CINCINNATI — With four days to go until their Monday deadline for a new lease agreement, Hamilton County and the Cincinnati Bengals appear close to a deal.
“We are still negotiating,” said Hamilton County Commission President Denise Driehaus. “I feel confident that we’ll meet the deadline.”
Commissioners met in executive session Tuesday, likely to discuss the county’s NFL tenant, which has until June 30 to exercise an option that would extend its existing lease for two more years.
Both parties have been working toward a comprehensive agreement of up to 20 years, while haggling over who pays for a planned $830 million renovation of Paycor Stadium and how much it will cost the county to operate the facility.
On Wednesday, state lawmakers finalized the details of a new funding plan for stadiums. If that plan is signed into law and survives a threatened lawsuit over its constitutionality, the Cleveland Browns will get $600 million, and the Bengals can compete with other teams for an additional $400 million in state funds.
In advance of Thursday’s regularly scheduled board meeting, Driehaus said state funding uncertainty won’t keep the county from signing a long-term deal with the Bengals.
“The state dollars are a little bit in flux. We knew that,” Driehaus said. “So, what we’re working on now is something that’s less than ($830 million), because the state dollars aren’t in the stack right now. But we have the ability to expand and include projects were we to get the state dollars.”
As the deadline approaches, the WCPO 9 I-Team has been reviewing NFL lease agreements in other cities and talking to experts to see what taxpayers should expect from a new deal with the Bengals.
“I would be looking first to see what’s the length of the deal,” said Joe Cobbs, lead researcher for the Institute of Sports Business & Event Management at Northern Kentucky University. “I think Jacksonville’s renovation they’re about to start on, it’s a 30-year renewed lease or new lease for a fully renovated stadium. I think it’s the same for Carolina.”
The Bengals initially offered a five-year lease extension in an April term sheet that the county released this month. The team has since said it’s willing to sign a 10-year deal with two five-year extensions.
“I’d also be looking at who is going to cover the cost overruns,” Cobbs said. “And I think you’ve seen more and more of those deals lean toward the team is covering those, probably because the public has gotten burned quite a bit.”
Hamilton County’s proposed term sheet in April said cost overruns would be covered by the team or “addressed by a reduction in the project scope.” The Bengals’ proposal said “any deviation” in project cost “requires the consent of both parties.”
Miami University Associate Professor Adam Beissel said he’ll be looking for two things when a new deal is struck: How much will the Bengals contribute towards construction and operating costs?
The county and the team have said they want a market-rate deal. Beissel said that would require a bigger contribution than the Bengals have previously offered.
“The average percentage of what a team would contribute to an overall stadium deal or stadium upgrades would be roughly around 40%,” Beissel said. “I don’t think the Bengals are inclined to increase their offer.”
In their April term sheet, the Bengals offered to contribute $194.44 million of an $802 million renovation project, or 24% of the total. But those contributions included $45 million already spent by the team and $29.44 million in county payments that the Bengals waived in 2018.
Beissel said he would like to see increased contributions from the team itself, instead of its previously announced pledge to fund half of its $120 million contribution with G5 funding from the NFL.
“The G5 stadium enhancement fund (allows teams to) borrow future revenues that are meant to be shared collectively among all 32 teams,” Beissel said. “So, really what we’re talking about is out of that $120 million from the Bengals, really it’s $60 million from the Bengals and another $60 million from collectively all 32 NFL teams.”
On operating expenses, the team and the county were far apart in April. The Bengals offered to pay $5 million in rent over five years and called for the city of Cincinnati to fund stadium operations for the first time. Hamilton County proposed $1 million in annual rent for at least 15 years and an annual payment of $6.5 million from the team for operations, a payment that would rise with inflation.
“One of the things to think about in the deal is whether or not the Bengals’ annual contribution toward maintenance and operating expenses could be tied to league revenues,” Beissel said. “So, if those grow over time, potentially then the Bengals financial commitment toward stadium operating and maintenance expenses could grow in parallel with those increasing revenues of the NFL.”
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