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What does Atlanta get from a new Falcons stadium? 

Public could contribute up to $300 million to project

In recent weeks, citizens, politicians, sports radio hosts, and reporters have all weighed in on reports that the state is preparing to build a new $1 billion-plus stadium to host Atlanta Falcons games, among other events. Much of that discussion centers on whether up to $300 million in public cash generated by a tax on hotel and motel rooms should be used to help pay for that stadium's construction.

It seems that there's substantial public opposition to constructing a new stadium built with public funds. And judging from news reports, it looks like metro Atlantans think that there's no need for a new stadium. (The Georgia Dome, after all, is only 20 years old and holds 70,000-plus people. And the Falcons aren't historically among the powerhouse teams in the NFL. Yes, this year's an exception.)

Yet in spite of this opposition, the odds are quite good that a deal between the Falcons and the Georgia World Congress Center Authority, the state agency that owns and operates the Georgia Dome and which would build the new stadium, will be announced sooner rather than not.

If that's the case, what's in it for us?

First, the purpose of a new stadium is not to host sporting events. Falcons owner Arthur Blank wants to build a new stadium because it will significantly increase the value of the franchise. Many economic studies show that a new stadium generally doubles the value of an NFL team. Unlike licensing and broadcast revenue, which in the NFL are shared by teams, stadium revenue accrues to ownership. A new stadium is a machine for generating revenue. That it hosts sporting events is largely a sideshow to those advocates who have the most to gain from its construction: Blank and the handful of private investors who own the Falcons.

Advocates for a new stadium built, in part, with public dollars assert the new facility will create a variety of tangible and intangible benefits, such as boost tax revenues, spur the creation of new businesses and jobs, attract tourists to sporting and entertainment events, and establish Atlanta as a "big-time" city.

But over the past three decades, studies too numerous to mention here have established that economic arguments made on paper for subsidizing stadium construction rarely, if ever, play out in real life. The job creation numbers associated with new stadium construction generally ignore the jobs lost with the elimination of an existing stadium. The rosy outlooks also ignore the costs to neighborhood businesses associated with increased congestion on game day. Tax revenue dollars from spending at new stadiums aren't "new" dollars; they are dollars ticket-holders might have otherwise spent at other places in the city — movie theaters, restaurants, and so forth. Furthermore, dollars spent at establishments like a café or theater, unlike dollars spent at stadiums, are more often "re-spent" in the local area on wages and supplies.

The overwhelming evidence of the flaws of such economic arguments is behind the rising popularity of "intangible" propositions — the capacity of a stadium to enhance a city's reputation or to give residents a sense of excitement and "buzz." These are fuzzy benefits — difficult to quantify and hard to prove or disprove. Perhaps public dollars should subsidize benefits that can actually be measured?

Proponents of a new stadium, in particular the GWCCA, also argue that public-private financing is the norm for funding new NFL stadiums. Many cities and municipalities have funded, to varying degrees, stadium construction. I have little doubt the same will happen here in Atlanta.

But whether public-private financing is the standard route to a new stadium is not the most interesting question to ask at the moment. We should ask not if the new stadium will happen, but how it will happen.

The business and political elite of Atlanta want a stadium to establish the metropolis as a leader among cities. So be it. But that structure needs to be more than a big, expensive, single-use box. We should ask what a new stadium could do for its surrounding neighborhoods — particularly Vine City and English Avenue, which have been burdened by the Georgia Dome and World Congress Center — and Atlanta besides just hosting sporting events.

Even the most active NFL stadium is only used for eight home games a year. Add every other imaginable event and you are likely still talking about a $1 billion building that is active less than 100 days out of the year.

What could it do the other 265 days? Could it have a child care center? Maybe a low-cost health care clinic? Perhaps it could serve as a public transport node for nearby residents? Why not thoughtfully incorporate green space and community gardens and cultural spaces? Could it begin to fill in the variety of amenities Vine City and English Avenue currently lack? There's no reason a structure of the magnitude being discussed couldn't host a lot more uses than merely sporting ones.

Finally, it comes down to dollars. Blank and the Falcons will raise $670 million or more to fund the non-public portion of costs for this stadium. Those investors will expect and receive specific monetary returns on their investment.

The public should expect the same from its $300 million, as should the neighborhoods that are home to the stadium. What would a fair return for one-third of $1 billion be? Would an annual return of 1 percent of profits from all stadium activities sent back to the neighborhoods be appropriate? Would 3 percent be fair?

These are the questions our political representatives should be asking. A project of this scale and cost must serve the interests of more than just the ownership of the Falcons.

Arthur Blank did not become a billionaire by thinking inside the box and being a conventional businessman. A stadium that serves as an appropriate legacy to his leadership in Atlanta should likewise be something more than conventional.

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12/25/2014

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