Revised Falcons Stadium Plan: More Expensive; Less Stupid; Still Blackmail

Today’s Courier Herald Column:

The Georgia World Congress Center Authority weighed in Wednesday with some revised plans for a new Falcons Stadium to replace the less than 20 year old Georgia Dome.  The team and the authority have finally ceded the point that building an open air stadium next door to a dome that would remain in place made no economic sense.  The remedy is now to build an even more expensive, retractable roof stadium and then tear down the Georgia Dome.

The plan has increased the cost of the new stadium to just under a billion dollars.  Strangely, the spokesperson discussing the details with the Atlanta Journal Constitution has now lowered his estimate of funds needed from taxpayers to roughly $300 Million of hotel motel taxes.  The state may still weigh in with additional land costs and sales tax waivers, but the lowering of the pool of tax money being used is an interesting yet still unexplained point.

The fact remains that the stadium is still taking hundreds of millions in tax dollars at a time when Georgians are being asked to go to the polls and vote themselves a 17% increase in the amount of sales taxes they pay (based on an increase from 6% to 7% in most counties).  An expensive PR campaign is underway in the Atlanta region to convince voters to increase their taxes because Atlanta can’t afford to compete without new infrastructure.  Blank dutifully has led the fundraising effort to finance this campaign, though the ads and direct mail will not mention the pool of money that could be used on transportation projects being squandered on this new stadium.

Arthur Blank’s ability to compete with other billionaire league owner’s team revenue is not being put to public vote.  His use of tax money robs the region of roughly $700 Million in potential infrastructure upgrades were the State’s priorities not focused on one man and his sports team, but the greater needs of the region.   Much like when Governor Perdue funding $20 Million in high speed boat ramps and a fishing museum with his Go Fish! initiative yet put upgrading the state’s trauma network (and a related tax increase) to a public vote, the state has taken care of the whims of insiders and left the responsibility of taking care of basic needs to the public – but only if they are willing to vote for even higher taxes.

The diversion of tax dollars has received little attention in mainstream Atlanta media.  WXIA has released polling indicating the public is strongly against public funding for this project.  AJC Sports columnist Jeff Schultz has also brought the argument off of the political pages and taken it to a more mainstream audience on the sports page.

“… the Georgia Dome is just fine for spectators. It’s just fine for teams. It’s just fine for a Final Four or a monster truck race or a trade show. Nobody is affected by the fact that it doesn’t make a sufficient ‘cha-ching’ sound for the Falcons other than the Falcons’ owner” he wrote on Wednesday, emphasizing the central point against the funding plan.  The wants of Arthur Blank are being placed ahead of the needs of the region and State.

He complemented Blank for his mastery of this game, adding “Give the man credit for this: He’s probably going to pull this off without once alienating the public by threatening to move his team…”  While right on the conclusions, I have to quibble with Schultz on this point.  The Atlanta Mayor doesn’t tell the Atlanta Press Club that “I will not be the Mayor that loses the Falcons” without an implied or direct threat to move the team.  The economic “justifications” used for the stadium make no sense when you look into the numbers and realize they represent the existence of an NFL franchise in the city versus one without.

When you talk to any political insider about this deal, they make it clear it is all about keeping the Falcons in Atlanta.  Just because Blank hasn’t taken to a microphone to issue his threat to the public does not mean in any way that the only reason this new stadium is being considered is because of a very clear threat to move this team if he does not.

The Falcons PR team took great exception to an earlier column when I compared this taxpayer shakedown to that of his Home Depot Co-founder Bernie Marcus’ gift to Georgia in the form of an aquarium blocks away.  They note Blank’s “investment” will be similar in scope.  The difference remains clear:  Marcus’ gift had no strings attached.  Blank’s “investment requires taxpayer money.  Public benefits are secondary to the goal of increasing the value of the team and Blank’s net worth.  And, most significantly, it is done not as a public offering to the city, but as an offer the city can’t refuse.

