#Braves Stadium: How Will Cobb Pay For It?

As details are starting to materialize after yesterday’s surprise announcement that the Braves plan to move to Cobb County (and almost my backyard) for the 2017 season, there are still many more questions than answers.  We’ll start to try to break these down into specific posts for each of the many issues that this relocation will face (and/or create).

The $450 Million dollar question – an amount that is also still in question – is how will Cobb produce the amount of public money that is at this point still rumored, but not confirmed, as the public contribution.  Dave Pendered of the Saporta Report gives us a primer on how it may work:

The Coliseum and Exhibit Hall Authority (Cobb-Marietta) has the sole power to set the hotel tax rate, according to state law. The Braves began talks with the coliseum authority in July, according to espn.com.

The coliseum authority now operates three destinations in the Cumberland area near the site of the planned Braves ballpark – Cobb Galleria Centre, Galleria Specialty Shops, and the Cobb Energy Performing Arts Centre.

In 2010, the hotel tax generated in excess of $9 million. That figure is based on a report in the Marietta Daily Journal that an 8 percent payment from the authority to the Cobb County Convention & Visitors Bureau would amount to $8.9 million.

I went online today to sample hotel reservations in various Cobb hotels, and it does appear that the local hotel tax is set at 8%.  Note that this is on top of the local sales tax of 6% which is also levied.  Thus, we currently burden our visitors with a 14% charge to pay for the services they receive during their stay.

More importantly, according to Pendered’s article, the maximum amount of the tax under state law is 8%.  For those looking to a quick increase, you’ll need to look to the Georgia legislature.  Now look back at that word quick….Anyway,

$9 million/year won’t service the debt on $450M.  There are other possibilities such as Tax Allocation Districts, CID funds, even local SPLOST dollars.  But those are speculation.  While questions are needed and advised, rampant speculation isn’t necessarily helpful.  But neither are secrets now that the deal has been announced.

In short, we still have more questions than answers on how Cobb County taxpayers will be affected.  Only when we have these answers can we attempt any sort of credible Cost/Benefit analysis and discussion.

58 comments

  1. South Fulton Guy says:

    the difference here is unlike the Falcons stadium where the Falcons bear responsibility for the expense of cost overruns Cobb County Taxpayers will incur responsibility for any potential cost overruns with the new Braves stadium…

  2. Andre says:

    Seriously though, can Cobb County issue bonds to finance the construction of the stadium, and is that something taxpayers are willing to pay for?

    The question remains where’s the money going to come from; which is another way of asking how do you pay for it?

    I just don’t see it.

  3. Back of the envelope math, we heard a lot during T-SPLOST about how people were rejecting it because they didn’t trust the politicians to spend it. When you factor in the true cost of this project, it’s roughly equal to the money Cobb would have spent as part of its share.

    Will be interesting to see if Cobb voters “trust” their electeds to manage this project.

    • mpierce says:

      Cobb TSPLOST taxes were estimated at $1.2billion. Hopefully, this won’t reach that level. A poll yesterday showed Cobb 56% to 30% against using taxpayer money to fund a new Braves stadium.

      • Good point – so about $120m/year for 10 years. Let’s say this is roughly a 4 year project = $120×4 = $480m. So roughly the same scope as T-SPLOST, just not as long/big of a commitment.

        • Rambler14 says:

          Cobb is 2 years into their current 4-year SPLOST… and they are VERY specific when it comes to what these $ are allowed to be spent on, unlike Gwinnett.

          There’s very little opportunity to spend existing SPLOST dollars for this venture.

          • I think you misunderstand. We’re not saying existing (or at this point proposed) SPLOST money will be spent on this project. What we’re saying is that just last year, a majority of Cobb residents voted against a similarly priced government spending project for roads, largely because they don’t trust public officials to spend it (or so they told the polls).

            Now comes along a project similar in scope, at least for a four or five year period, except instead of transportation improvements that in theory benefit everyone, you’re getting what’s essentially a publicly funded development project with an investment from the government unseen in recent years.

            It will be interesting to see if Cobb can sell it to their voters. Or if the current commissioners will be spending more time at Turner Field games after they get voted out of office for trying this.

            • Charlie says:

              That’s not really what I’m saying either.

              My point is this isn’t something that has to be paid for over 4 years (or even 10). It’s something for which a revenue fund of $20-$27M must be identified over the course of 20-30 years.

