It's a gift (to rich people) that keeps on taking (from taxpayers) and there's nothing anyone can do about it.
Kevin Jairaj-USA TODAY Sports
Paul Brown Stadium, the home of the Cincinnati Bengals, is the result of the most fiscally disastrous stadium deal in American history. The stadium cost more than double its initial projections, and wound up crippling Hamilton County's budget. In 2008, Paul Brown Stadium debt accounted for 11 percent of the county's general fund. In 2010, it was 16.4 percent. It is a fiasco.
Also it is not finished happening. Somehow, Ohio taxpayers aren't done subsidizing the NFL franchise. This week, the Bengals are installing a new scoreboard; it costs $10 million and Hamilton County taxpayers are picking up three-quarters of its cost. Why would the county agree to give the Bengals even more money? It's because of the cherry on top of the sweetest stadium deal ever made: the state-of-the-art clause.
According to the Bengals' lease, if 14 NFL stadiums have something, then taxpayers must buy the Bengals that thing. It's like if your parents were contractually obligated to buy you a new iPhone if all your friends got one, every year for 30 years, but if you were a billionaire and your parents were barely breaking even. Good deal for you, bad for your parents.
Coincidentally, 14 new NFL stadiums for 15 teams—MetLife Stadium hosts the Giants and Jets—have been built since Paul Brown Stadium opened, meaning any technology in these new stadiums has to be retroactively installed in Paul Brown Stadium as well. The taxpayers have zero recourse in this. The Bengals can simply bill the county for any qualifying state-of-the-art improvements, including a yet-to-be-invented "holographic replay system," which they snuck into the lease for good measure.
The Bengals aren't the only team with a state-of-the-art clause. The Charlotte Hornets, Kansas City Chiefs, St. Louis Rams, Atlanta Braves, and Minnesota Vikings also have state-of-the-art clauses in their leases; the Chargers had one until 2004, when they gave it up in the hopes that they would soon get a completely new stadium.
The Rams' clause allows them to break their lease every 10 years should the Edward Jones Dome fail to qualify as a "first tier" NFL facility. It also means they can reject less expensive renovation plans in lieu of their super-ambitious, costly ones. Or, as Neil deMause of sports stadium financing site Field of Schemes (and a contributor to VICE Sports) put it in 2013, "either the city needs to spend $700 million to upgrade a stadium that only cost $280 million to build in the first place 17 years ago, or the team can bust out of its lease and move elsewhere in 2015." It's no coincidence the Rams-to-LA situation is unfolding now, during the window in which the Rams can break their lease with St. Louis under the state-of-the-art clause.
There are so many problems with these clauses that it's hard to know where to begin. One of the first problems is how to rank stadia by state-of-the-art-ness. According to the Rams' lease, such things are measured by at least 15 different components: "everything from luxury boxes to club seats, lighting, scoreboards... regular stadium seating, concession areas, common areas (such as concourses or restrooms), electronic and telecommunications equipment," as well as locker and training rooms, and the field itself.
But, according to an analysis by Kristen E. Knauf in the Marquette Sports Law Review, this doesn't provide much clarification. What is state-of-the-art lighting? How does one rank NFL locker rooms? Does a state-of-the-art concession area mean better food, shorter lines, Apple Pay compatibility? The lease doesn't provide any details. It's up to an arbitrator to decide, and that arbitrator just so happened to side with the Rams in 2005. That triggered negotiations for a $30 million stadium upgrade, which was completed in 2009.
Because of the vagaries of such matters, the Rams have tremendous leverage in negotiations. In his book Field of Schemes, deMause estimates that, if the city wanted to keep the Rams, the city's Convention and Visitors Commission would have to put aside $36 million every year to keep the Edward Jones Dome a "first-tier" facility.
There is no good reason for any public official to entertain such a clause, much less grant it. Teams have state-of-the-art clauses because of two factors: they had the gall to ask for one, and the politicians had the stupidity to give it to them. In 2010, Demause conducted an interview with Jim Nagourney, a now-retired sports facility manager and consultant who was part of the Rams stadium negotiation. The way deMause tells it, "[the Rams] were just throwing stuff in there and they were amazed when St. Louis actually went for it."
The only appealing aspect of state-of-the-art clauses to politicians is that they probably won't have to deal with it. Even a decade later, most local governments will experience significant turnover. A state-of-the-art clause helps get the deal done without ever costing the current government anything. It's somebody else's problem, by design. Of course, as Hamilton County and dozens of other municipalities have learned, this is true of publicly financed stadium deals in general.
The true absurdity of the state-of-the-art clause is the possibility of every team having one, generating a Sisyphusean arms race in which all 31 stadiums could never be "state-of-the-art." Maybe that will never happen, but it could happen, and doesn't mean politicians have learned their lesson, either. Two new stadiums for the Braves and Vikings both have state-of-the-art clauses.