Atlanta mayor touts new Falcons stadium funding plan, as actual public cost soars past $400m

Well, that was fast: Atlanta Mayor Kasim Reed announced last Friday that he’d have a revised Falcons stadium finance plan ready to go by the end of the month, and now only a week later, there is a new plan:

Mayor Kasim Reed said the city would provide $200 million of construction costs through bonds backed by the city’s hotel-motel tax. The Falcons franchise, owned by Home Depot co-founder Arthur Blank, would provide $800 million and be responsible for construction cost overruns.

The Falcons would pay for up to $50 million in infrastructure costs not included in the construction budget and help retire the last few years of debt on the Georgia Dome, which was publicly financed entirely using the hotel-motel tax.

Also, Blank’s private foundation and the city each would spend $15 million on surrounding neighborhood development.

That’s actually pretty much the old plan, along with $30 million thrown at surrounding neighborhoods to make local city council members happy, though half of that will come from tax money collected by an existing city TIF district, so really it’s only an extra $65 million from the Falcons. And there’s still no official word on the $100 million or maybe more in future tax revenues that the Falcons have been reported to be asking for — the terms of the operating agreement for the stadium aren’t official yet, and that’s where those kind of future subsidies would be revealed. And, of course, it’s not a “deal,” no matter what the headlines say: the Atlanta city council still needs to hold hearings and vote on this.

Speaking of hidden subsidies, this might be a good time for me to address the analysis that Atlanta blogger Al Gray posted recently claiming to show that the Falcons would only be on the hook for $43 million out of a total $1.17 billion stadium cost. Simplifying Gray’s chart a bit, we have:

  • Hotel/motel tax money for construction: $359 million
  • Hotel/motel tax money for future maintenance and improvements: $178 million
  • PSL sales: $150 million
  • Construction sales tax rebates: $30 million
  • Donated public land: $24 million
  • Atlanta infrastructure costs: $53 million
  • Value of naming rights and concessions rights given to the Falcons: $128 million
  • NFL G-4 program: $200 million
  • Falcons: $43 million

There are a couple of quibbles I have here: It’s not entirely clear where that $359 million figure comes from, since Reed is claiming it’s only $200 million in up front hotel/motel tax proceeds (or rather, it’s clear it comes from here, but not whether that represents the actual final bond amounts). Counting PSL sales as public money just because the state would be handling the sales is a bit dodgy, since if anything it’s money that will cost the Falcons some as fans plunk their spending money down on the right to buy tickets rather than on tickets themselves. (You could certainly argue that PSLs could be used to offset the public share of costs, but that’s a different debate.) The Falcons now say they’ll pay for the $50 million in infrastructure costs, though whether that’d be offset by some other concession in the lease we won’t know until that document is released. And naming rights and concessions rights usually end up going to the team, though again, you could make an excellent case that naming rights in particular for a publicly owned building should by all rights go to the public.

Even bending over backwards to eliminate any contestable items, though, we still have $200 million in construction costs, plus $178 million in present value of future improvements, plus $30 million in construction sales tax rebates, plus $24 million in land costs, for a total of $432 million in public costs. And after selling naming rights and PSLs and all, the Falcons would indeed be on the hook for only about $43 million, though in using naming rights and PSL proceeds they’d be giving up a big chunk of the new revenues they’d otherwise be looking to get out of a new stadium. That sounds a heck of a lot worse for the public than the “$200 million public, $800 million private” headlines, but then, that’s undoubtedly why Reed put his number and not the other one in their press release.


31 comments on “Atlanta mayor touts new Falcons stadium funding plan, as actual public cost soars past $400m

  1. Is there a ‘Field Guide to Mayors’ in publication? Under the ‘characteristics’ or ‘behavioral’ descriptions does it say “blindly supports any stadium or arena plan no matter how counter-inuitive from the ordinary taxpayers perspective”.

  2. That’d be this, pretty much:

    http://www.thenation.com/article/162400/why-do-mayors-love-sports-stadiums

  3. Future headline: “Unpopular Atlanta Mayor Reed Voted Out Of Office”
    Governors love sports stadiums too – re:Blagojevich & Wrigley Field.