              There are a lot of different pieces of the puzzle to come up with that number, and not all of them are from taxpayers (even “non-resident taxpayers” like the hotel/motel tax).

              If you went to taxpayers and said “Will you pay an extra penny for 4-5 years to give the Braves a new home in our community” the answer would still likely be no.

              But if you said “If we could put a package together that leverages private money, future tax receipts created within the area of the stadium above the current amounts, and existing surpluses from the existing hotel/motel tax”, the answer is likely to be yes.

              And based on the cryptic information I’m getting, the question will likely be phrased a lot more like that latter than the former.

              • griftdrift says:

                “If we could put a package together that leverages private money, future tax receipts created within the area of the stadium above the current amounts, and existing surpluses from the existing hotel/motel tax”

                Sounds familiar

                • Charlie says:

                  Well, the Mayor himself says we can’t compare the two deals, but I’m more than happy to revisit the Falcons deal and my opposition if you like. I went as far as having a direct meeting with the GWCC to try and get an understanding of the numbers. The fact that the Falcons changed the argument multiple times (We must have two stadiums changed to “y’all will be stuck with this albatross dome if we move to a second stadium”, for instance)

                  My problem with that deal remains the true public cost, and that it continues to go largely unreported. The hotel/motel revenues are fixed to the falcons at 37% of 7% of all taxes collected until 2050. That’s the “cost” to taxpayers (plus the land, plus the infrastructure, plus…). Yet it keeps being reported as “$200M and the Falcons will pick up the rest”.

                  As we’ve discussed on many types of many different issues, if you can’t deal in the truth, I don’t want to be part of the deal.

                  For the Braves deal, I’m waiting to see the truth. Then we can deal or not. And I believe you’re going to see a lot less public contribution here than current speculation is calling for. More on that in a bit.

                  • Well here’s the problem with the math. I used 2.92% (the average yield of the MUB etf), 30 year payment and $450m starting cost and I come up with $22.7m/year needing to be raised. I would argue that drastically underestimates the cost – but just right there that’s a decent chunk of money. A study estimated the direct impact of the Braves for city of Atlanta was about $3m/year, so let’s drop that number down to $19.7m.

                    Now the last time I looked, Turner Field is not 30 years old and they already want a new field. So, conservatively, what if you use a 20 year payback now you’re talking $30m pre-impact and $27m post impact for 20 years.

                    Now, I really don’t see how they can do all of this and not spend an additional half-billion on transportation improvements, when all is said and done. So now you’re looking at roughly double the annual cost somewhere between $45-$55m to service all this debt.

                    If we choose $50m/year, that comes out to $94/year for everyone over the age of 18. Politifact said the average cost for over 18 people for the T-SPLOST was $132. But the T-SPLOST was ten years, that $94 would be for 30 years plus setting yourself up for future extractions when the Braves decide to exercise their newfound leverage over you.

                    Now look – I don’t live in Cobb. All things being equal, I think the Braves should stay downtown (my preference would be that they move the stadium to Centennial Park). If Cobb wants to do this, I say go for it. However, as an observer of politics, I believe that 70% the annual cost of T-SPLOST but instead of 10 years it’s 30+ is going to be a tough sell.

                    • Charlie says:

                      You’re still looking at this as a $/taxpayer cost. The point I’m making is that a large part of the funding is likely to be from outside. I’m moving that to a different post as the stuff down here is literally lost in the weeds.

                      As for the traffic assertions, I don’t buy into that, but it is a separate and needed discussion. I’ll have a post on that in a day or so. Much work to catch up on as the Braves killed the last two days of my “free” time.

                    • bgsmallz says:

                      I’m not sure I’ve seen a link to this one yet…

                      http://saportareport.com/blog/2013/11/what-it-would-have-taken-for-the-city-of-atlanta-to-keep-the-atlanta-braves-at-turner-field/

                      Lots of fun nuggets in there…

                      As long as we are talking infrastructure improvements, this is my favorite…
                      “In late July, the Atlanta Braves were in active discussions with Cobb-based American Maglev Technologies to build a pilot transit line connecting MARTA to Turner Field. The $30 million project would have been privately-financed by Grupo ACS, a multibillion-dollar engineering and construction firm based in Madrid.”

                      So now that there is going to be a stadium at 75/285…could it jump start a discussion about a top end transit line? I know, I know…such a waste of money…no one would use it…blah blah blah….

