The Atlanta Braves have played two seasons now at their new Cobb County stadium, but still no one knows how much the whole thing cost, because — I swear I am not making this up, and neither is the Atlanta Journal-Constitution, which reported it — nobody in the county has bothered to ask for all the receipts:
The Braves, who managed the stadium construction, say at $684 million, the ballpark exceeded its budget, with the team covering more than its share. But Cobb only has invoices covering $536 million, meaning there are roughly $148 million in construction costs for which Cobb officials have not reviewed receipts.
“We have invoices for all work that was the county’s responsibility to pay for,” the county said in a statement.
The county has the right in its contract to demand an audit of stadium expenses, but, according to one county commissioner:
Commissioner Lisa Cupid, who has been a consistent skeptic of the Braves deal, said there is little appetite on the board to damage the relationship with the team by asking “pointed questions.”
On the one hand, this probably isn’t a huge deal in the long run: The county knows where its $392 million went, and it isn’t getting any of that back unless the Braves’ share came in way under budget, which it almost certainly didn’t. Still, we don’t know how much our private partners are spending on this project because we don’t want to upset them by asking is pretty telling about elected officials’ usual approach to stadium deals.
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.]
Speaking of the Pegulas and New York’s current governor, they’re planning an $18 million upgrade of Rochester’s arena that hosts the Rochester Americans minor-league hockey team (which the Pegulas also own), with costs to be split among the owners and city and state taxpayers. Split how? Sorry, no room in the Associated Press article, ask again later!
The AP did find time to fact-check Wisconsin Gov. Scott Walker’s claim that the new Milwaukee Bucks arena would return three dollars in new taxes for each one spent, and found that “Walker omits some of the state money spent on the 20-year arena deal and relies on income tax estimates that experts call unreliable.” I could’ve told them that — in fact, I did, three years ago.
“‘Ticket tax’ proposal could lead to higher prices on movies, theater, sports in Columbus” reads a headline on WSYX‘s website, something that the station’s reporter asserts in the accompanying video without saying where he got it from. He’s at least partly wrong: Ticket prices are already set as high as the market will bear, so unless the ticket tax changes the market — in other words, unless people in Columbus are forced to spend more on movies and theater and such because the other options (staying at home and watching TV, going out to eat) aren’t good enough, mostly this will just mean prices will stay roughly the same but a bigger share will go to theater/team owner’s tax bills. (I could try to find an economist to estimate exactly how big a share, but isn’t that really WSYX’s job?)
Former Oakland A’s exec Andy Dolich says the team owners may be looking at buying both the Howard Terminal site and the Oakland Coliseum site, and using the revenues from one to pay the costs of prepping the other for baseball, which, if the Coliseum site is such a cash cow and Howard Terminal such a money pit, wouldn’t they be better off just buying the Coliseum site and developing that? Or is the idea that Oakland would somehow give up the Coliseum site at a discounted price in order to get a new A’s stadium done? I have a lot of math questions here.
With nobody wanting to spend $250 million on a major renovation of Hartford’s arena, the agency that manages the XL Center is now looking for a $100 million state-funded upgrade instead. Still waiting to hear whether this would actually generate $100 million worth of new revenues for the arena; if not, the state would be better off just giving the arena a pile of cash to subsidize its bottom line, no?
The Denver Broncos are finding it slow going getting a new naming rights sponsor for their stadium because a used stadium name loses lots of its value, thanks to everyone still calling it by the old name. Yes, this is yet another reason why teams demand new stadiums when the old ones are barely out of the cellophane.
F.C. Cincinnati‘s ownership group is preparing upgrades to Nippert Stadium as the team’s temporary home while a new stadium is built, and “isn’t concerned by the cost,” according to WCPO. Yes, these are the same owners who said they couldn’t possibly build a new stadium without $63.8 million in public money. Also who said Nippert Stadium couldn’t possibly be made acceptable as an MLS venue. I’m done now.
Fredericksburg, Virginia has scheduled a July 10 vote on whether to build a new $35 million stadium for the single-A Potomac Nationals, and paying off the city’s costs by siphoning off property, admissions, sales, meal, personal property, and business license taxes paid at the stadium and handing them over to the team. I guess that would make it a PASMPPBLTIF?
