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A Busted Play
Lester Munson
December 04, 1995
Art Modell says that he owes so much money that he has no choice but to move his Browns to Baltimore because he has reached the $50 million debt limit the NFL has established for each of its franchises. In recent weeks Modell has placed the blame for his precarious finances on local politicians' indifference to his team's plight and on escalating player salaries. But Modell's own misguided business decisions are largely responsible for the mountain of debt he faces.
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December 04, 1995

A Busted Play

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CLEVELAND BROWNS ATTENDANCE (1975-94)

Year

Home Att. (Avg.)

League Rank

% Capacity

Record

1975

55,777

9

70

3-11

1976

67,515

3

84

9-5

1977

68,686

2

86

6-8

1978

63,756

3

79

8-8

1979

74,228

2

92

9-7

1980

77,562

2

96

11-5

1981

75,216

2

94

5-11

1982

62,829

13

78

4-5

1983

70,580

2

88

9-7

1984

57,304

13

72

5-11

1985

66,969

6

84

8-8

1986

72,967

3

91

12-4

1987

70,420

2

88

10-5

1988

76,943

2

96

10-6

1989

76,677

2

96

9-6-1

1990

71,012

5

89

3-13

1991

71,469

6

89

6-10

1992

70,052

6

89

7-9

1993

71,059

6

91

7-9

1994

69,948

7

89

11-5

Art Modell says that he owes so much money that he has no choice but to move his Browns to Baltimore because he has reached the $50 million debt limit the NFL has established for each of its franchises. In recent weeks Modell has placed the blame for his precarious finances on local politicians' indifference to his team's plight and on escalating player salaries. But Modell's own misguided business decisions are largely responsible for the mountain of debt he faces.

In an interview with SI on Monday, Modell said that the Browns, of which he owns 51%, are $40 million in debt and that he is personally on the hook for $10 million more that he lent to the team. How is it possible that the Browns, a thriving franchise by any measure, could be so encumbered that Modell says his only recourse is to move?

Modell, who bought the Browns in 1961 for $4 million, sowed the seeds of his team's fiscal demise in '73. That year, he thought he saw a golden opportunity. The city of Cleveland had been losing money operating Cleveland Stadium. Modell believed that if he were to take over the operation of the stadium, he could reverse those losses. He signed a 25-year lease with the city that gave him operating control of the stadium beginning in January '74 and allowed him to rent it to his own team and to the Indians.

Under the terms of the lease, Modell would receive all the revenue from the stadium, including income from signage, parking and concessions. In return he was to pay an annual rent of $150,000 per year for the first five years and $200,000 thereafter. It was a sweet deal for Modell—so sweet that, while Modell had several partners in the Browns, he formed a separate stadium company that he kept mostly for himself. It was sweet until he was confronted with the grim reality of operating a crumbling, mammoth 43-year-old stadium.

Modell conceded on Monday that the deal he had struck with the city "turned out to haunt me." Right away he was forced to borrow $10 million to fulfill his commitment to install luxury boxes, a new scoreboard and new rest rooms. But that was only the beginning. "We wanted to fix up the visiting-team dressing room," he said Monday. "When we broke the wall down, to our horror the main structural beam had eroded to the width of a pencil at its base. So we opened up every wall in the building to reinforce the structural beams that hold up the upper deck. Then I knew that I had a real big headache on my hands."

With meager concession revenue from Indian games—"they weren't drawing fleas, for crying out loud," Modell said—and the daunting expense of renovations, it wasn't long before Modell's stadium company began rolling loans into bigger loans. Worse, Modell told SI, with no stadium revenue to offset the Browns' operating expenses, the team was forced to begin a separate cycle of borrowing. And at various times Modell himself borrowed money from banks that he then lent to the Browns. "I was denying the football team the resources to be competitive and putting that money, instead, to pay off my obligations on the stadium side," he said.

In a 1982 letter to Gabe Paul, then the president of the Indians, Modell implored Paul to increase the rent that the Indians were paying. Modell also revealed that his finances were so bleak that he'd had to give the stadium's concession business to the Servomation Corporation in exchange for still another loan to pay off debts.

Yet, while Modell was telling Paul that his stadium company was a loser, he was trying to persuade his fellow owners of the Browns to buy it from him. The board of the Browns, which Modell controlled, voted 4-1 to spend the team's money to purchase the stadium company. The sale would have produced $4.8 million for Modell, and his loans would have been assumed by the Browns, an entity with a healthy cash flow, thanks to NFL revenue-sharing, which divvies up TV money and gate receipts equally among the teams. But Robert Gries, who owns 43% of the Browns and cast the lone vote against Modell's scheme, saw no reason to saddle the Browns with Modell's bad loans, and he sued to halt the sale.

In the course of his lawsuit, sources say, Gries discovered that Modell had used $600,000 of his own money to purchase a piece of real estate (on which Modell had hoped to build a new stadium) in Strongsville, Ohio, which he later sold to his stadium company for $3 million. While attempting to unload the stadium company to the Browns, Modell had claimed that the Strongsville property was worth $3.8 million. Gries hired an appraiser who valued the property at $335,000. It took four years, but Gries prevailed in court, leaving Modell with his stadium company, his lease and his debts. In 1994 he even lost the Indians, who had made their own bargain with the city and moved into the new Jacobs Field.

Modell's most recently reported salary from the Browns—a total of $632,500 for the three years ending in 1990—is not out of line for a corporate chief executive. And he says he has not drawn a salary from his closely held stadium company.

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