                      But I know everyone is dying to talk some transit!…so from the Braves stadium to the commercial center at Powers Ferry is 2.5 miles…from there to the the new Sandy Springs ‘downtown’ is 2.5 miles miles…from there to Pill Hill/Perimeter, connection with Marta, and the new State Farm HQ, etc. is another 2 miles…from there it is another 2 miles to Dunwoody’s project Renaissance, a major walkable mixed use development and home to Dunwoody’s city offices…and from there its 2 miles to the Doraville GM plant, another connection to Marta and a lifesaving outpost for Gwin-knee-shuns looking to make a 7:40 start…

                      Is that a thread jack?

                    • Charlie says:

                      Not a thread jack, but I’d really like to hold off the transportation aspect for another thread. I’ll try to get to it tomorrow. “try”.

              • Scott65 says:

                You’re also missing this little tidbit:

                The Coliseum Authority, which has issued debt to fund the Cobb Galleria Centre, the Cobb Energy Performing Arts Centre, and Galleria Specialty Shops, ran a $1.5 million deficit in fiscal year 2012, the last year for which figures are available. That deficit knocked down the authority’s savings account to $18 million, according to its financial statement from that year.

                http://www.myajc.com/news/news/local-govt-politics/cobb-officials-dont-disclose-braves-deal-details/nbqhs/ (paywall alert)

  4. griftdrift says:

    Of course they will. Cobb passes every local SPLOST that’s up for renewal.

    You know why? Because it will benefit Cobb and no one else. It is in their DNA.

    • Rambler14 says:

      Can you please help me understand how Cobb spending SPLOST $ on intersections, bridge replacements, and major corridors will benefit “Cobb and no one else” ???

      Don’t residents of Paulding, Cherokee and Fulton drive on Cobb’s roads all the time?

      • griftdrift says:

        Do they? Well I’m sure that can be corrected.

        Maybe by asking for proof of residence for anyone who enters Cobb County. Or maybe some gates across public streets.

        Or maybe the Chair of the party that runs the county has a few ideas.

        http://www.ajc.com/weblogs/political-insider/2013/nov/12/your-daily-jolt-threats-both-sides-atlanta-braves-/

        ““It is absolutely necessary the solution is all about moving cars in and around Cobb and surrounding counties from our north and east where most Braves fans travel from, and not moving people into Cobb by rail from Atlanta.”

        • mpierce says:

          Are you trying to disprove your own point?

          Also only 6% of their attendance uses marta to get there. They are reducing the number of seats and they will be closer to their customers.

          • griftdrift says:

            Well I guess it will be 0% now, won’t it? Because god knows except for having those roads and bridges paid for by SPLOST connect to other entities, you aren’t willing to do anything to partner with anyone south of the river.

            And like I said, given your history with id cards and gates across public roads, it would not surprise me if you cut those off too.

            • mpierce says:

              I’m sure somebody might be willing to take the MARTA bus to Cumberland to see the Braves. The proposed $856 million light rail connection to midtown was to be paid by Cobb taxpayers with extra Cobb taxes going to pay for Atlanta improvements. Is that your idea of a “partnership”?

              • griftdrift says:

                Yes. You’re right. Atlanta is just take take take. You’ve convinced me. I’m wrong. Please direct me to the appropriate place to put corrective stickers in the front of all my books.

                  • griftdrift says:

                    Maybe you’re right. Maybe being wrong is in my DNA. So maybe I’m wrong about this being the final blow to any chance we ever had at solving regional problems.

                    For almost 50 years the donut counties have refused to play with DeKalb and Fulton and the city of Atlanta. The litany of instances far outweigh your light rail with its apparent generous improvements it would lavish like flowers along a rail line cruising down I-75.

                    And as this backroom deal shows. As the rank hypocrisy of politicians who just months ago were pooh-poohing Atlanta for spending 60% of the same money on the Falcons are now crowing that Cobb is the place to be shows.

                    As the unbridled arrogance of the leader of the Cobb GOP shows about the never-ending feelings about those people who aren’t special enough to live and drive the streets of Cobb County shows.

                    All of this shows. Nothing changes. Ever.

                    But maybe you’re right, and I am just destined to be wrong.

                    • John Konop says:

                      Studies have shown for years stadium projects because of short life cycles do not pay for themselves. If the local businesses and or ticket price tax is used and the community agrees one could argue that is the price of the product related to paying for the project. I made the same point about the Falcon deal as well.

