"Good Energy"

FirstEnergy's $102 million gift to the Browns raises eyebrows

I've arrived at FirstEnergyCorp.com and I'll be goddamned if it's not the most soothing bit of graphic design I've seen in weeks.

There's nothing all that remarkable about it, really. It's just extremely clean. The text boxes are rounded at the edges and this strikes me as a courtesy. I'm taken, somewhat abruptly, with an idea: For websites there exists an imperative that's perceived as much less legitimate for romantic partners: that they be easy on the eyes.

Nevertheless, my guard is up. I have seen the movies. I have internalized with great rigor and method the tactics of your garden variety 'corporate ruse.' I tell myself not to be unduly hypnotized by these high-resolution photographs, this balmy wordplay.

I am here as a foot soldier in the crusade for truth. More to the point, I am here to track down a FirstEnergy representative who can tell me something substantive about the electric utility's finances.

Like a lot of people in Northeast Ohio, I'm curious about how the $102 million that FirstEnergy just signed over to the Cleveland Browns in the stadium naming rights deal – to be paid out over 17 years – will affect company operations. I'm also curious about why that money is going to a football franchise and not the city that built the stadium and continues to be responsible for its upkeep.

But mercy, this website! These marbleized blues upon which a snowflake disburses its sparkles; these flashless but immensely readable options, in Arial, indexing corporate destinations: "Environment," "Community," "Careers."

There's a photomontage, too, with snapshots depicting tableaus of "Good Energy" – a multiracial family, a doctored computer keypad, and those rural power structures that from great distances resemble men. And why would we, the casual or concerted investigator, deny that the first energy with which this multi-billion dollar Akron-based company concerns itself is not electricity but positive vibes?

Vibes were anything but positive back in October. After Sandy, FirstEnergy dealt with the ire engendered by marathon blackouts all over Northeast Ohio in the wake of the storm. They're still getting flak for their poor customer service.

Regional president John Skory visited Parma's city council earlier this month to apologize for the way residents were handled there. Council members had complained about surly operators and unhelpful information. According to comments, some customers were told that their power would be restored in "several hours or several days."

In response, Skory promised additional training for customer service employees and a renewed commitment to call-center technology to improve unwieldy wait times during storms.

There's no storm now – it's just godawfully cold – but all representatives are busy when I call the Illuminating Company. It's surprising when you consider that the average FirstEnergy call center can process 3,500 calls per hour.

"It should be seamless," said Skory, at the Parma meeting. He mentioned that FirstEnergy would consider adding personnel during severe weather to account for outages.

That rings a little false, only because adding personnel has been the opposite of FirstEnergy protocol lately. In November, 142 employees were laid off, 56 of whom were in the Akron area. The company expects to part with up to 400 more in the next few years.

And it's here that direct correlations are not only easy but somewhat dangerous to draw: In order to make room for a mega sports sponsorship, it seems logical that FirstEnergy would lay off employees to balance the budget.

The naming rights deal has them on the books for $6 million a year. Divide that by 142 and you get 42 grand. That's a really strikingly sensible average salary. High enough to account for a few managers, low enough to account for entry-level "corporate support" staff, which was the generic label given to all 142 in FirstEnergy's November remarks.

CEO Tony Alexander has dismissed any correlation between staff cuts and the new Browns sponsorship. When questioned directly by an Akron Beacon-Journal reporter in a recent press conference, he alluded to meeting the challenges of "the continued weak economy,"

And boy can Alexander identify. He is now only the 275th richest person in America, according to Forbes, with an annual compensation of just $6.16 million. Back in 2009, he was 72nd overall, making more than $18 million per year (which included his extravagant stock options, now "N/A" on his wealth profile).

The question remains though: If the economy is so limp, and employees are being let go en masse to compensate, why on earth is FirstEnergy dropping $6 million per year on a stadium?

"I'm as baffled as you are," says Neil deMause, boondoggle excavator and author of the stadium-finance book Field of Schemes. "Why FirstEnergy would want to advertise to a national football audience is beyond me. It seems like the kinds of companies that buy naming rights are usually those trying to get attention by any means necessary, which is why so many of them seem to go under so quickly."