And finally, a man found dead in a walk-in beer cooler in the Atlanta Braves‘ new stadium turns out to have been there to install a revolutionary new fast-pour beer tap he’d invented, and no one yet knows how he died. This is going to be the best season of True Detective yet! (No, seriously, this is a tragedy for the man and his family, and I hope that everyone involved soon finds closure, at least, by determining the true facts of what happened. But also, no, I’m not going to go back and delete the joke. If this makes me a monster, at least I’m an appropriately social-media-driven monster.)
Congratulations to the team that had never won the hockey thing winning it over the other team that had never won the hockey thing because it was a new team! And meanwhile:
Today was going to be the last day for David Beckham’s Miami MLS ownership group to make a $901,500 down payment to the county for three acres of land that would be needed to build a new stadium in Overtown, which the owners say they don’t want to do anymore, maybe, but really who knows? But anyway, now it’s not the last day because Mayor Carlos Gimenez agreed to waive the deadline because of the ongoing lawsuit over the county’s no-bid sale of the land, and you’re already losing interest, aren’t you? All you want to know is where is this team going to play already, and who will pay for it how and when will it happen? and the answer to all of that remains ¯_(ツ)_/¯.
Here’s an editorial from the Seattle Times saying that spending $177 million in public money on upgrades to the Mariners‘ stadium would be a good deal because it “supports smart investments in a beloved regional asset that will need more than basic maintenance as it ages beyond its teen years,” which doesn’t actually explain what “smart” or “need” mean or why the public should be responsible for any of this. But also, the stadium is projected to “generate $3.1 billion in economic output” over the next 20 years, which doesn’t explain what “economic output” means or how this was calculated and then it acknowledges that “those numbers are high” but c’mon, just give the Mariners the money anyway, they have a difficult teenager to deal with, don’t they deserve some help? There’s a helpful list of editorial board members at the end, in case you want to drive around Seattle and point and laugh at them.
And speaking of the Mariners, here’s a long article in FanGraphs lauding them for “essentially guaranteeing that taxpayers will realize at least some profit from the initial stadium construction investment,” which is even too rose-colored for the Seattle Times editorial board. Seriously, if we’re going to be showering sports team owners for only asking for $177 million to upgrade their buildings that they got the public to pay more than $400 million for in the first place, I think maybe it’s time to give up on moral relativism altogether.
And finally, enjoy this article about a Philadelphia Flyers executive who recalls being at his then 18-year-old arena and thinking, “I was kind of out, walking around the arena, and it just sort of started to feel tired.” Arenas got mid-life crises!
Happy baseball season! Unless you’re a Miami Marlins fan, in which case it’s already ruined. But anyway:
The Texas Rangers owners say they won’t tear down their 24-year-old stadium once they build their new one next door so they can have air-conditioning. What on earth will they use an empty baseball stadium for? “We will look for tenants to occupy the office building and now we’re entertaining ideas and how to retrofit the rest of the park,” says Rangers VP Rob Matwick. “What that will be, I don’t know. Right now we’re just fielding ideas and there has been a lot of interest.” Uh-huh.
The Marietta Daily Journal says the Atlanta Braves‘ new stadium has been a huge success for Cobb County because the formerly undeveloped land is worth more now that the Braves owners have developed it, which isn’t how economic impact works at all. But I guess it’s nice that the traffic hasn’t been a nightmare, though you have to wonder how it’ll be once the Braves are good enough for people to start going to games again.
The Pro Football Hall of Fame’s $1 billion expansion project is over budget and in financial trouble — in case you couldn’t have guessed that from “$1 billion expansion project” — and there have now been “discussions among local officials about potentially having to increase sales taxes to help fund the project.” Man, I gotta find me a way to become considered too big to fail.
The county could try to raise more money by, say, increasing hotel and car rental taxes, except it already did that for the Braves stadium, and is likely approaching blood from a stone territory.
Verdict: The stadium isn’t the only reason Cobb County residents are going to have a harder time finding books to read — as Deadspin notes, former county commission chair Tim Lee also cut taxes (I think he cut millage rates, so while property tax valuations are up, actual revenues are down, but I have a cold and don’t have the patience for the googling it would take to piece this together from media reports, so feel free to correct me in the comments if I got this wrong) — but it sure ain’t helping.