                      Your macro point is very valid…..if one is arguing to do this project via economic activity…..and than argues against infastructure spending they are either being hypocritical or do not understand math. Good infastructure projects via roads, widening ports, well thought out rail……are much better on a macro than stadiums growing GDP.

                      Sports teams shift entertainment dollars, they do not create much new activity on a macro…..ie widening a port actually can create new industries, activity…….via access……if we create more access to an area it allows increase flow of activity…..The history of Atlanta is proof…..the international airport being in Atlanta over Birmingham made us an international economic center verse Birmingham…. our airport fostered economic growth for metro atlanta and the south east.

  5. gcp says:

    I know it’s archaic and utopian but perhaps the Braves could have funded their own stadium sort of like the privately funded Metlife Stadium in New Jersey home of the Jets and Giants. Just a thought.

  6. SmyrnaModerate says:

    I hope mayor reed sends the Cobb commissioners a really nice gift basket for them handing him the mantle of fiscal conservative when he runs for higher office, his entire speech is pretty much geared to be broken down into future sound bites for political ad’s.

    • Andre says:

      You saw that too. That made guffaw loudly when I heard Kasim Reed say that folks in Cobb County are more liberal with their spending than Atlanta. Tim Lee is the least envied man in Georgia right now. Lee has to sell a potential tax increase to his constituents who don’t mind sending people home for even forming the words “tax increase” in their mouths.

  7. Charlie says:

    Tim Lee says he’ll have this info out by the end of the week:

    http://www.bizjournals.com/atlanta/news/2013/11/12/cobb-county-to-release-details-of.html?ana=RSS&s=article_search&utm_source=dlvr.it&utm_medium=twitter

    “Some of the information that was put out yesterday from other news sources was inaccurate,” Lee said. “I just want to share with the public that when we bring forward this final document, it is my hope and my belief that the majority of folks will find that this is a win-win for Cobb County, a win-win for the Atlanta Braves and a win-win for the city of Atlanta and Fulton County as well.”

    I don’t have much in terms of concrete details, but what I’m being told is that this will not involve tax increases to Cobb residents. That does leave the door open for hotel/motel tax, but as also noted above, that is at the state limit though producing a surplus of about $9M/year at present.

  8. Charlie says:

    While in the original post I suggested rampant speculation isn’t helpful, it’s clear that in the void of facts that many are rushing to fill in their hopes and dreams; or fears and paranoia.

    SO…..let’s play with some numbers.

    Chris notes above this would be the equivalent of a 1% sales tax over 4 years, in a comparison to the magnitude of T-SPLOST. I’d suggest it be looked at another way, since the vehicles available to doing this without a taxpayer referendum appear to be pointing toward bond issuance.

    Let’s just say the $450M number is accurate, and that Cobb was going to float bonds for the while amount.

    Presuming these would quailify as muni-bonds (I’m no bond lawyer or municipal finance expert), I’m going to throw out a borrowing rate of 2% and a term of 20 years to retire the debt.

    Those numbers come out to $27.3M per year of debt service.

    If the bonds can be let for 30 years, that number declines to an even $20M

    I have no idea how much of the hotel/motel tax’s $9M is spoken for, but it could be as little as $11M/year is needed to make this deal work.

    For some perspective, Cobb County’s general fund budget is about $330M/year. And again, you still have the opportunity to see if there are items such as Tax Allocation District or CID contributions to be made, plus private revenues from outside the Braves (naming rights, PSL’s, etc) that are customary in these kinds of transactions.

    Let’s see the numbers, and let’s see who is holding the risk. I think we can hold off claims of utopia or cries that the store has been given away until Friday.

    • I’m skeptical of the value of naming rights and PSL’s, at least with comparing the cost of a deal to what it would cost to renovate Turner Field. A renovated Turner Field could sell naming rights and PSL’s, no?

      • Scott65 says:

        As I stated above, the authority that manages the venues (the galleria etc.) ran a 1.5 million deficit last fiscal year, so they are not even covering costs now. Also, unlike the current stadium, the new one is very close to Sandy Springs and other places outside of Cobb so much of the hotel revenue will not stay in the county

  9. xdog says:

    For reference, here’s a critique of Gwinnett’s deal with the Braves re Cool-Ray Park from 2004: http://www.sabernomics.com/sabernomics/index.php/2008/01/breaking-down-the-gwinnett-braves-stadium-deal/

    Bradbury was proven right that it was a lopsided deal. I’m pro Bravos but I hope Cobb is a little more wary than was Gwinnett.