DeMause is talking about companies like Enron, another energy giant, which bought the naming rights to the Houston Astros stadium in 1999 in a 30-year, $100 million deal. The Astros bought back the stadium for a scant $2.1 million after Enron's scandal and collapse.

And that's not the only example. The Tennessee Titans sold their naming rights to Adelphia, the cable company that promptly went bankrupt after internal corruption. The Miami Dolphins and Miami Marlins sold their facility to Pro Player, a sportswear company. And though Pro Player was liquidated by Fruit of the Loom in 1999, Miami was saddled with "Pro Player Stadium" for the duration of the 10-year contract, until 2005.

I feel like I've been on hold since 2005 B.C, but in truth it's only been 23 minutes, according to my phone's tidy little display. In addition to the first human customer service rep I talked to, I've now dealt with the IT department and the retirement benefits desk, both of which requested certain mercurial "access codes."

But I've finally reached a secretary in External Communications, and after an elaborate game of phone tag, I'm contacted by Todd Schneider, a manager.

He laughs when I ask about the salaries of the laid off employees. He doesn't have the faintest idea. He does confirm that there were some managers, and also some mid-level folks who served redundant "business functions." No assembly line workers were let go. As for the upcoming layoffs, he recalibrates what I've heard.

"Any further job reductions will be through attrition," Schneider says. "At which point we'll reevaluate those positions."

He's really not sure how the Browns contract "fits in" with company finances at large, but he can tell me that they strive to operate as cost-effectively as possible. FirstEnergy has 17,000 employees all told, and often they need to restructure in order to improve service and reduce liability, he says.

For further details, he directs me to their quarterly financial reports.

FirstEnergy's finances look a lot healthier than, for example, Cleveland's. The city shouldered the majority of the $330 million it cost to build the Browns stadium and still have about $134 million left to pay.

The terms of the 1996 lease between Cleveland and the Browns are wildly skewed in the Browns' favor. Not surprising, as local writer Roldo Bartimole notes, when you consider that Fred Nance of Squire Sanders & Dempsey wrote the lease and then became the Browns legal counsel.

Without exaggerating, the lease requires the city to pay for basically everything, and the Browns get all the profit – "100% of all revenues from operations of leased premises" including naming rights. The rent the Browns pay is a joke too $250,000 per year.

Right now a sin tax keeps the stadium afloat. But that tax expires in 2015. According to Cleveland city councilman Brian Cummins, the Browns understand the predicament they're in, and would love to see the city and county work with state legislature to renew the tax.

"But it's a regressive tax.," said Cummins, "and it's hurting a lot of people, a lot of lower income people." If the tax isn't renewed, and the Browns refuse to cooperate, more money will be siphoned from the RTA and public works. Other revenue streams are also an option – hiking the tax on sports tickets, for instance. But once again, the city's paying for it. The taxpayers – the fans – are paying for it.

Cummins says what's necessary is more transparent accounting of pro-sports financing. He posted on his blog that the NFL new media rights contract nets the league $6 billion per year until 2022, which means the Browns will receive $187.5 million per year during that stretch.

"I just don't think the public has any idea how much money these teams are making," Cummins said.

And yet they're paying practically nothing on the house we built for them. The Browns occupy one of the most valuable lakefront properties between New York and Chicago. By rights, they should be paying about $9 million in property taxes, but their lease says they don't have to.

"That they're getting away with this is outrageous," said Cummins.

FirstEnergy Field: Never mind how catchy it sounds or whether or not the company behind the name withstands even cursory ethical scrutiny. Cleveland couldn't care less if it's FirstEnergy Stadium or Second City Stadium or Fifth-Third Bank Field – a football facility by any other name would still be a sinkhole.

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Sam Allard

Sam Allard is the Senior Writer at Scene, in which capacity he covers politics and power and writes about movies when time permits. He's a graduate of the Medill School of Journalism at Northwestern University and the NEOMFA at Cleveland State. Prior to joining Scene, he was encamped in Sarajevo, Bosnia, on an...
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