  4. Is that $43M from Blank/Falcons or is that money coming from the NFL’s stadium loan program (is that G-3, G-4… what number are we at)?

    And isn’t that money another dodge to begin with? By which I mean, I think that money comes off the top of whatever the topline revenue is in the CBA before the players get their share (so basically the NFL is costing players roughly $.50 for every stadium dollar it ‘loans’ out to a billionaire owner to help fund a stadium). Moreover—and this is where some clarification would be good (or I just may be flat wrong)—but I thought I read somewhere that the G-3 program was at least partially funded by teams ponying up some of the money from premium seats sold to visiting fans?

    The NFL really is on par with a strip club in terms of a device that separates people from their money. Oddly enough I bet they both get plenty of help from politicians.

  5. The $43m is actually from Blank. G-4 money gets its own line item, as you can see above.

    G-4 money is (mostly) from the visiting teams’ revenue-sharing share of premium seat sales (so, not the same as “seats sold to visiting fans”). It’s money the Falcons are only getting to keep if they build a stadium, which is why G-4 is called a “loan” program but is really mostly a grant.

  6. Me fail English?

    Probably helps to read. My bad as I actually looked through the ppt posted on that Gray guy’s website. It was put together terribly and was unnecessarily long and redundant, so I bailed before getting the specifics out… which I guess is the point? What councilmember or legislator is going to sift through that to make sense of the actual numbers.

  7. Is $200 M the new sweet spot for bonds from cities/counties ? Odd that Seattle arrived at the same number (from the city and county)… with the private arena operator getting profits from naming rights/arena concessions.

  8. G-4 is mostly a loan, not a grant. It’s 40% grant, the portion of revenues that would go to visiting teams, versus 60% loan.

  9. “Is $200 M the new sweet spot for bonds from cities/counties ? Odd that Seattle arrived at the same number (from the city and county)… with the private arena operator getting profits from naming rights/arena concessions.”

    In today’s economy where it’s not doing as well as it did 15 years ago, I would say that $200 million for sports stadium subsidies from cities and counties is a reasonable figure (and should be the maximum amount if anything). Same with states and provinces. What do the rest of you think?

  10. The public picking up 75% of the tab is our sweet spot. NFL owners across the land are smoking cigars and sipping champagne in our private billionaire suites, as we have pulled yet another fleece-job off on the rubes, err, valued loyal fans! Every team should get a new palace every 20 years or so, and you should pay for it.

  11. The public isn’t picking up 75% of the tab. You can be against public funding for stadiums without being dishonest.

  12. NFL G4: 200 mil
    Falcons: 43 mil
    taxes, rebates, public outlays, psl giveaways, etc: 927 mil
    927/1170 =79%

    Sweet spot baby! Oink oink.

  13. Throwing PSL revenue into the public funds category is a joke. The naming / vending rights revenues really should be considered neutral stadium generated funds.

    It’s clear Al Gray isn’t interested in legitimate analysis.

  14. PSL giveaways? Are you joking?

    PSLs are team revenue, its dishonest to claim otherwise.

  15. Falcons = $443 million
    Public Funds = $435 million
    Stadium Generated funds = $128 million

    50% private/ 50% public

  16. John, the Falcons and the mayor of Atlanta are claiming a $200 million cap on public funding and approximately $800 million to $1 billion private, so they should be taken to task too.

    Given that it is the Falcons and the mayor who are pushing for this deal while Atlanta already has a stadium that does exactly what it needs to do, the burden is on them to prove a benefit. So far they’ve given out a different set of numbers each time anyone has challenged the need for a new stadium. How can anyone be expected to perform an accurate analysis of the deal when the numbers change from day to day?

    While I’ll agree with you that PSLs aren’t public money, they are an increase in cost to fans. I’m ok with that but Falcons fans should be fully informed that this is going to happen to them. Right now many think they’re getting a new stadium to watch their team for pretty much no cost to them and little concern that it’s being paid for partially by non-fans. If they know it is actually going to cost them something instead of being a government freebie, they might not be so enthusiastic.