    The main questions I’m curious about is who will be responsible for maintaining the stadium and how the revenue split shakes out.

  10. Stefan says:

    What’s the Cobb annual budget? I’d guess slightly above 800 million, which they probably can’t quite make judging by their school budget. So this would be well over half of of that. They’ll bond out the debt, obviously, but they will likely be general obligation bonds, even though they’ll be tied to the hotel/motel tax or some other related revenue source. However, they’ll have to bond and fund well before they get a revenue stream (if one actually appears), and total repayment number will be way north of $450m, and that’s if there are no cost overruns. If the revenue stream fails, the budget won’t be able to cover the difference and still maintain the schools (they can’t do it now, had to fire 100 or so teachers a couple months ago) and then property values will drop, further eroding the tax base.

    Obviously, that’s toward the worse end of the spectrum. They could issue revenue bonds and make them non-recourse, but I’d bet the market would require a much higher interest payment which would cause other problems.

    My guess is Cobb reveals an incredibly optimistic finance number to try and get the vote through the commission and revises it upward after construction begins.

  11. scottlong says:

    In an interview they just ran on WABE 90.1, they interviewed what i believe were Cobb officials (i didn’t catch the names) They said they were not using hotel/motel tax, and hinted that the Cumberland CID would be involved. Cumberland CID looks largely private from what i can see.

  12. SmyrnaModerate says:

    I’m also curious, have 3 Cobb Commissioners actually publicly declared already they are “yes” votes? I’m sure Lee is a yes but what about the others? I’ll bet all the money in my wallet that the democratic commissioner will vote no just to stick it to the majority and to curry favor with Reed. And to ensure that there is only one democratic commissioner, the other 3 districts are pretty hard skewed right, especially districts 1 & 3. I can’t imagine they have a lot of happy constituents right now and many of whom probably already consider the Cumberland district “Atlanta” and will wonder why their money is being sent “down there” for such a massive project.

    • If you’re the Democrat, it seems like there are lots of potential positives to get your vote – transit etc. I’d be surprised if a Democrat votes against it, to be honest.

      You’re correct though – the Republicans will be tough.

  13. seenbetrdayz says:

    Maybe we should ask why Wrigley Field is nearly 100 years old, and yet these Atlanta teams seem to think that when a stadium is a few decades old, it’s somehow obsolete and we need another one built so we can tear it down in a few more years as well.

    • Well I think if the Cubs/Chicago thought they could get away with tearing Wrigley down or doing major modifications, they’d do it in a second. Wrigley is a bad example. The team makes little money from the actual stadium, meanwhile rents are extracted from people who own luxury rooftop rentals across the street. And when the stadium tried to open talks about building out the outfield, those extracted rents had bought some pretty powerful opposition from the city.

      So the idea that we want a 100 year old stadium, probably not. But 20 does seem young.

  14. Ellynn says:

    Did you see what they did to Soilder Field when they renovated it… Because the bears refused to give up their piece of holy ground…

    Wrigley fans held protests when they added lights for night games in the 90’s… Wrigley with out the bars across the street off the back field wall where you on watch the game from the roof, not to mention the drunks trying to catch home runs in the street – only when the last Cub fan dies.

    Boston with out a Green Wall is not going to happen. They tried that once. Once.

    Green Bay with out the Frozen Tundra? The Cheeseheads of the world will gladly pay to have the whole structure around them replaced, renovated, even built upward then lose the location of the ground that Vince once walked. The exact location the Ice Bowl made iconic. No taxpayer money involved. Fans pay for 6 x 4 inch boxes of “turf” when ever they do a major grass replacement. They pay for parking in the lot for away games to tailgate in -20 degree weather. They even paid to keep the metel bench seating. That’s right – bench seating – in Green Bay – in late December – Outside.

    Their are some teams you just don’t mess with their field… Ever.

  15. gagenx says:

    I feel the whole thing …the announcement, the decision, etc; is a portrait of how decisions are made within the Braves. I have said for the past year the leadership is sub-par. That is the main reason the team, with the talent we have, cannot make it to the finals. And, now this. It is evident.

  16. benevolus says:

    So as I think I have said before, if the taxpayers are going to put up the money, why can’t WE get paid back? The Braves (and Falcons) are going to get paid back. Why can’t the taxpayers get some of the revenue until we get paid back? Any other investor would demand that.

    Is it because we get tax revenue from ticket sales and concession sales? Is that enough?

Comments are closed.