I’ve gotten used to newspapers running headlines that contradict not only reality but the stories they themselves head, so when I saw yesterday’s Wall Street Journal headline “Atlanta Braves Owner Says County Wins Big From Development Near New Stadium,” I assumed most of it was probably wrong. And it is, undeniably: The only thing the Braves “owner” — not specifically identified, but probably actually CEO Derek Schiller, since he’s quoted directly later in the piece — says is that (in the WSJ’s words) “taxes and other income generated by the site are helping offset some of the county’s costs incurred by the Braves’ controversial $672 million suburban stadium,” which isn’t exactly the same thing. (The article also notes that the Braves are turning a tidy profit on the sale of three apartment buildings near the new stadium, which is very much not the same thing.)
The article does, however, reference a September study from September by Georgia Tech’s Enterprise Innovation Institute, done on behalf of the Cobb County Chamber of Commerce, which claims that public debt service on SunTrust Park come to $9.5 million a year, while the stadium has generated $18.9 million a year in new tax collections and “other benefits.” That really would be winning big. So is it true?
The report (and some executive summaries) can be found here. It is, just in terms of readability, horribly written — the numbers in the charts bear no obvious relation to those discussed in the accompanying text — but here’s the best I can understand it.
In terms of public costs of the new stadium:
- Debt service on Cobb County’s $300 million stadium debt is $22.5 million a year, of which the Braves owners pay $6.1 million in rent, leaving $16.4 million a year for taxpayers to pay off.
- $10 million a year is paid off by two Cumberland Special Service District funds (SSDs), wherein businesses “tax themselves in order to contribute to the stadium project.”
- The county is putting in $1.2 million a year to a stadium capital maintenance fund, and spending an extra $970,000 a year on public safety and other additional operational costs of the stadium.
That would seem to come to $8.6 million in remaining annual public costs, but the report says it’s $9.5 million. (The difference may be because of added cost of things like building that damn pedestrian bridge, but it’s not clear — like I said, this thing is horribly written.) This is almost exactly what the Atlanta Journal-Constitution came up with in its own calculation, so that checks out.
(There’s still one big problem here, which is that the analysis assumes that the SSD money — which is a tax surcharge on local businesses — would only come in if the stadium were built. But we’ll come back to that in a second.)
On the benefit side:
- $817,000 in sales taxes on ticket and concession sales to out-of-county residents
- $905,000 in hotel and sales taxes from fans who traveled more than two hours to the game, on the assumption they came specifically for the game, stayed overnight, and spent the average that an overnight Atlanta-area visitor did on food and lodging
- $89,000 in sales tax on Braves employee spending (no source given for this, other than the LOCI™ computer model)
- $270,000 in taxes on taxable office property in the tax-exempt stadium, including copiers and ice-making equipment
That all leaves SunTrust Park as a $7.4 million annual loss to the county, which over 30 years would be cost taxpayers about $100 million in present value — not as bad as at first feared, but also nothing like “winning big.”
Ah, but that’s just the stadium! The big benefit of the stadium, according to the report, is actually the development that the Braves owners built next to it, plus the “halo effect” of rising property values on adjacent land. This is probably best presented in a chart from the report:
In short, the Braves’ stadium remains a money pit for taxpayers, but they’re building a whole lot of other stuff that’s not a money pit, so yay, win!
The problem here isn’t one of math, but one — really two — of logic. Yes, building a stadium at a public loss next to a mixed-use development project that’s a bigger public gain is a net public gain. But who the hell said anybody had to build the stadium? If people in Cobb County are clamoring to live and work and eat in a new fake urban district in the suburbs, by all means give it to them, but unless you think they’ll only do so if there’s a baseball team playing next door 81 times a year, don’t shackle it to a money-losing stadium.
Also, if Atlanta suburbanites were indeed hankering for more places to walk around and pretend they’re in the city without actually being in the city, there’s every indication that somebody would have given it to them somewhere — just not necessarily in Cobb County. Yesterday’s WSJ article even notes that Cobb may just be benefiting by stealing economic activity from other parts of the metro area:
“We have friends in Buckhead,” one of Atlanta’s upscale neighborhoods, said Mike Plant, chief executive of the Braves Development Corp. “We hear from them. They’re not real happy.”
So basically, what we have is that the Braves owners built a stadium that is costing taxpayers lots of money, but they also held out the carrot of an accompanying development that would steal enough revenue from neighboring areas to put the final numbers in the black — if you assume that nobody ever could have been convinced to build development there without a stadium. This is indeed an exceedingly common gambit, dating way back to the Brooklyn Nets‘ money-losing-arena-plus-a-bunch-of-development plan, and dating right up to the Worcester Red Sox‘ similar minor-league stadium project. It relies on the fact that it’s nearly impossible to say if a mixed-use development would have been built “but for” the accompanying subsidies — so if you attribute all the new taxes being paid to the subsidy, any new development looks like free money.
All of this makes it very, very hard to determine exactly where the Braves stadium falls in terms of historically bad sports subsidy deals, which is precisely the point. Ancillary development projects bring in new revenues, yes, but more importantly they muddy the waters of determining who’s paying what — still nobody, including me, has a good number for how much that Nets arena is costing New Yorkers — and justify handing over public cash to a baseball team that was turning a tidy annual profit even before building new apartment buildings next to its new stadium and selling them for a 22% return on investment.
If the Braves stadium is the wave of the future, in other words, it’s less a revolution in figuring out how to absolve taxpayers of stadium costs than a revolution in how to confuse taxpayers about who’s paying for what. They’ve already succeeded in confusing the Wall Street Journal — tomorrow, the world!
[ADDENDUM: Atlanta-area sports economist J.C. Bradbury responded to this report on Twitter last month — something I missed because Twitter is but a blur passing before my eyes — and came to similar conclusions: “The report isn’t as bad as many I’ve read, but it’s estimated $18.9 mil impact isn’t correct.” He also raises questions about whether the SSD taxes are really “businesses taxing themselves” or just taxes that the county could have levied on businesses and used for other purposes, which is an excellent point that is beyond the scope of this post, because it’s long enough already, but maybe another time.]