Hidden cost watch: How much would Falcons profit from sweetheart lease?

Matt Pearl of Atlanta’s 11alive NBC station, who interviewed me last week as part of his research, put a FAQ up earlier this week on the Atlanta Falcons stadium plan, which includes the following assessment of the $1 billion project, which would require an estimated $331 million in public construction subsidies:

Since 1995, 20 NFL teams have built new stadiums; on average, the public paid for 48% of the costs. In fact, take out the two most recent and most expensive stadiums — Cowboys Stadium in Dallas and the Jets’ and Giants’ MetLife Stadium — and the public contribution rises to an average of 62%.

By those numbers, the potential Falcons’ deal looks far more favorable. The public, under the Barrett Sports Group’s analysis, would pay for 32% — less than a third of the cost.

Then right after that, Pearl wrote this:

So why would the Falcons spend at least $700 million? Because, as any sports economist will tell you, they stand to make a whole lot more back.

Right now the Falcons are basically a tenant; the GWCCA runs operations at the Georgia Dome. The latest term sheet says the Falcons “will have the rights to all revenues generated” from a new stadium “and will pay all related costs.”

This will enable the Falcons to control revenue streams that don’t have to be shared with the NFL or the GWCCA — streams like advertising, personal seat licenses, concessions, and luxury boxes.

Okay, so the Falcons would benefit by not having to share stadium revenues … with the state-run GWCCA. Meaning the state would no longer get a share of stadium revenues. Meaning part of the stadium deal is that the state is agreeing to kick back future stadium revenues in a new lease.

How much would that come to? The GWCCA’s latest audit statement indicates that the state more or less breaks even on the Georgia Dome — $44 million in “cash received from customers” plus $19 million in seat license fees in 2012, vs. $62 million in operating expenses and payments to the Falcons — but without a further breakdown of what’s in these figures, it’s tough to compare apples to apples with the new lease (if we even knew exactly what the new lease looked like). If Pearl’s assessment is correct, though, that the team would make “a whole lot more” less because of the new stadium per se than thanks to a new sweetheart lease, then that should be part of any calculation of the cost — which would mean it could well end up being more than $331 million.

On the bright side, Pearl tells me that Mayor Kasim Reed now says his previous estimate of $350 million in additional infrastructure costs includes some non-stadium-related work, though he didn’t indicate how much, so the total public cost would be … somewhere between $331 million and a lot more than that? Any chance we can get Judith Grant Long to do an auto-updating app version of her book?

One comment on “Hidden cost watch: How much would Falcons profit from sweetheart lease?

  1. So the deal is to just fork over the money and get nothing but higher taxes in return? Great deal. Even JerryWhirrled gave *something* back.