Taxpayers need to become more vocal about this deal, as it is not a “deal” for taxpayers who will be asked to raise their taxes to fund much more critical needs.  I’m happy for the Falcons if they choose to replace the Dome.  I’m not happy to watch scare tax dollars being squandered on it.

30 comments

  1. The Last Democrat in Georgia says:

    “When you talk to any political insider about this deal, they make it clear it is all about keeping the Falcons in Atlanta. Just because Blank hasn’t taken to a microphone to issue his threat to the public does not mean in any way that the only reason this new stadium is being considered is because of a very clear threat to move this team if he does not.”

    With an “open” market in Los Angeles, Blank doesn’t have to even imply that he will move the team if he does not get what he wants.

    Even if Blank never says a word about moving the team during the process of “negotiating” with (i.e. blackmailing and extorting) the city and state for a new stadium, everyone already automatically assumes that he’ll move the team to Los Angeles, the nation’s second-largest media market.

    Which means that the NFL’s plan of using an empty L.A. mega-market as leverage for team owners in small and mid-sized markets to “negotiate” for publicly-funded new stadiums is having its desired effect of having cash-strapped local governments cave-in to the whims of billionaire team owners out of fear that their teams will leave for L.A. if they don’t give them the brand spankin-new mega stadiums they want.

    • bgsmallz says:

      On the one hand the Falcons should have to build their own stadium because they are a private business but on the other hand the Falcons or Arthur Blank asking Georgia taxpayers to provide market rate public funding when their lease runs out is blackmail or a shakedown.

      I guess whatever works to make the point.

  2. Three Jack says:

    I know this is not an apples-to-apples comparison, but for $78M we were able to secure a major bio manufacturing plant that will cost Baxter Pharma around $1B to build — http://www.ajc.com/business/training-tax-breaks-lure-1422416.html

    The plant will create 1500 high paying jobs plus all of the ancillary jobs associated with construction, ongoing maintenance and other businesses like restaurants, shops, etc.

    In a side-by-side comparison, it would appear Georgians get far more ROI from the $78M spent to lure Baxter here than $300M needed to keep Arthur Blank happy and rich. Based on the numbers, Georgia could theoretically attract 4 similar type deals as Baxter for the same amount needed to keep one group of overpaid football players in town.

    • heroV says:

      I agree that we shouldn’t drop $300M on this stadium, but as an aside, football players are not overpaid. They are paid their market value given the scarcity elite football players in the marketplace.

  3. peachstealth says:

    Isn’t it great that folks from middle and south Georgia who have to be at Emory at 5:00 am for cancer treatments get to help fund a football palace for a billionaire.

  4. Jackster says:

    So, basically, the falcons are not worth the tax dollars being spent to keep them here – kind of the same equation cities, countines, the governor, etc. calculate when they offer tax breaks to companies to come here. (like baxter, catepillar, kia, etc.)

    Which makes me wonder why no one really gets appaled at “all those tax dollars” being wasted on bringing other companies to Georgia.

    IF they left, it would because Los Angeles beat out Georgia in their quest to “bring businesses to GA” in this case.

  5. Dave Bearse says:

    My favorite part of the post “[t]he state has taken care of the whims of insiders and left the responsibility of taking care of basic needs to the public – but only if they are willing to vote for even higher taxes.”

    There media makes no mention that the $300M subsidy doesn’t benefit only Blank. Faclson ticketholders, though they’ll be paying more, are indirectly sharing in that subsidy. (It’s similar to HOT lanes where tolls are paid, but general road users pick up the difference between what tollpayers pay and actual cost.) Most of the ticketholder subsidy in turn benefits the 1 percenters in the luxury boxes.

    • benevolus says:

      Yeah but companies don’t use the HOT lanes as enticements to draw good employees, and politicians don’t use a ride in the HOT lane to attract companies to relocate.
      do you want to compete with Louisville or with Dallas? I bet it’s painful for a city to get smaller.