    I’m fine with naming and vending rights being counted as public money because right now those items belong to the public at the Georgia Dome. Part of this deal is to have the publicly owned Georgia Dome torn down. That’s an expensive public asset that the Falcons are getting for the price of tearing it down. With the Georgia Dome still in operation, it is claimed that neither stadium could make a profit. So naming rights (which right now the state has chosen to forego in order to keep ‘Georgia’ on the building) and vending money that the public currently get will be given instead to the Falcons. To me the demolition of the functional Georgia Dome is the biggest scam in the entire deal.

    For those who think this will cause Mayor Reed to be voted out of office, as to day he only has one opponent running against him in November, and not a serious contender at that. His opponent is a chef who is angry about parking meters being installed in front of his restaurant. He’s posted photos of him exposing his bare buttocks as a form of protest so as you can imagine, no one is taking his candidacy seriously. It’s just a way of calling attention to his restaurant and the parking meters. If Reed actually had a serious opponent, he might be a bit more concerned about giving away so much public money and spending so much time on pleasing Arthur Blank instead of the needs of the City of Atlanta.

  17. Jason, I agree that the mayor and city council should be taken to task but lying to inflate the public costs doesn’t inform the fans or help the cause of those against using public funding for new stadiums.

    Al Gray’s twisting of the facts is as awful as the mayor’s and the Falcons’. He has zero credibility after posting that tripe. The $178 million for future maintenance and improvements shouldn’t be included in stadium construction costs either unless we know the time frame this covers and the amount of annual rent the Falcons will pay. Is this for 20 years? 30 years? What’s the annual rent that will go to the city?

    Al doesn’t bother to explain why he used the $359 million amount from page 5 of the GWCCA doc instead of the $286 million figure on page 7. He also doesn’t bother to mention that $60 million goes towards paying off the debt on the current stadium.

    I’m against any public funding for stadiums and the $200 million in public funds for construction plus the $24 million in land is more than enough to make the case against this deal. Fabricating the stuff that Al’s come up with is unnecessary and exposes his blatant bias.

  18. Oh, I agree with you that lies are bad no matter which side they’re from. Really Mr. Gray should break things down into three categories: Falcons/NFL, Public, and ticket buyers. That would make things much clearer.

    I’d also like to see a side by side of what the expenses and revenues for each group would be over the next couple of decades if the Georgia Dome is kept around (and repairs made as needed) versus a new stadium. To me that would be the clearest way of presenting the numbers. Now if we can actually get our hands on the numbers before the public is obligated by contract to something they’re not being fully informed about. So far the number given by public officials for upkeep have ranged from $30 million to $800 million and infrastructure costs from $50 million to $200 million. The whole thing really needs to be vetted by an impartial third party because the numbers from everyone seem to be mostly fantasy.

    And the ability to vote on the deal would be nice too. It amazing, though I guess not surprising, to see many Falcons fans on the internet say there should be no vote. I guess they’re worried about not getting their hobby subsidized by the public.

  19. What I don’t see in all this is the extra money raked in for the skyboxes, that sounds like a major cash cow for the NFL.

  20. Hi Matt;

    Rather than setting a hard dollar cap for stadium subsidies… my personal view is that the public contribution should never be more than 25% of the budgeted cost.

    I think an argument can be made that sports facilities do provide some public benefit (and not only in relation to their primary tenant). But it’s very hard to demonstrate anything beyond 25% as supportable (actually, it’s pretty hard to get to 25% without stretching the truth at least a little).

    I think whether a city wants to help build a $10m minor league facility or a $400m pro palace, kicking in 25% toward infrastructure and other improvements should be the limit. I suppose one way to look at it would be to say “assume the city builds a basic facility for $X and rents it to the team. If the team wants more than $X spent, they should cover the excess”. Is that type of thing part of your $200m suggestion?

    One can make the case that the smaller and less lucrative the sports business involved, the greater the subsidy should be. IE: should a city pay $6-8m toward a $10m minor league facility? Don’t know… but it’s harder to argue that the city contribution creates profit for the private operator in a minor league scenario… the subsidy might actually be necessary to allow the sport to exist (though that changes nothing in relation to whether one believes in public subsidy to private entertainment businesses).

