Four bad reasons to build an Atlanta Falcons stadium

The Atlanta Journal-Constitution had an interview with Georgia World Congress Center Authority director Frank Poe over the weekend, in which he gave a whole string of reasons why he thinks it’s a good idea to spend $300 million (at least) on a new Falcons stadium. Let’s unpack them one at a time:

  • The hotel-motel tax that would fund the stadium can’t be used for roads or schools anyway.
  • The public’s investment would “buy a $1 billion asset” that “will be sustainable for the next 30 or 35 years.”
  • If you want to have NFL football, “public-private financing is the way these deals are structured for the most part these days.”
  • You can play college football and the World Cup there, too!

Taken in order:

  • Money is fungible, so the hotel-motel tax revenue could always be used to fund something else that would free up money for schools.
  • It’s tough to argue that a new stadium would last 30-35 years when the old one is being slated for replacement after just 20.
  • “But all the other kids are doing it!”
  • You can. But you can play college football at the Georgia Dome, and the World Cup is only played in the U.S. once a century.

The only arguments from the standard stadium playbook that Poe left out were that a stadium would boost the local economy and that the Falcons need one in order to remain competitive. But I guess he had to leave himself something for next week.

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23 comments on “Four bad reasons to build an Atlanta Falcons stadium

  1. Though WC may only be in US “once a century”, World cup qualifying happens more often. There is also gold cup and other international soccer games. Even if there is only one per year, that is one day the stadium is full.

  2. Not really much of an argument. The US team plays maybe 14-16 games a year at home. Atlanta might get one every other year.

    Besides, the point of Neil’s point is to ask “is spending so much money on a new stadium when the one you have is structurally sound worth it.” It is not, as many people like to ask, “would it be fun to go to a soccer/football/baseball/basketball/tennis match in a new stadium?”.

  3. Neil – please find the ‘NFL playbook for what to say to get a new stadium’.
    There has to be one. Jed York, 49ers CEO, gave the exact same reasons here in Santa Clara a couple of years ago.
    There was supposed to be a ‘public private partnership’ – in which no loans were disclosed in the stadium ballot measure – but then they came back 18 months later with $950 million in loans to our Stadium Authority. No one will tell the people of Santa Clara just how those loans will be paid off in two years when the construction is finished. And no one who ran for city council this past few months even touched the stadium loan issue in any of the candidate forums.

  4. GDub:

    Not only that, but given that several warm weather potential sites for WC/qual games have actual grass fields and the like, and have been purpose built for soccer (often using public funds…), and the idea of a world cup qualifier (or friendly) being played indoors in a city that has shown only tepid interest in most of the teams it presently hosts, on synthetic turf (or dead grass laid over the top of synthetic turf… which is often a worse option than the plastic itself) seems more and more ludicrous.

    To be even clearer, while the US has new or relatively new soccer specific facilities in Houston, Kansas City, Los Angeles, Chicago, New Jersey, Philadelphia and others, as well as “historic” facilities like the Rose Bowl, Soldier field and the like, it seems highly unlikely they would choose to play indoors on plastic at a 65,000 seat NFL facility.

    When the USMNT played in the Silverdome, it wasn’t because they wanted to be indoors. It was because there were few alternatives capable of accommodating a regulation FIFA pitch. If the MNT really wants a 65k+ facility in the south east, they can go to Joe Robbie Stadium or the Bucs facility and play on grass outdoors.

  5. “Neil – please find the ‘NFL playbook for what to say to get a new stadium’.”
    Joanna and I wrote it down 15 years ago. It’s Chapter 4 of our book. Can we sue the NFL for copyright infringement?

  6. Logic and fiscal responsibility will be out the window if the Falcons win the Super Bowl. They’ll get what ever they want.

    When is the NFL going to petition the IRS for religious tax exemption status?

  7. The Georgia Dome is now 20 years old, even if a new stadium is agreed upon today–it will take 5 years to plan and build—-that would make the stadium 25 years old. Would that mean that the “new” stadium would be viable for the same 25 years? Most likely. Fulton County Stadium was used for 30 years, but should have been replaced 5-10 years before it was replaced.

    International games have been played at the Dome and they install grass over the turf. Atl has had games with attendance at about 50k.

    College Hall of fame will be near by—-and a double header with inductees between game will most likely occur and Chick-fil-a bowl will most likely get a bid to be a play in game for College Football championship starting in 2014 (not every year but in a rotation).

  8. You can almost always count on Mexican national team fans to sell out whichever stadium El Tri plays in.

    Gringos, not so much.