I’ll sometimes get criticism for being skeptical of all plans that involve spending a whole lot of public money on stadiums and coming out ahead because “economic impact,” but there’s a reason for that: When you start in a several hundred million dollar hole, it’s damn near impossible to climb out of that thanks to whatever money trickles in from new spending. Sure, in a best-case scenario you steal some consumer spending from neighboring jurisdictions, and the “multiplier effect” of money recirculating in the local economy isn’t mythical, just overblown. (Especially when most of the money never enters the local economy because it goes to athletes and owners who live and spend out of town.) But you’re counting on pennies to pay off dollars, and that’s never a good business plan — whether it’s for stadiums or for movie shoots.
Anyway, Cobb County is hosed, but we knew that already. Just set this one aside for the next time anyone says, “It’s not like this stadium money would be going to fund schools or libraries otherwise!”, because sometimes — oftentimes — that’s exactly what it means.
The Atlanta Journal-Constitution has been doing generally excellent work covering the Atlanta Braves‘ new stadium in Cobb County, and today reporter Meris Lutz does something that is rarely attempted in press coverage of stadium deals: Trying to add up the actual costs and benefits of a new building after the fact, and seeing how it all worked out compared to what was promised by proponents.
First, the promises:
“Thanks to serious, conservative leadership, Cobb County will realize a 60 percent annual return on investment from the SunTrust Park partnership,” [former Cobb County Chairman Tim Lee] wrote. “In fact, it will be the first private public partnership of its kind to result in a return on investment to taxpayers in the very first year.”
Those are some promises! Now, how has reality lived up to that?
The public debt obligation on the stadium amounts to $16.4 million a year. Of that, $6.4 million is paid by Cobb residents out of the county’s general fund, while the remaining $10 million is funded through taxes and fees, including a countywide hotel/motel tax, a countywide rental car tax, a localized Cumberland hotel/motel tax, and localized Cumberland commercial property taxes.
None of these costs take into account the tens of millions spent on transportation infrastructure that critics say would not have been built but for the Braves. Nor does it account for the cost of the new parks, which were funded with another bond issue after money was diverted to pay for the stadium.
In total, Cobb County is paying a minimum of $8.6 million out of its general fund just for debt service, stadium operations and public safety.
So that’s $27 million a year, plus “tens of millions” for transportation and parks, in costs. How do things look on the revenue side?T
The Battery commercial project around the stadium has generated about $460,000 in property taxes for the county’s general fund and $1.3 million for schools. Those numbers are expected to rise as the development fills up — it is already at more than 50 percent capacity.
The county declined to give an estimate of sales tax income from the stadium and Battery, but a previous study projected $1.7 million annually. That money goes toward special funds for education and transportation, not the general fund.
So if property tax receipts double, Cobb County is looking at $5.2 million in new revenue, for a return on investment of at least negative-80%. That is something less than a 60% annual profit.
The city of Phoenix is set to vote on Tuesday on whether to sell its Sheraton Hotel to raise an estimated $255 million toward a new Suns arena. The Sheraton is reportedly bringing in $7 million a year in revenues, so I don’t actually know why anyone would pay $255 million for it, but if the city has found a sucker to buy it, they should jump at the opportunity. Then taking the windfall and handing it over to the Suns would be beyond stupid, of course.
The circulator began operating with three routes on March 31 — the same day as the first exhibition game at SunTrust Park. Since then, more than 11,000 people have used it. A study conducted by an outside firm estimated the service would eventually draw between 80,000 and 133,000 passengers per year.
We’re only about three-quarters of the way through the baseball season right now, but even if you pro-rate those 11,000 people to a full season, that’s still going to be about $82 per person that the county is spending on busing Braves fans to the games. For that kind of money, they could just rent them all cars.
The county’s transportation director still swears that eventually more people will be riding the bus, though from the sound of it the only people who use it now are Braves fans and people who work for the team. (The Atlanta Journal-Constitution’s article on this includes an interview with a temp-worker dishwasher at the stadium whose knee trouble makes it hard for her to walk two miles to the stadium on days the bus doesn’t run, along with an accompanying photo showing her on the bus, all alone.) And then there’s this detail from an email Cobb County got from the Greater Cleveland Regional Transit Authority when it asked about how Cleveland’s bus circulator went:
“Unfortunately, although people ‘loved’ the circulators not many of them actually ‘rode’ the circulators,’” an authority representative wrote. “Needless to say, we are out of the circulator business.”
The obvious solution would seem to be: Tell the Braves if they want a bus system to get fans and workers to their privately run stadium that they chose to put in the middle of nowhere, they are welcome to pay for one. Hopefully that’s one of the options being placed on the table.