Cleveland, Ohio (August 28, 2017) – The Cleveland Cavaliers announced today the cancellation of their participation in The Q Transformation Project of the publicly-owned Quicken Loans Arena, which would have:
- Significantly upgraded one of the oldest arenas in the NBA
- Make it more competitive for the long term with other nearby midwestern cities and national venues to maintain and attract additional events
- Created over 2,500 project-related construction jobs
- Grown The Q’s permanent job base to 3,200
- Increased tax revenue to the City’s General Fund and neighborhoods
- Extended the Cavaliers lease for The Q to 2034
- Help maintain state and local taxes such as the $44 million in 2016 and potential growing tax revenue source to Cleveland through 2034
- Rehabbed 40 gym courts and floors in the city of Cleveland’s rec centers and all Cleveland Metropolitan School Districts high schools
- Brought an NBA All-Star Game to Cleveland in 2020 or 2021 along with its $100 million+ economic impact
Construction on the $140 million publicly-owned facility project was to have started this past June, but had been delayed due to a prospective referendum being placed on the ballot by the Washington, DC-based Metro Industrial Areas Foundation represented locally by a group calling themselves the “Greater Cleveland Congregations” (GCC), Service Employees International Union District 1199 and the Cuyahoga County Progressive Caucus.
The prospective referendum will cause the groundbreaking of The Q Transformation to miss the current construction cycle, which pushes the overall price tag of the project higher due to rising construction costs. In addition, a time sensitive financing package that included historically low interest rates would be negatively impacted by further delay due to a prospective referendum exposing the project to an expected higher interest rate environment.
The public friendly public/private partnership was to be funded with $70 million of private capital contributed by the Cavaliers organization and an additional $70 million in public funding was to be generated primarily by a portion of the existing Admission Tax of every ticket sold to every event at The Q from 2023-2034 and a portion of the existing Cuyahoga County Bed Tax which is paid predominantly by visitors from outside of the County, many of which are attending events at The Q, as well as other sources either directly generated or largely impacted by The Q. The Cavaliers had also committed to covering any and all construction cost overruns on the project.
In addition, the City’s General Fund would have received matching funds equal to the revenue collected from the Admission Tax generated for use in The Q Transformation project.
There were no new or increased taxes related to this project.
The Q is the oldest arena in the NBA without a major structural renovation. The renovation project would have extended the life of The Q to over 40 years when the average life of similar facilities is only 22 years in the NBA. The $140 million transformation investment is a fraction of the cost of a new arena, which today would cost between $500-$800 million.
Quicken Loans Arena and the Cleveland Cavaliers have been a massive economic engine for downtown Cleveland and the entire region:
- Generating over $2.7 billion in economic activity creating thousands of jobs
- Producing nearly $500 million in state and local tax revenue
- Contributed over $42 million in community, civic and charitable funding and support to local programs like the Greater Cleveland Habitat for Humanity, the Cleveland Food Bank, Shoes and Clothes for Kids, Cleveland Municipal School District and Boys & Girls Club of Cleveland among others
- The most public-friendly lease for mid to small markets in the NBA with the Cavs paying 100% of maintaining, operating and repairing The Q since it opened in 1994, including the vast majority of capital repairs, resulting in over $400 million of private investment into the publicly-owned arena
- Co-funding along with the Indians 100% of their landlord Gateway Economic Corporation’s expenses, including all property taxes related to The Q
- Invested at record-levels into the Cavs player payroll contributing to three consecutive NBA Finals appearances and Cleveland’s first major professional sports championship in 52 years
- Cavaliers Chairman Dan Gilbert and the organization’s Family of Companies invested over $2.4 billion into business and real estate in Cleveland and Ohio since 2005
- The Family of Companies employs over 5,100 team members in Greater Cleveland and over 6,200 in the State of Ohio
- Substantial investment in the development of downtown and Cleveland’s neighborhoods. This includes a deep commitment to fighting blight, including the organization’s lead role in securing over $60 million of Federal Hardest Hit Funds for blight relief for Cleveland and Cuyahoga County, and donating over $1 million of support to the efforts of the Greater Cleveland Habitat for Humanity
- The recently announced $1 million dollar donation to support Cleveland and Akron public school S.T.E.M. programs
“Quicken Loans Arena brings over 2 million people a year to downtown Cleveland and last year alone produced $245 million in economic activity including the RNC and the NBA Finals. This facility is Cleveland’s gateway to the world as many of our events are broadcast nationally and internationally. The investments over the years into The Q have paid back multiples in economic impact, job creation and tax generation. It is very disappointing to see our further private investment into The Q Transformation project reach this ending point,” said Len Komoroski, CEO of the Cleveland Cavaliers.
The Cavaliers appreciate the strong leadership of Cuyahoga County Executive Armond Budish and Cleveland Mayor Frank Jackson, along with Cuyahoga County Council President Dan Brady and Cleveland City Council President Kevin Kelley. Both the Cuyahoga County Council and Cleveland City Council overwhelmingly agreed with the project, by way of supermajority votes of support, understanding that there is a need to update the publicly-owned Quicken Loans Arena for the future benefit of the entire community. United States Congresswoman Marcia Fudge has also been a major supporter. State Senator Sandra Williams has been a strong advocate as well. There was also tremendous support and partnership from many civic, community and business leaders and organizations both locally and regionally, including the NAACP, the United Pastors in Mission, Cleveland Clergy Coalition, ACEE/Black Contractors Group, the Urban League of Cleveland, the Cleveland Building & Construction Trades Council, Laborer’s International Union Local 310, the President’s Council, Greater Cleveland Partnership, Downtown Cleveland Alliance, Greater Cleveland Sports Commission, and many others.
Civic and community support for the project was earned by the public-friendly, private and self-generating funding source structure being an efficient, significantly less costly and beneficial way to extend the life of a core public asset for the long term.
The Cavaliers organization will no longer participate in the partnership formed for The Q Transformation project and the need for a referendum no longer exists.