  9. Lewis,

    Not taking care of a stadium doesn’t mean that they fall apart. Yankee Stadium lasted with one major renovation for 80 years. Fenway turned 100. It does happen. That’s different than “wouldn’t it be cool to have some more superboxes.”

    I don’t think people doubt that events would come to Atlanta. the question is–will enough come? I doubt that a soccer game every other year and a few college football games justifies the level of financial commitment to building another stadium. Unless one believes that football is more important than everything else in life; America is not lacking for such opinions.

  10. GDub,

    I realize that the world does not revolve around sports, BUT the Georgia Dome has allowed Atlanta to take a more prominent place in the sports Pantheon. Since the GD was built Atlanta has become the home of the SEC championship game, Chick-fil-a kick off classic, 2 Super Bowls, NCAA Final Fours 2002, 2007, and, 2013; along with regional semifinals and finals in 2001, 2004, 2006 and 2012 and NCAA Women’s Final Four in 2003; WestleMania (crowd of 70,000 +). Along with home football games for Falcons, Georgia State, and numerous high school and smaller college football games.

    The GD was a GREAT investment in the city. However each of the listed events have choices on where they will be hosted. With a new stadium it will ensure that the city of Atlanta will host such top notch sporting events. I agree that the Georgia Dome could be used for another 10 years without much harm being done. The Falcons have choices too, they could move the team to the Northern Suburbs and I am sure some city would try to pull a deal much like Arlington, TX did to get the Cowboys—-but the city of Atlanta is much richer with the Falcons downtown.

    Will the owner of the Falcons make more money because of a new stadium? YES! Will the city of Atlanta and the state of Georgia have a net benefit from this investment? I would argue that it would indeed.

  11. Lewis:

    Since much of the “need” for a new stadium for the Falcons seems to be borne of a desire to redirect the Georgia Dome related revenues that presently flow to the city to the Falcons themselves (and not just from Falcons games either), it is more difficult to see how Atlanta itself benefits from a new facility.

    If you want to count advertising benefit from announcers saying “From Atlanta” on national television, and arguments about “community spirit” as part of the benefit, there may be some – though it’s hard to quantify. However, it’s difficult to see the city being able to not only pay off a new facility but actually profit from it they way they have from the Georgia Dome if they hand over most of the revenue streams to the Falcons.

  12. John,

    I would say that travel to the city, buying food, renting cars, buying fuel, going to other tourist sites, and hotel would the part that would help the city. Some would argue that the construction of this building would generate economic development as well. The dome currently makes about the same as the cost of operation. The bonds are being paid off by hotel tax and would continue to be paid off with hotel tax. The reason the tax passed initially was that the tax was being paid primarily by the visitors to the city and not the residents of the city. That would continue to be the case.

    As a fan of downtown venues, I really want the new stadium to be built in downtown. I enjoy taking MARTA to the game (after first stopping at the Varsity). I really would prefer an open air stadium, but because of events other than Falcons games, having a retractable roof venue makes more sense.

    If the Falcons were to build an open air stadium in (just an example) Kennesaw. The total cost of the stadium would be about $300 million cheaper. But in doing so the GD would then have competition. The cost to the owners would be the same, but it would hurt the downtown Atlanta.

  13. Lewis,

    Has it occurred to you that having a hotel tax FBO of a stadium sort of precludes a tax FBO of something else, like maybe libraries, schools, public safety, etc.? It’s a choice I know, but it’s not as cost free as you seem to by implying.

  14. So SCjay, you are saying that collecting taxes on people who stay in hotels should be used for libraries and schools? Why not put up border crossings and charge people as they drive into the state and use that money to support libraries and schools?

    The tax was originated to pay for the GD, what is being purposed is extending that tax to pay for a new stadium.

    If you do not stay in a hotel in that area, it is free to you.

  15. What about tax that would be collected on supplies for the building of the new stadium, and state income tax that will be collected on construction jobs that would be generated? A portion of sales tax and income tax DO go to support schools, libraries, and public safety.

  16. Lewis:

    Many of the “tourist” taxes you mention do funnel some new revenue into the coffers of host cities. These are not all “new” revenues, however, as discretionary spending is more often redirected than expanded by sporting events or theatre/monster trucks etc. On a personal note, when I gave up my season tickets for my “local” club (abt 300mi from my home), I did not stop going to the host city as a result. In fact, because I no longer pay several hundred dollars a year to the franchise itself, I have a little more disposable income to spend… which tends to result in a trip or two “more” to the preferred local business hub. It is not impossible that the city is actually far better off because I now spend that money somewhere other than their football stadium (like restaurants, theatre, bars etc). This may or may not be typical of other locales. The point is, major centres are attractions for those of us who live around them whether they have an NFL/NBA/MLB team or not.