  21. To further complicate things, suburb communities are leaving Atlanta and forming their own municipal governments, which will pass on more cost to Atlanta taxpayers. http://www.wnd.com/2013/03/suburbs-secede-from-atlanta/

  22. I commented on Al’s page and his response was extremely misguided. He doesn’t understand what rights PSLs cover and tried to spin the fact that he included “future maintenance and improvements” into “Total Construction, Site and Land Costs”.

    Linking to crackpots like Al does this site a disservice.

  23. I would like to akin this move to Arthur Blank deciding that the house that he presently resides in and “RENTS” is no longer any good and he would like to BUILD a house on the same street. Instead of using his own finances he asks us to chip in and help him BUILD a new house that he promises he will invite us to the parties that he will host there. By the way, he will charge admission to come to the wonderful parties that he will host there. ARE WE INSANE TO NOT SEE THAT HE WISHES TO GET OUT OF HIS PRESENT LEASE AND IS USING US TO DO SO?!!!!!!! W are willing to loose a revenue generator like the Georgia Dome and give it away to a new stadium to where the STATE gets nothing!!!

  24. Dennis, that might be the most uninformed article I’ve read in a long time. Not a single square inch of the City of Atlanta has left the city. The article is writing about issues in county governments, most of which are suburban. While the city does have it’s issues, those addressed in the article simply aren’t City of Atlanta problems and have no effect on the city’s budget. The fact that the headline starts off with a false statement (suburbs are seceding from Atlanta) should be reason enough to be very skeptical of everything else in the article.

    Reading the comments on the article shines a bright light on the type of people who read WND and their motivation for writing such a poorly researched article.

  25. Hi Neil,

    I posted a response to Mr. Bladen’s comment a bit after midnight today and it went into the spam filter. Either I forgot to click on the password or it took me too long to post my comment (it did take me a while to write my response). Is there anyway that you could pull it from the filter and post it on this thread? If not, then I fully understand. Thanks Neil.

  26. Sorry, I’m afraid there’s nothing from you in the spam filter. It must not have gone through at all.

  27. I also had a comment not post, but it was mostly snark, so it’s evaporation into the binary ether is not a big deal.

  28. Guys, it’s not $200 mm of public money – it’s $560 mm – $640 mm of hotel motel tax. Until we hear otherwise, the Falcons will get the hotel motel tax from retirement of the Dome in 2017 until expiry of the current tax statute in 2050. City council was told at the first hearing that the Falcons’ piece of the tax is $17 mm. So that’s $560 mm over 33 years. But in today’s piece by veteran local power-structure reporter Maria Saporta she lets out that the tax stream to the Falcons is $19.5 mm, which may be the up to date number. Hotel revenues were up sharply last year in the City of Atlanta per a piece in the AJC this weekend. That would $640 mm.
    Just because they don’t go for more than a $200 mm bond doesn’t mean they don’t get their hands on the full stream for the full term. And don’t run present value without including inflation and real growth of hotel revenues.

  29. Break it down any way you like, but quit arguing over whose money it is. The simple answer is that in the end, it’s ours. All of it.

    I do appreciate the many who show up here to argue vociferously on behalf of us NFL owners. Where are the nutty “economic benefit” arguments btw? Haven’t seen those for awhile. These days it’s just all about who pays what %, no one bothers with the econ 101 b.s. any more.

    Which means we are making fantastic progress in the campaign to get everyone on board with the idea that you the people owe us NFL billionaires a new stadium every 20 years or so in every city we play in. That gravy train is comin’ down the track, at 100 miles per hour, baby. We put the “fan” in fantastic, at 100 bucks a seat and maybe 20k or so for that PSL kicker. Pay up, chumps!

    Our design committee has this great idea to include plans for a future replacement in 20 years every time a team hires a design firm for a new palace. We’ll publish them and then start the next round of public funding discussion while the current new palace is just going up. Damn I love this country!

    Snagging taxpayer loot is a lot easier when they beg us to do it harder, over and over… oh yeah, that feels goooooood!

  30. There is a city council meeting on this tomorrow. Not sure if there will be a public input period, but if so, any opposition to me reading this?

  31. Public is invited at tomorow’s City Council workshop but no public comments are allowed.