LeBron James's $141 Million Muni Makeover Is Different This TimeBy
As Dwyane Wade and LeBron James are reunited, raising the Cleveland Cavaliers’ chances at another NBA championship run, their home court gets a $141 million face-lift with a little help from the muni markets. Arenas aren’t always a popular use of public money, but it’s hard to make the case that this week’s bond sale will come back to bite.
Cuyahoga County, where Cleveland is located, is selling tax-exempt and taxable bonds to pay for upgrades to the 23-year-old Quicken Loans Arena, where the Cavaliers and the American Hockey League’s Cleveland Monsters play. Public financing for stadiums and arenas has been criticized as some expensive facilities fail to fill seats or result in the economic benefits initially promised.
However, in this case, the Cleveland Cavaliers extended its lease with the arena -- known as The Q -- by seven years to 2034 as part of the renovations deal, according to a 2016 news release and bond documents. That could prevent the team from being lured to another city.
The upgrades will also "eliminate" any talk of building a brand new venue, which can cost more than $750 million, a website run by the Quicken Loans Arena says.
The $141 million deal, rated AAA by S&P Global Ratings, seems unlikely to go sour because of inability to pay. About half the bonds will be repaid using a variety of city and county taxes, including an admissions tax, S&P says. About $70 million worth of bonds will be paid off through rental payments from the Cavaliers, S&P says.
And business sounds brisk. The arena’s annual attendance has risen almost 50 percent since 2014, when James re-joined the Cavaliers, according to a report by Conventions, Sports & Leisure International, an advisory firm specializing in the sports and entertainment.