Cobb businesses will have to sell a lot of pizza to pay off new Braves tax

Much of the attention on Cobb County’s $300 million stadium subsidy deal for the Atlanta Braves has focused on the roughly $120 million a year that would be paid for by extending a hike in local property taxes. But the next biggest chunk of the public share — $5.15 million a year, or maybe $75 million worth of stadium cost total — would come from an increased business tax in the Cumberland Community Improvement District immediately surrounding the new stadium. The idea is that local businesses would get the bulk of the benefit from having the Braves playing next door, so they should be the ones footing the bill.

And what do the businesses themselves think of this logic? CBS Atlanta asked one:

Uncle Vito’s New York Pizza manager Richard Brown, whose business falls in the district, has his doubts.

“I don’t see us getting so much of a benefit that it outweighs the amount of taxes that we’re going to end up having to pay,” Brown said.

His company may not directly have to pay taxes, but the shopping center that his restaurant sits in would, which he worries could trickled down to him in the form of rent.

And he believes that Braves fans will end up getting meals inside the new stadium complex and might not patronize businesses in the area when the game’s done.

“The people are just going to the game and then they’re going home,” Brown said. “All it basically does is just cause a traffic jam for them.”

This is just one business owner, mind you, so it’s possible all his neighbors are just thrilled about taking on higher tax bills in exchange for baseball foot traffic. (Well, not foot traffic because no one will be walking to games. What do you call traffic when it’s in cars? Oh, right, “traffic.”) But Brown does have a point: The whole reason the Braves are putting in $372 million of their own money for this project, after all, is that they are hoping for increased revenues from a new stadium, and one way to get those is by sticking in more restaurants and souvenir outlets and other places for fans to spend their money without venturing beyond the stadium walls. And we’ve certainly seen local merchants complaining about crappy business outside other new ballparks.

But, hey, these guys don’t get to vote on it anyway, because the CCID can raise taxes without a vote of any kind, so who cares what they think? I mean, this guy cares, obviously, but he’s just some guy with a WordPress site, and — oh, yeah…


18 comments on “Cobb businesses will have to sell a lot of pizza to pay off new Braves tax

  1. I seem to recall reading on somebody’s blog that ticket taxes are really paid by the owners (not the fans) because the market will dictate what price fans pay, regardless of whether a tax is included or not. Something isn’t adding up here…

  2. Any government (local or state) that is out-laying taxpayer funds for an enterprise such as the funding of a sports stadium SHOULD do the due diligence with regard to the economic benefits of handing over MILLIONS of dollars to a private sports team…(laughable I know), but it would seem that too often it is the representatives of the team RECEIVING the funding that communicate all of the “pie in the sky,” economic benefits a new sports stadium will bring to the area.
    How often do the teams receiving the tax payer funding provide the talking points for the government agencies to utilize on why its such a “great deal” for the public, and for local economic development?
    Unless the local business owners can pool enough money to lobby on their own behalf (fat chance), they better come up with another location for their local business, as they will likely become “former” business owners, once the stadium is built, and their customer base spends their dollars within the stadium, rather than in the general area.

  3. Hmm. What’s to stop current restaurants & stores from moving away from the new Braves stadium?

  4. “Hmm. What’s to stop current restaurants & stores from moving away from the new Braves stadium?”

    Leases, plus any sunk costs in equipment and marketing.

    The CCID boundary is pretty screwy. Anyone know how hard it would be to find commercial space just outside of the green line?

    http://portal.cobbcountyga.gov/images/documents/comm-dev/planning/2013%20cobb%20ccid%20map.jpg

  5. All you have to do is take a virtual walk South of SafeCo field in Seattle to see the economic development in an area that’s had stadiums since the mid 70s. Ok, North is a bit better direction, although that’s been developed for 100 years.
    https://maps.google.com/maps?q=sodo+neighborhood&oe=utf-8&client=firefox-a&ie=UTF-8&ei=41GKUrbzGqKuiQLqhYCIDQ&ved=0CAoQ_AUoAg

    Incidentally, a city councilman who voted against Hansen’s arena was narrowly replaced by a Marxist, with support of Sonics fans going for the “tax the rich” Marxist.

  6. Got it. So fans will respond to market forces when buying tickets, but business owners won’t when considering leasing costs.

  7. Ben, what are you talking about? Are you saying that commercial landlords won’t be able to raise rents because the market won’t bear it? That doesn’t work in a market where all their competitors (within the CCID, anyway) are facing the same added costs; everyone can be expected to raise prices in tandem. It’s a completely different dynamic than a baseball team that is competing for entertainment spending with other options that aren’t facing the same tax.

    If the pizzerias all move out of the district, obviously, that’s another story, and commercial landlords will end up eating the cost. But the money has to come from somewhere.

