling Gilbert out on the veiled threat—instead only helps make it more explicit, giving it credence and using it to sway public opinion.
Imagine that Budish really believes it to be true that Gilbert and the NBA would abandon this profitable market and rabid fan base, LeBron’s backyard, in the wake of LeBron’s historic achievements here; that Gilbert would walk away from the casino monopoly that Ohio voters granted him in 2009, his Quicken Loans office, his gigantic (and gigantically subsidized) investment downtown, over not getting yet another handout that he obviously doesn’t need and that ultimately amounts to peanuts for him. Here, it’s worth noting that he just announced plans to build a $700 million skyscraper in Detroit that would be the city’s tallest.
On the flip side, speaking of Cuyahoga County’s more than $1 billion debt load, Budish himself recently said that, “our credit-card is maxed out.” Meanwhile, the County’s infant mortality rate, already among the worst in the nation, continues to spike, with the gap in infant deaths continuing to widen deeply along racial lines. And just this week the CDC issued a shocking report that 20 percent of high school students in Cleveland’s poverty ridden public schools attempted suicide in 2015, the highest rate among 19 urban areas surveyed in the study.
Whether or not Budish believes that Gilbert would or could ever move the Cavs away, any sane discussion of the proposed subsidy would of course have been far different from the display Budish made at last week’s Council meeting. Such as to simply point to the extremely pressing alternative uses for these funds. And to request of Gilbert that if he really needs this money to keep the Cavs in town, to publish his financial statements so that taxpayers can be sure that this is the case (of course, it isn’t).
And if Gilbert—who has consistently refused requests to open his books—can’t make this case (of course, he can’t), and ratchets up the threat to leave if taxpayers don’t keep handing him money that he doesn’t need, why wouldn’t the County just say good riddance? Who needs a “partner” like this?
One need not take issue with the notion that the Cavs are an asset to the community to point out that the franchise would be even more of an asset if its owner would pay his own business expenses. By refusing to subject these subsidies to real scrutiny, and instead communicating absurd threats on the sports-owners’ behalf, Budish, Frank Jackson, and their corporate sponsors at the Greater Cleveland Partnership have made clear that they’re becoming increasingly comfortable with the widening economic and racial divides that persist in the region. Rotting schools, neighborhoods, and public health, spiking infant mortality rates and teen suicide rates for some. Publicly subsidized NBA basketball, concerts, and fancy downtown restaurants and bars for others.
Someone should ask LeBron what he thinks about the idea that Gilbert would rip the NBA away from his hometown for reasons that amount to no more than his own greed.
This article appears in Feb 22-28, 2017.
So the provision of the Revised Code Peter cites does not apply to Mr. Gilbert’s statements. That provision is found in Chapter 5924 of the Ohio Revised Code, titled “Code of Military Justice.” The code, and the provision on extortion, only applies to members of the organized militia. R.C. 5924.02. Which Mr. Gilbert is most assuredly not covered by.
If the Cavs’s allowed them to leave tomorrow, he wouldn’t. Please list a city willing to pay to build a new arena, give the Cavs a better deal then they currently have in order to lure an NBA team. There isn’t one.
I’m opposed to the renovations because I don’t think the value per dollar spent is there. That said, this article is extremely disappointing. Like others I’ve read on Cleveland Scene recently, its an appeal to base emotions with horribly framed arguments and poor contiguity. First, the fact that Gilbert can afford to remain in Cleveland without the subsidies has little, if anything, to do with whether it makes economic sense for him to move the team if the City doesn’t subsidize the renovations. Second, the argument that there are other pressing needs for the money fails to approach the counterfactual – if the Cavs leave at the end of the lease, what’s the loss in revenue to the City, and what’s the loss in funds towards those programs? Third, that’s not extortion. Extortion is a criminal offense defined under 2905.11 of the Ohio Revised Code. Though it doesn’t matter, since clearly this was meant to be another emotional call to arms, it’s just bad journalism. I guess, in the end, that’s the point of my long-winded comment.