  6. saltycracker says:

    Maybe it is the other way around – The Dome may be more than the team deserves.
    Dallas earned there way to a new stadium.

    Forbes list
    NFL Value
    #1 Dallas $1.85 billion
    #27 Atlanta $814 million

    “Cowboys Stadium continues to be a gold mine for Jones. The 320 suites and 15,000 club seats at JerryWorld generate $115 million in revenue annually. Sponsorship revenues are $50 million even with the Cowboys inability to ink a naming rights partner for the venue. The Cowboys earned $119 million in operating income last season, the most in the NFL for a second straight year.”

    • bgsmallz says:

      http://www.dallasnews.com/news/cowboys-stadium/20100710-Tax-income-to-pay-Cowboys-Stadium-9172.ece

      http://thesportseconomist.com/2010/07/11/cowboys-stadium-financing/

      Just pointing out the obvious…somehow the Dallas area has decided that they public financing of a state of the art football stadium ‘for’ Jerry Jones and financing the largest transit expansion so far in the 21st century are both worthy goals.

      Money quote from the article: “The city’s portion of debt is paid with proceeds from a half-cent sales tax increase, 2 percent hotel-motel tax hike and 5 percent increase in car rental tax. The bulk of the money comes from sales taxes…”

      But as long as the facts don’t get in the way of the narrative that somehow taxpayers in GA are getting a raw deal…

        • bgsmallz says:

          So which way does that cut? If they were bringing in more revenue for that richer than Arthur Blank guy, Jerry Jones, before the new stadium and the city of Arlington and the state of Texas still approved $325M in public funding through increased sales taxes, increased hotel/motel taxes, and increased rental car taxes for the new stadium plus another $147 M in bonds that are paid for by parking fees and ticket taxes….doesn’t that hurt the argument that the city of Atlanta shouldn’t be using hotel/motel taxes to fund a new stadium for the Falcons because of how rich Arthur Blank is?

          (the answer is so blatantly obviously ‘yes’ that its painful to even write.)

          • saltycracker says:

            Not questioning you want it and this is how to get the money but the point is to get our money back in a reasonable time.

            Where is the logic in handing over the same money or more to a team worth less than half of the cowboys with a fraction of the record and fans ?

            They need to earn their way out of the dome .

            • bgsmallz says:

              1) That’s not the argument being made by Schultz or Charlie…the point they are making is that Blank is super rich and the Falcons are a private business and so therefore he should pay for the stadium himself. The counter to that is Jerry Jones is more rich, the Cowboys already made more money, and Arlington/Texas not only came up with hotel/motel and car rental fees but increased the sales tax, too. I’m not saying their opinion on whether it is ‘worth’ it is right or wrong…I’m just saying their description of the marketplace for securing an NFL tenant in a stadium/city is grossly inaccurate.

              2) Addressing your argument that they need to earn their way out the dome as a contrast to the Cowboys having earned more public money…

              Indianapolis/Indiana just spent $620 M of the total $720M in costs for the Lucas Oil Stadium with the Colts providing roughly $100M. 86% was public financing.

              http://www.lucasoilstadium.com/about.aspx
              http://www.in.gov/ifa/2329.htm

              Again…not saying that is right or wrong…just saying the market is the market. It’s factual and verifiable. Have the argument over whether it is worth it…but don’t distort the facts by acting like $300M from hotel/motel tax funds is some sort of out of whack price for keeping a team/building a new stadium. It’s under half of what the state of Indiana just put in for the Colts.

              • Charlie says:

                I’m saying I don’t care what Dallas has done. If we’re poor mouthing to the taxpayers about the city/region about to be a 2nd tier metro area without us voting ourselves a major tax increase, I find it hard to believe that we’re just willing to give away 10% of that infrastructure purchasing power because an even bigger prioritiy is that our NFL franchise doesn’t have a stadium that is as state of the art as someone else’s.

                Perversion. Of. Priorities.

                • bgsmallz says:

                  Right, Dallas is irrelevant because it’s blackmail and not a free market with competition. Forgot.