  8. The pizzaria can embrace the tax like other businesses do sales for charity. $2 of this $25 pizza was earmarked for the Atlanta Braves. Except they’d have to probably pay money to license the use of the Atlanta Braves logo or name.

  9. @ChefJoe: Love that idea. But you probably would have the Braves’ lawyers knocking on your door pretty quick. You could always go generic: “$2 of your $25 purchase was assessed by the county to pay for that big stadium across the street”.

    “…ticket taxes are really paid by the owners (not the fans) because the market will dictate what price fans pay.”

    It’ll only come out of the owner’s pocket if he’s already charging the absolute maximum that people are willing to pay and there’s no room to tack on the tax. Pricing is rarely that perfect, so he’ll pass it on.

  10. Neil,

    You hit the nail on the head. The market will dictate whether businesses will move out of the district if landlords try to build in the new tax to rents. Just like the market dictated whether Milwaukee sports fans would go to the sports bar instead of the arena to watch the Bucks when the ticket tax went up.

  11. “whether” landlords will try to build in the new tax to tenants?

    Seriously?
    You understand what triple net means, right?

    One of the bigger lies municipal politicians ever tell their constituents is that they are ‘taxing the wealthy’ by raising commercial property taxes.

    You as customers pay those increased taxes when you buy any product or service that the operator of the business in the commercial unit presents. The landlord will earn his nut regardless of any surtax, convenience tax, fee et al.

    Those hotel and rental car taxes everyone loves to trot out as being “free” don’t get paid by the hotel and rental car companies… they just collect them from customers. That’s you, taxpayers.

  12. ChefJoe/Keith: How about a “$2 from every pizza sold is going to pay for that starting pitcher we signed to a ridiculous deal 6 years ago who hasn’t pitched for the Braves since 2008″?

    Of course, you could easily use up the entire cost of the pizza by doing this given the number of bad contracts around (somebody is still paying Raul Mondesi and Mike Sirotka, I’m sure…), so this would have the added benefit of making the customer think he is getting his $25 pizza for free, really, when you consider all the players contracts he may be funding with his purchase…

    “Come on down and spend $50 on wings and beer at Honest Al’s TIF bar & grill, and do your part to pay for the millionaire major league failures who’s names none of us can really remember…”

  13. Ben,

    I see where you are going, but look at it as a public policy question and not a sports question. If businesses are paying a tax–the question is “why”–there are lots of good reasons that this could be in effect: more sales/revenue, more customers, more development. Everyone takes a chance that it will work.

    However, in many of these cases, the policy goal never happened (other than building the stadium). Look at DC, where the business surcharge revenue (on larger businesses) has been “higher than expected” (which could be a factor of the huge amount of urban growth across the city, not just in the vicinity of the ballpark). Yet at the same time development has actually been the slowest around the ballpark, which raises the question of opportunity costs and exactly why the surcharge is being paid. This is really a tax to support baseball being played nearby, which is a bit different than what’s being argued here.

    Look at stadiums around the country–or better yet–in the UK and Europe, and ask where a stadium cuts against the grain of urban growth and decline. Even with the eyeball test, the argument doesn’t stand up.

  14. Yes, Ben, the pizzeria owner will be free to close his pizzeria if he doesn’t like the market price of rent + Braves taxes.

    No, commercial landlords in a district with a universal tax increase do not face the same pricing decisions as sports team owners in a competitive entertainment market with sports bars, etc. — for all the reasons I and others have noted above.

  15. I thought Cobb County was all about free enterprise and low taxes? How about this: If the benefits of this new stadium proposal are expected to be so great, force Liberty Media to put it in writing. Guarantee that the county will see an increase in ______ (e.g. property values, tax receipts, etc.). If that doesn’t happen, Liberty Media/Atlanta Braves will pick up the shortfall in the form of increased taxes and/or a rebate to the citizens of Cobb. If they don’t like that idea, then they can pay for the whole deal out of their own pockets like ‘real businesses’ are supposed to.

    Hey, I’m a huge Braves fan, but like they say: business is business.

    Peace be with you.

  16. The local Merchants around whats going to be the New Stadium will come to find out that on game days their current customers will stay far away so they will need to at least double it on game days to make up for it which probably wont happen. I have been going to yankee games for 24 yrs at legal drinking age and we would always go to,STANS Or the Bowling Alley across from the old stadium and it would be packed and everyone would meet there. In the first 4’seasons of the New Stadium i have yet to spend 1 dollar outside of the stadium except for parking.

  17. CFountain: One of the best possible protections for the general public is just that: If the CRL or TIF or BRZ or whatever falls short of the expected revenue goal, the team owner makes up the shortfall.

    If they really believe that the stadium will provide a windfall for the local economy (as they almost universally state), then what could possibly be the objection? The city will be making so much money that they need never reach into their own pockets, surely….

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