According to Atlanta’s 11alive news, the Atlanta city council could vote to approve a Falcons stadium bill as soon as today, which — after the state Georgia World Congress Center Authority gave its expected rubber-stamp on Friday — would pretty much guarantee the project’s passage, with only the vote of the city-run Invest Atlanta needed for final approval. That’s pretty alarming, given that there still hasn’t been any official attempt made to figure out how much the stadium would cost city taxpayers, taking into account the excess hotel-motel taxes that would go to subsidize future stadium operations and improvements.
So if the Atlanta city council isn’t going to do the math, let’s give it a shot ourselves:
- Previously established costs include $200 million in up-front construction costs, $30 million in construction sales tax rebates, and $24 million in land costs, for a total of $254 million.
- Once the first $200 million in public stadium bonds were paid off, anything left over of the Falcons’ share of the city’s 7% hotel-motel tax — 39.3% of the tax proceeds, according to the latest MOU released Friday — “will be applied for the maintenance, operation and improvement” of the new stadium. The MOU doesn’t put a total cap on this annual subsidy, but from the chart of past hotel-motel tax collections (see page 5, and thanks to FoS reader cityzen for the link), we can see that the Falcons’ share of the hotel-motel taxes is currently about $17 million a year.
- Under the MOU, the hotel-motel tax funding for the Falcons would be extended through the year 2050. Thirty-seven years’ worth of $17 million payments equals $629 million.
- Normally, I’d point out that that $629 million is in nominal payments, so we’d need to calculate the present value — the same as when you figure the price of your house, you do it by calculating what you paid now, not by adding up all your mortgage payments for the next 30 years. But since the hotel-motel tax revenues have been pretty consistently going up each year, the two factors should roughly cancel each other out, so we should still be at around $600 million in present value.
- The first $200 million of that $600 million comes off the top to pay for the city’s stadium bonds. Also, whereas previously some of this money was being used to pay off debt on the Georgia Dome, under the new deal the Falcons would pay off the remaining debt, which comes to around $100 million, per Forbes. So that would leave the team with $300 million worth of future excess hotel taxes to spend on pretty much whatever it felt like.
- Add the $300 million to our original $254 million, and we get a total public subsidy for the project of $554 million.
Could this be off? Sure: growth in hotel tax revenues could be less than what it has been; the financing costs for the stadium could eat up more of the money than I’ve estimated; or half a dozen other uncertainties. But as a best guess for how much the Falcons deal would cost the public, “more than half a billion dollars” is an excellent starting point. Now to see if anyone mentions that figure during today’s council meeting.
Not entirely surprised by the news… the whole “Hey! Atlanta can get a new stadium for only $200m” that we were discussing weeks ago did seem a little thin on details.
Funny how adding details never seems to make stadium deals better… at least for the taxpayer.
I don’t think it’s fair to count the $300M as a subsidy. If the Falcons didnt exist wouldn’t the tourist tax be used to keep the Georgia Dome modern for the SEC championship, kickoff classic, Chick-Fil-A (Mmmmm, I’m getting myself hungry) Bowl and occasional Final Four?
Not sure in what sense one would net out the $100 mm for paying off the Dome from the $600mm+ value of what the Falcons are getting. It was their choice not to pay off the Dome sooner – they used the HM tax for other purposes – and not to use the Dome for longer.
But what’s $100 mm between friends when we are beginning to establish that this deal is no $200 mm “steal” for Atlanta?
Ben: The tourist tax could be used for anything the city wants after 2020, or rescinded altogether if they felt like it. And if they did spend it on the Dome, sans Falcons, at least the city would get the revenues from those event, not the Falcons.
cityzen: My subtracting out the $100 million for paying off the Dome is the equivalent of you (in the other thread) not counting the next seven years of hotel tax revenue because it’s already dedicated to Dome debts. It’s the same figure, roughly.
All this is guesstimating based on what info is available, and I wouldn’t be stunned to find out the real number is $450m, or $650m. This is why there needs to be an actual independent accounting of how much the stadium will cost taxpayers over time — but with the council showing no interest in having one of their staff do that, this is my best guess.
Is that right that the Falcons get revs from the non-Falcons events now instead of the Authority? If so you’ve gotta credit Arthur Blank. That’s a bold play.
Ben, yes. Falcons bear all expenses, receive all stadium revenues, receive the HM tax stream and keep the stadium profits. Oh they still pay the convention authority $2.5mm / yr.
New stadium approved by Atlanta City Council
alive11.com
“The stadium would cost nearly a billion dollars to build. The Falcons have agree [sic] to pay for all but $200 million of the construction cost.” The magic $200M.
Council voted 11-4 in favor. Watson, the guy who’d asked how much the Falcons were getting, insisted on the City CFO reading into the record his evasive response. Ultimately, after obfuscations re sum of loan payments not being the way to look at things, he allowed as a PV of the tax might be nice. But then declared that conservatively it would not be right to assume any growth. With a 4.2% compound average growth rate over 23 years, 5.5% until 2009, a zero growth projection seems really reasonable!
So then, did he come up with a number? Because even $17m a year is still going to be more than they need to pay off $200m in bonds.
Cumulative collections from 2018-2044 of $494 mm, using $18.3mm per year. He didn’t discount the cash flows, so came up not far off your number but it was not actually a PV. Not sure why he went for 27 years since it’s a 30 or 33 year deal. Nor is it clear why he used $18.3mm per year, since 2012 was a little under $17mm.
Giving the Falcons all of the revenue is crazy, no wonder they want a new stadium.