                  Quick question.. Dallas has found a way to fund a stadium that generates mllions in yearly tax revenues and brings in world class events and prestige…and yet they are still funding a heavy mix of transit and road infrastructure. Shouldn’t we be asking more of our legislature rather than pushing the NFL out the door to make a point? That’s a genuine question.

                  • Charlie says:

                    Which did the legislature take care of first out of existing revenues? The transit and road infrastructure or the shiny new stadium to replace one that is currently less than 20 years old?

                    That’s the point. You say we can have both. The one we’re definitely going to get is a stadium we may want, but don’t need. We’re only going to get the roads if the taxpayers vote themselves a tax increase.

                    The “fiscal conservatives” who approved this made sure the “want” was taken care of, so the “need” requires a tax increase. But if voters don’t want to raise their taxes, only Blank gets what he wants, and the actual infrastructure we need goes lacking.

                    • bgsmallz says:

                      The legislature has punted the infrastructure needs since before the Dome . It’s pathetic and shameful to leave transportation up to a TSplost while funding the stadium. No argument there.

                      I have disagreements with some of the other details/statements, but why mess up a good thing. Hopefully Harold’s was good. Thanks again for your commitment to our state through this blog.

                    • saltycracker says:

                      Charlie, Charlie, Charlie,

                      Be nice. Rarely do many understand the need, want, demand marketing concepts. The adolescent or idealistic brain is not fully developed and will demand something absent fiscal responsibility and prioritizing. Work or money or planning is not in the equation but takeaways and debt leverage are.

                      Will agree with bg that planning is lost in some political game.

                  • saltycracker says:

                    The lemming approach is fun to watch until it is used to justify spending taxpayer monies. Stadiums, college presidents. Public administrators….

                  • The Last Democrat in Georgia says:

                    “Dallas has found a way to fund a stadium that generates mllions in yearly tax revenues and brings in world class events and prestige…and yet they are still funding a heavy mix of transit and road infrastructure.”

                    The Dallas-Fort Worth-North Texas area has also funded a maximum amount of man-made water infrastructure in their drought-prone region, funding the construction of over two-dozen major reservoirs for water supply and flood control over close to the last 60 years or so while Metro Atlanta remains dependent largely on only two federally-controlled reservoirs.

                    “Shouldn’t we be asking more of our legislature rather than pushing the NFL out the door to make a point? That’s a genuine question.”

                    But asking more of our legislature means asking them to take even more money from our already beat-up and battered wallets, which would be a problem since they already take so much of our hard-earned (and increasingly limited) tax dollars as it is.

                    • seenbetrdayz says:

                      But asking more of our legislature means asking them to take even more money from our already beat-up and battered wallet

                      That’s it, that’s what’s been nagging me this whole time.

                      Yes, good point. Why must they always wait until the economy is in the shi*tter to pull off these schemes? Georgia has a 9% unemployment rate. Maybe the Falcons will be nice enough to price their tickets at a level that an unemployment check will buy.

                    • Dave Bearse says:

                      “Why must they always wait until the economy is in the shi*tter to pull off these schemes?”

                      Because once it’s an emergency, the hurrying and imperative to complete, what before the Falcons get away, provides cover to trough-feeding insiders and extras being attached that can’t stand scrutiny of a measured approach.

                      No NFL team in L.A. is the NFL’s business strategy to maximize public dollars for their largely unregulated monopoly.

  7. Dave Bearse says:

    I’m not so certain about politicians not using a ride in the HOT lane to attract companies. The expense of tolls is meaningless relative to the personal finances of senior management. Empirically, a number of metro Atlanta companies / offices are located or have locally relocated near where the CEO/senior management prefers to live, and not selected a location that would attract the best pool of employees, or in the case of local relocation a location that best sutis existing employees.

    • Calypso says:

      “The injuries are really getting ridiculous and how do you mitigate that? ”

      Offer nice signing bonuses to the replacements of the dain-bramaged folks.

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