    With regard to the sales tax on building supplies and income taxes on construction jobs, surely you must understand that on a project funded entirely (or at any rate above 5%) by the city and/or state, any net return on outlay for the stadium will be negative (probably severely so)?

    Put another way, spending $1Bn on a stadium because you want the tax revenues generated to put $40m toward schools and hospitals isn’t a very effective annual return on investment, much less as a one time funding mechanism.

    “Tourist” taxes are never free unless your district is the only one using them. In fact, they often multiply, since residents from surrounding suburbs (or the county) who may already be subject to local taxation directed at stadium funding will sometimes choose to stay downtown near the facility when travelling to a game.

    Secondly on this point, it is self evident that residents of Atlanta will at some point travel to other cities (for pleasure, work, to attend a Falcons road game etc). At that point, they will be staying in hotels, eating in restaurants and probably renting cars. So tourist taxes are anything but “free”… This is yet another ‘sounds good’ lie that politicians love to sell – it won’t cost YOU a dime.

    Add to that fact any dollars spent on (what most capitalists would consider regressive) taxes cannot be used to spur other areas of the economy… so $400 annually in voluntary taxation to pay for a stadium you might visit a few times is $400 less an avg family or individual has for a new car, appliances, or the kids college fund.

    Suppose that, instead of directed taxes aimed at funding a stadium for NFL fans, we were talking about the same total tax imposed federally to feed underprivileged kids a decent school lunch and provide them with an actual education rather than what passes for same in much of the public school system? Suddenly this type of taxation doesn’t seem like the economic driver that stadium advocates would claim it is, does it?

    Are you in favour of such a funding mechanism? If so, as much or less than you are for the same tax to fund a new stadium for your team to play in? It doesn’t have to be one or the other, of course

  17. @Lewis – here in Santa Clara, CA, it is our property taxes which go to the schools. Sales taxes don’t go to schools – they go to our city/county/state. Income taxes go to the state and feds.
    The fact that the land under the stadium is publicly owned means that the football team won’t be paying property taxes – so our schools have a net loss of property tax income when compared to doing something else with that land which would generate property tax dollars for our schools/city/county.

  18. @SC–sales tax and property tax go to help fund schools in Georgia.

    The GD is on public property and the new stadium will be built on land that is currently a parking area for truck is already owned by the state. There is not a net gain or loss in property taxes with the new stadium (unless it is in that the places around the stadium become more valuable, but I doubt that would be the case).

  19. John,

    MANY cities do have a “tourism” tax. Everytime I rent a car, a hotel, perhaps even pay extra sales tax in a degisnated tourist area–I pay for something that I personally will not benifit from. However you are making this issue beyond what we are talking about building a stadium. I agree totally that investment in education should have a much better long-term effect on a city than a stadium would. The bigger point is a stadium will be built, in downtown Atlanta, in the northern suburbs of Atlanta, or in a new city. The influx of jobs and supplies to build $1B stadium will have some postive effects on schools, local govt, etc. (not as much as a direct tax—you are correct) but this not a debate about which tax is “right” and which one is “wrong”—it is is an $300 million investment in downtown stadium a good one for the city/county/state. I still contend that it is, you seem to say it is wrong.

  20. Lewis:

    Without wishing to drag this out any more… the answer to that question is that it depends on what/how much the city earns for it’s investment (be it $300m, 500m or 750m).

    If the demonstrable net revenues can cover the investment (which they easily exceeded with the present stadium), then I would agree that it’s good. If most of the new revenue streams flow to the owner rather than the city, and the city must spend revenue from other streams to cover the stadium bond debt (as has happened in the majority of facilities built in the last two decades), then it is not.

    The point re: “school lunches and education” was not well made, sorry. What I was trying to make clear is that the public mostly looks at incremental taxes as regressive and ‘anti business’. Unless, of course, the revenues from those taxes flow to private individuals (mainly, sports franchise owners). In such cases, no-one seems to complain that the proposed taxes are anti business or regressive. Instead, they are seen as a method of “paving the way to prosperity”.

    I struggle to see the difference when the tax is the same, only the beneficiary is different.

  21. John,

    Thanks for the dialog. I think that talking things through is important. We may disagree, but I respect your thoughts on the matter. When it comes down to what to do about a new stadium, it will be up to the people of the city, county, and state.

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