In Metro Atlanta, we’re having a big argument about whether to build a new stadium to replace the Georgia Dome.
Many point out that the building is just 20 years old; the $300 million of public funds that are going to be kicked in could be used in better ways; and the proposed deal seems a lot more generous to the Atlanta Falcons than the current one. They’re right.
But in the end, what’s being proposed in Atlanta represents a standard of what teams around the National Football League want — and usually get. So it’s worth considering our situation in the context of how NFL teams operate.
Pro football is the most popular sport in the United States, and it generates huge dollars. Cities clamor for teams.
To have an NFL team is to be considered an important place, in the eyes of many.
On a personal note, I grew up as a Cleveland Browns fan. When that team abandoned Cleveland in 1995 — in part over its stadium deal — it unleashed a gut-wrenching moment in the city’s civic history. The identity crisis that followed led to a mostly publicly financed stadium to lure a new franchise.
The NFL owes its incredible popularity to competitive balance. Today, NFL teams will play their second-to-last games of the season; most of them have a chance at the playoffs.
How does the NFL do that when baseball is generally dominated by big-market teams with the small guys out of the race for much of the season?
NFL rules enforce this competitive structure. First, all teams have the same budget to pay players and can’t gain an advantage by spending more for better players — the “salary cap.” Also, the league splits the money it makes on its immensely popular television broadcasts among its 32 teams.
Those two provisions give teams from less lucrative media markets the same chance as teams from huge markets. For example, the Cincinnati Bengals have played in more Super Bowls than the New York Jets — and the Falcons.
So why does this matter when it comes to Atlanta’s stadium question?
Teams can cut their own stadium deal, and, for the most part, they don’t have to share the money they make on it.
The stadium arrangement can differentiate a team — its finances and fans’ experience at the game.
NFL teams are growing obsessed with the fans’ game experience. With the cost of tickets, parking and food, teams fear that fans will stay home and watch their 70-inch, high-definition flat-screen TV.
Success requires fans in the stadium, and the conversation around the league is about adding things like Wi-Fi and giving fans access to information on smart phones and iPads to enhance the experience.
On the financial side, the Falcons want to make more money on Sundays than they do now; growing revenue is the goal of all businesses. Teams with the most desirable stadium deals control the revenue they get from suites, concessions and parking. They can manage and price those items the way they want. That makes them stronger businesses with better marketing and operations — and better profits.
Under the Falcons’ current deal, the suites are subject to a complicated formula that gives a share of the money to the Georgia World Congress Center Authority.
So compared to other teams, the Falcons either get less money for suites, or have to price them higher.
In the proposed deal, the Falcons would just pay rent of $2.5 million per year (with 2 percent annual increases). After that, they could market suites, sell food and hang sponsor signs in the way they want, making as much as they can — just as their key NFL competitors do.
For an NFL team it makes costs predictable, and it puts the ability to grow revenues entirely in the team’s hands. That’s why the Falcons (with some help from the NFL) are willing to be responsible for $700 million to build the stadium.
So around the NFL the debate isn’t about whether you have a stadium that’s adequate. Teams are looking for deals that offer them the upside their competitors have.
Teams often threaten a move to the nearby suburbs, or to leave for another city to get their way.
But it’s important to remember that Metro Atlanta is under no obligation to build a new stadium; in fact, no one can force the issue, and it requires the assent of our elected leaders — and therefore our assent too.
This is how the game is played in the NFL: teams get their stadium deals or they consider other options.
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