Rebuilt stadium proposal enough? Cleveland is touting new plan, but experts question its adequacy

January 04, 1996|By Jon Morgan | Jon Morgan,SUN STAFF

The mayor of Cleveland today will present his case for keeping the Browns to a panel of NFL team owners whom he must convince, among other things, that his beefed-up plan for renovating Cleveland Stadium is viable and competitive.

Cleveland officials say improvements have been made to the package that they decline to identify. The deal will be unveiled today in Atlanta before a joint meeting of the NFL's finance and stadium committees.

If the last offer is any guide, it's not going to be an easy sell, according to independent financial experts who, at the request of The Sun, reviewed the proposal the city made to the Browns on Nov. 8, which Cleveland Mayor Michael R. White vowed would "meet the needs of the club well into the next century."

One source familiar with the plan say it is better than the Nov. 8 proposal, but still follows many of the same guidelines and assumptions. Cleveland may reconfigure its estimates and try to show more revenue from the proposed tax and bonding sources, possibly as high as $200 million. The city also is considering an offer to allow the team to use the money as it sees fit, either renovating Cleveland Stadium or building new elsewhere in the city, although there is little real estate available for such a project in the city.

The team was offered the opportunity to appear before the committees today, but decided to wait until Jan. 16, on the eve of the league's scheduled vote on the relocation. League officials have said the vote may be delayed, although they expect to begin consideration of the issue then.

"We are absolutely confident that it is a solid plan" and that it has satisfied top officials of the NFL, said White's press secretary, Nancy Lesic.

The Browns say the deal they have been offered is inadequate, and some independent experts agree. Unless the Nov. 8 package has undergone radical surgery, it is not likely to impress many team owners, the experts say.

"It's a nice offer, but not that attractive. I think they need a new facility," said Michael Megna, a financial consultant with Megna Valuations in Milwaukee who has advised a number of NFL teams. "They are offering an old stadium with a new paint job."

Paul Much, senior managing partner with the Chicago investment banking firm of Houlihan Lokey Howard & Zukin, said the offer made to the Browns "is not a competitive offer, and the projections are based on pie-in-the-sky revenue estimates."

The city proposed Nov. 8, two days after the Browns announced they were moving to Baltimore, a $175 million overhaul of the 65-year-old stadium. The renovation would be paid for with a combination of taxes on parking, game tickets, liquor and cigarettes, contributions from Ohio and the city's power and water companies and transit authority.

The plan calls for lowering the playing field eight feet and reconfiguring the seats to correct the stadium's notoriously bad spectator views, modernizing washrooms and concession facilities, installing an improved sound system and large-screen-television scoreboard, and removing a partial roof and view-obscuring posts.

The city would eliminate the team's rent, which now runs about $700,000 a year, but leave the operating costs -- at least a few million dollars a year -- to the team, which would be able to keep all revenue. In addition, the city assumes the team could raise $1 million a year by selling stadium name rights to a corporate sponsor. A $14 million capital improvement fund, fed by private and public loans and excess tax revenues, would be made available to the team over a period of years for reimbursement of past investments the team has made into the stadium or funding future work.

Megna said the Nov. 8 financing scheme called for a "lot of promises" and assumptions about future spending on taxable goods but the faith and credit of Cleveland is sufficient to pay the bills. More troublesome, he said, are questions about whether the work could be done for the stated budget, whether anything could be done to the stadium that would have a significant enough impact on the team's revenues and how much the team would lose playing there during renovations.

"They are relying quite a lot on the private sector," Megna said. The city is counting on corporations to put down deposits -- refundable in 30 years -- on sky boxes that wouldn't be completed for years. Despite a vacancy rate of nearly 25 percent last season, the city is projecting a sellout for next year at prices on par with what suite-holders paid when they could watch both the Browns and Indians there. The baseball team moved to its own stadium in 1994, taking many box renters with it.

Even if a civic campaign can be mustered to rent the boxes, some of the corporations could back out later, go out of business or be acquired by a new parent with less interest in football, Megna said.

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