Extortion is extortion whether it’s specifically prohibited by law or not. The definition provided in the Ohio Statute above is consistent with the dictionary definition, per Random House: “to wrest or wring (money, information, etc.) from a person by violence, intimidation, or abuse of authority; obtain by force, torture, threat, or the like.” The point is that it’s wrong, whether it’s illegal or not.
PS: I’ll pay $100 cash to either of the two commenters above (“J” or “Cleveland Pride”) if they can prove they’re not being paid by Gilbert to astroturf this comments section.
Mike, I would agree I don’t think Dan Gilbert will move the team but I bet Columbus would love to have an NBA franchise. At the rate columbus is growing they could easily support a professional team.
Peter Pattakos uses typical progressive tactic of attempting to discredit anyone that doesn’t agree with them. However, what Peter doesn’t know is if the argument made is correct, it doesn’t matter who gave it.
For what it’s worth, I raised similar objections to members of County Council last week. For those who are upset by the tone of this article, my own style is about as emotion-free as you could ask, but I drew much the same conclusion about Armond Budisch playing the bad guy role for Dan Gilbert.
So did my own representative on County Council, who replied “I agree with your position. I believe Mr. Budish would have been better off to leave the threat out of his presentation.”
Peter- Your attention to detail might be at the root of your poor journalism. As I noted above, I’m opposed to the renovations. I’m not on Gilbert’s payroll, and I doubt “J” above is either. It’s disappointing that you used the “paid protester” rebuttal instead of substance.
Extortion is a criminal activity. Let’s imagine that Company A is a big client (the BIGGEST) of Company B, and orders 200 widgets per year from Company B. Company A has grown and needs 400 widgets per year to keep up with demand, and a new company, Company C, is offering 400 widgets at the price Company B is offering 200 widgets. So they tell Company B that they need 400 widgets at the price of 200 widgets or they’re moving to Company C. That’s not extortion, that’s not “wrong” (though I question your depth of moral philosophy on all accounts) – that’s capitalism. Further, I don’t know how Gilbert’s ownership is structured, but assuming there are investors, Gilbert owes a fiduciary duty to those investors to maximize the value of their investment.
Mr. Frowns, I can assure you I am not being paid by Mr. Gilbert for anything, although if you know somewhere where I can apply for said funds, please let me know.
I actually agree with the overarching point of your article. Just pointing out that your assertion (whether express or implied) that Mr. Gilbert’s statements violate a provision of the Revised Code is most assuredly incorrect based on the statutory text itself.
Dan Gilbert has proven to be a pathetic liar concerning the Phase II casino project. But the gutless career politicians are now willing to open up the taxpayer’s checkbook to a guy who is apparently too cowardly to do his own bidding in public.
Assuming that cavs dan actually has a fiduciary duty under the law to Usher or any other minority owners to maximize the value of their investments (a concept subject to considerable debate amongst corporate law scholars, see https://www.amphilsoc.org/sites/default/files/proceedings/Stout.pdf), and assuming that the close corporation, LLC operating, or partnership agreements those investors sign do not waive or otherwise limit said duties by cavs dan to Usher, et al. (not very likely but I’ll play the game), which minority investor do we imagine will bring suit against cavs dan for his alleged breach of fiduciary duty in failing to wring maximum public tax dollars from the city and county? Is that a case that would survive summary judgment?
I mean, if we’re going to be law pedants.
We’re not talking about widgets, we’re talking about a basketball franchise that’s a public trust and a community asset, and we’re talking about hundreds of millions in public funds that could be used to meet any of a number of infinitely more pressing needs. When someone like Gilbert takes more than he needs, innocent people suffer needlessly, as we are seeing in Cleveland. Everyone should be against such needless suffering and should do what they can to prevent it, including by subjecting subsidies like this to real scrutiny as opposed to caving to absurd threats.
1. Moseph- Probably fair points all around. My point isn’t that Gilbert has to maximize value, just that the maximization of value is more in line with our legal requirements than it is criminally out of line (as Peter implied by calling it extortion).
