Nine months after saying he wanted to offer up to $150 million to the owners of the Atlanta Hawks for arena renovations to get them to sign a lease extension, Atlanta Mayor Kasim Reed has offered $142.5 million to the owners of the Atlanta Hawks for arena renovations:
The city will put $142.5 million into the renovation, with the Hawks contributing $50 million.
About $110 million will come from extension of car-rental tax and the city will contribute $12.5 million from the sale of Turner Field, which is expected to close by year end. The remaining $20 million from the city will come from a series of expected future land sales, Reed said…
Hawks officials have previously said they are looking to, among a number of upgrades, replace the bank of suites that dominate one side of the arena, install a variety of different-size suites, improve the connectivity so fans can navigate around the arena on one level and create better floor seating by changing the layout which originally had oval ends to accommodate hockey.
So how bad would this deal — which still requires approval by the Atlanta city council and the Atlanta-Fulton County Recreation Authority — be for city residents? Let’s come at it from a variety of different angles:
- Having the public put up 74% of the renovation costs for a privately run sports facility sounds pretty bad, unless the Hawks are agreeing to share more arena revenues with the city in exchange. The deal is just being described as a “lease extension,” though, so presumably they’re not.
- On the bright side, $142.5 milllion is a lot less than the almost $700 million in public funds that the Falcons are getting for their new stadium. On the less bright side, they’re getting a whole new stadium out of the deal, whereas this is just rejiggering the suites and concourses.
- Philips Arena only cost $213.5 million to build in the first place, so this is almost paying for its construction cost all over again.
- The Hawks’ lease already runs through 2028; this would extend it through 2046. That makes this a public tithe of a little less than $8 million per each added year, which is cheaper than the $14.6 million per year that Charlotte is paying the Carolina Panthers for their lease extension, so, um, good negotiating?
- Now Hawks fans don’t have to worry about the team moving out of town in 2029! Which will be a real worry following the economic upheaval in the first year of the Farkas Administration.
In short, then, the owners of the Hawks complained that their 17-year-old arena was designed wrong and needed a $200 million upgrade 12 years before their lease was to run out, and the mayor of Atlanta said, “Sure, we’ll pay for three-quarters of that, if you extend your lease some.” It’s not the worst deal in the world — it’s not even the worst deal that Reed himself has brokered — but it’s not an especially good one either, especially if anyone in Atlanta was hoping to use that future tax money for something that would benefit more than one group of local rich guys. Atlanta city council, ball’s in your court.