Seat licenses eyed for Falcons stadium

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Seat licenses eyed for Falcons stadium

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Brant Sanderlin, bsanderlin@ajc.com
The Falcons and the GWCCA, the state agency that operates the Georgia Dome, have been in negotiations for 20 months about a possible new stadium, which would be built on GWCCA property near the Dome and cost around $1 billion.

Sixteen NFL teams have sold personal seat licenses in some form, including the three teams that occupy the league’s two newest stadiums. The New York Giants and New York Jets share a $1.7 billion stadium that opened in 2010, and the Dallas Cowboys’ new home opened in 2009. How PSL sales figured into paying for those stadiums:

Giants

PSL seats: 82,500

Low price: $1,000

High price: $20,000

Gross revenue: $371 million

Jets

PSL seats: 55,500

Low price: $2,500

High price: $25,000

Gross revenue:  $293 million

Cowboys

PSL seats: 55,000

Low price: $2,000

High price: $150,000

Gross revenue: $500 million

The state legislature in 2010 approved an extended local hotel-motel tax to assist in funding a new downtown stadium. Since then, staff writers Tim Tucker and Leon Stafford have stayed out front on the story as the Falcons and the Georgia World Congress Center work toward a deal on how the stadium is managed and how the remainder of the nearly $1 billion project will be raised.

Source: Study prepared for GWCC Authority by Barrett Sports Group

Atlanta Falcons fans may be asked to help pay for a proposed new downtown stadium through personal seat licenses that can cost thousands of dollars, based on a document obtained by The Atlanta Journal-Constitution.

The document — the most recent draft of a non-binding term sheet that is being negotiated between the Falcons and the Georgia World Congress Center Authority — provides the first acknowledgement that a sale of seat rights is being contemplated as part of the funding plan for the stadium.

Personal seat licenses commonly have been used in the financing of NFL stadiums over the past 15 years. In such programs, fans typically are asked to pay one-time fees for the right to subsequently buy season tickets in a specific seat for the life of the building or a defined number of years.

The Falcons-GWCCA term sheet, described by both parties as a work in progress and obtained by the AJC under Georgia’s Open Records Act, states that the GWCCA “will pursue a ‘seats rights’ campaign to help fund construction” and that the Falcons would be “the sole and exclusive sales representative for these seat rights.”

The Falcons would have “the right to determine the exact terms of such seat rights program, including price, term, etc.,” according to the document. The GWCCA would have “final approval rights over the marketing and sales program plan and forms of agreements to be utilized in connection with such seat rights.”

The Falcons and the GWCCA, the state agency that operates the Georgia Dome, have been in negotiations for 20 months about a possible new stadium, which would be built on GWCCA property near the Dome and cost around $1 billion.

Under the deal being negotiated, an estimated $300 million or less would come from bonds to be repaid by hotel-motel tax revenue and the rest of the cost – minus whatever is raised from seat licenses – would be the responsibility of the Falcons and the NFL.

The state Legislature in 2010 authorized an extension of Atlanta’s hotel-motel tax through 2050 as a partial funding mechanism for a new stadium.

If a deal is reached between the GWCCA and the Falcons, additional governmental action would be required before the project could proceed. The city of Atlanta and Fulton County would have to pass resolutions authorizing the hotel-motel tax extension, and the GWCCA would need approval from the Legislature to increase its borrowing capacity.

The Falcons declined a request for an interview about personal seat licenses, saying “no decisions regarding seat rights have been made.”

The 25-page term sheet “sets forth certain of the material terms and provisions necessary” for the stadium project, according to its opening paragraph, but does not constitute a binding commitment on any point. The protracted negotiations have been fluid.

In response to questions from the AJC about the seat-rights issue, GWCCA spokeswoman Jennifer LeMaster said by email that “these questions will be addressed in detail as part of the [memorandum of understanding].” The Falcons and GWCCA hope to complete the term sheet this month and negotiate a more definitive MOU by year’s end.

“The term sheet only identifies the concept and does not indicate a specific position on each of the items listed,” LeMaster said.

The term sheet states that “all net proceeds from the sale of seat rights” would be included in the GWCCA contribution toward the construction cost after the Falcons are reimbursed for sales and marketing expenses. Seat-license programs at some other stadiums around the country have been set up through governmental entitities, such as the GWCCA, for tax reasons.

A number of questions that fans would want answered about a possible seat-license program are not addressed in the current draft of the term sheet: Would all seats require them? If not, what percentage? And what would be the price range?

Some Falcons fans have expressed concern about expected increases in the cost of attending games since stadium talks heated up earlier this year. An AJC examination of the three NFL stadiums built in the past five years, published in May, showed that ticket prices jumped by an average of 26 percent in the season the stadiums opened and that many fans paid thousands of dollars more in seat license fees.

A study prepared for the GWCCA by consultant Barrett Sports Group estimated that seat licenses in a new Atlanta stadium potentially could generate $100 million to $200 million.

The study estimated that the New York Giants brought in $371 million, the New York Jets $293 million and the Dallas Cowboys $500 million from seat licenses in stadiums that opened since 2008.

The Giants’ and Jets’ seat licenses were priced from $1,000 to $25,000 per seat, depending on location, and the Dallas Cowboys’ from $2,000 to $150,000, according to the study.

Seat rights currently are being sold for a new San Francisco 49ers stadium in Santa Clara, Calif.

Sixteen NFL teams have sold some form of seat licenses. Some teams have required them on all seats, while others have limited them to prime seats. Teams typically offer short-term installment plans or longer-term financing on the fees. No Atlanta pro sports franchise has sold seat licenses.

The Falcons hope to move into a new retractable-roof stadium in 2017. Under the proposed deal described in the current and previously reported drafts of the term sheet, the GWCCA would own the stadium and license control of it and its revenue streams for 30 years to the Falcons, who would be responsible for operating expenses and construction cost overruns.

A few major issues – such as the amount of annual rent the Falcons would pay to the GWCCA and whether the stadium would be located ½ mile north or just south of the Georgia Dome — are still characterized as “open” in the latest draft of the term sheet.

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