2. Peter- You’re getting closer to a real point (and maybe a substantive article). If you’re argument is that the amount being asked for is “needless” since the public funds should be allocated to worthy public goods instead of remodeling, then that’s where the focus of this piece should be. And as I mentioned to start, I agree with you on that point. It’s not extortion (I think we can all agree on that now, widgets or not?). Another focus could be on whether the team actually would leave (not just whether you assume it’s financially viable for the team to stay), and the impact on tax dollars were that to happen. My guess is that we have some good empirical data points from the Browns’ exit.
To suggest that Dan Gilbert is in any way responsible for Clevelands poor education results, deteriorating neighborhoods, incresaing crime and murder rates and poor economic situation is poorly contrived.All of these failures are directly the result of economic mis mangement by Frank Jackson his administration and the Obama administration policies. It’s been going on for years. Dan Gilbert has only contributed in a positive financial way to the City of Cleveland but he can’t do it alone.
Fantastic piece of writing.
second verse…same as the first
This issue is the absurdity of absurdities. Let me get this straight: the
purpose of the Sin Tax is to gouge those who purchase alcohol and cigarettes
not because anyone is trying to discourage consumption but rather so the
County can use that money to pay for sports stadiums that do not produce
anything but a fleeting moment witnessing the passing of a football, the
dribbling of a basketball and the throwing of a baseball so that such a minute
tidbit of diversion can be enjoyed by all. The stupidity of this proposition is
enough to make your head spin even though the spin doctors advocating
passage of this nonsense are already doing a pretty good job of hypnotizing
the voters to actually consider supporting it. At least the Robber Barons
of the previous centuries provided something tangible such as oil, steel,
railroads etcetera. These team owners do not even provide one tangible thing
that could ever be considered with the term value added. Almost everyone
discusses this enterprise as though it is the same thing as industry {which
it is not}. The price of admission is essentially a voluntary tax paid by those
who can afford it to pay those who dont need it. If this isnt a transfer of
wealth I dont know what is.
The real outrage here is the fact that taxes on alcohol and cigarettes will
not be used to aid in the reduction of addiction {hence the reference to sin}
but rather to stuff the pockets of all three teams who could easily afford to
pay for the repairs themselves. The vote was rammed through the last time
{under somewhat suspicious circumstances} and hear we go again. But this
time…not so fast!!! We the voters of Cuyahoga County are going to fight the
proponents on this one and we don’t care if the teams up and go somewhere
else {please see my views on entertainment below} because quite frankly there
are simply more important things than sports and the unearned money that
comes with it. Those in public office who are too stupid and lazy to find other
ways to grow a major American city need to resign and leave their self-seeking
political ambitions on the scrapheap of history. Dont ever let it be said that
this was time when the tide ran out on Cuyahoga County but rather was the
time when the voters rose up to welcome the rising tide of change and rebuked
this pathetic paradigm our previous elected leaders embraced.
Let the battle be joined.
And now to the real underlying issue at hand:
One of the most disturbing facts about our capitalist nation is the
misappropriation of funds directed to the salaries of entertainers.
Everyone should agree that the value an athlete, movie star, talk-show host,
team-owner, etcetera brings to the average citizen is very small. Granted,
they do offer a minuscule of diversion from our daily trials and
tribulations as did the jesters in the king’s court during the middle ages.
But to allow these entertainers to horde such great amounts of wealth at the
expense of more benevolent societal programs is unacceptable.
They do not provide a product or a service so why are they rewarded as such?
Our society is also subjected to the “profound wisdom” of these people
because it equates wealth with influence. Perhaps a solution to this
problem and a alternative to defeated school levies, crumbling
infrastructures, as well as all the programs established to help feed,
clothe and shelter those who cannot help themselves would be to tax this
undeserved wealth. Entertainers could keep 1% of the gross earnings reaped
from their endeavor and 99% could be deposited into the public coffers.
The old ideas of the redistribution of wealth have failed, and it is time to
adapt to modern-day preferences. People put their money into entertainment
above everything else; isn’t it time to tap that wealth? Does anyone think
this will reduce the quality of entertainment? It seems to me that when
entertainers received less income, the quality was much higher.
Joe I wish I could like your comment a million more times