Negotiations on a new downtown stadium for the Atlanta Falcons continue behind closed doors. But one thing seems clear: Much of the cost will be passed along to fans, some of whom are already bracing for a hit.
An examination by The Atlanta Journal-Constitution of the three NFL stadiums built in the past five years shows 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 personal seat licenses merely for the right to buy tickets.
If the same happens here, some of the Falcons’ most ardent fans could be priced out of the games, especially those in the most marketable lower-level seats. And the ticket cost doesn’t account for the concessions and souvenir prices that also sometimes rise with a new stadium.
With a preliminary price tag of $948 million, the proposed Falcons stadium has been described by the team and the Georgia World Congress Center Authority as a public-private project that would be built with an estimated $300 million in bonds secured by hotel-motel tax proceeds. The Falcons would be on the hook for the remaining $648 million. While the team has not responded to questions about how its portion of the cost would be recouped, experts expect the answer to include stadium naming rights, luxury suite sales and higher fan costs.
While a 26-percent increase would hike the price of the average Falcons ticket to about $87, based on last year’s average of just under $69, Judy King of Smyrna is concerned that her front-row, lower-level seats on the Georgia Dome’s 20-yard line would become cost-prohibitive in the new retractable-roof stadium being negotiated by the Falcons and the GWCC Authority, a state agency.
“I’ve paid my dues to sit in those seats,” said King, 67, a Falcons season-ticket holder for 31 years.
Her tickets currently cost $129 per seat per game — she paid $13 per game when she became a season ticket-holder in 1981 — and she gasps at the thought of what equivalent seats would fetch in a new stadium.
“Oh, my God, I have no earthly idea,” she said. “Two-hundred, 250 dollars a seat?”
In addition, she is concerned that she might be required to purchase personal seat licenses, which are one-time charges for the right to buy season tickets for specific seats for a prescribed number of years. Seat licenses were a key part of the financing plans for recently built NFL stadiums in Dallas and New York.
If the Falcons sought a relatively modest license fee, King said she might pay it, albeit unhappily. “If it’s more than $500 or $1,000, I’d tell them, ‘I’m sorry, but you just lost one of your most loyal fans,’” she said.
The Falcons say no decisions have been made on seat licenses or ticket prices. The team declined to comment further for this article, contending “it’s too early to be able to answer these questions in any kind of detail.”
The questions, though, are on their customers’ minds, as demonstrated at the team’s annual invitation-only “state of the franchise” event for season-ticket holders earlier this month.
During a videotaped question-and-answer segment, a fan told team officials that a new stadium “sounds like it might translate into much higher ticket prices” and asked, “What is the organization’s commitment to keeping prices within reason?”
Falcons owner Arthur Blank initially delegated the question to team president Rich McKay, who feigned an attempt to change the subject. Then McKay said the Falcons “have done nothing that models what the price of a ticket would be in 2017,” when they hope the new stadium will open.
“Arthur has ... told us over and over again that access to the stadium [for] the fan base that we have, we have to remain committed to,” McKay said. “And we will.”
Blank added: “How the ticket prices end up, I don’t know and Rich doesn’t know. Obviously we’re fooling around with different levels of cost of construction, etc.
“The important thing ... is that we want to make sure that inside the stadium reflects the same distribution of population that we have on the outside of the stadium,” Blank said. “We want to make sure we represent all of Atlanta, not just a certain level of Atlanta. That’s going to take a tricky design, a thoughtful design, but we are committed to doing that.”
The comments seemed to suggest that if the prices of prime seats rise sharply, efforts would be made to keep other seats more affordable.
But Robert Boland, a sports management professor at New York University, said fans are “not misguided” to worry about substantial price increases in a new stadium.
He said the escalating costs of stadiums, coupled with the declining market for naming rights — in which companies pay big bucks to have their names attached to the facility — have made teams more aggressive in covering the construction costs and resulting debt with the revenue generated from tickets, license fees and suite sales. The higher prices “have killed some of the honeymoon effect of new stadiums,” Boland said.
Professional football is one of the pricier sports to attend. Last season, it cost a typical family of four $391.64 to attend a Falcons game, according to Chicago-based Team Marketing Report’s annual fan cost index. That figure includes average-priced tickets, parking, food, drinks, two programs and two caps. The Falcons’ costs were below the NFL average of $427.21 last season.
According to Team Marketing Report’s surveys, the New York Jets and New York Giants increased their average ticket prices by 32 and 26 percent, respectively, compared to a league-wide increase of 5 percent, when they moved into their shared new $1.7 billion stadium in East Rutherford, N.J., in 2010.
In 2009, the Dallas Cowboys hiked prices by an average of 31 percent when they moved into a new $1.2 billion stadium in Arlington, Texas, compared to a league-wide increase of 4 percent that year.
And in 2008, the Indianapolis Colts increased prices 14 percent, compared to the league average of 8 percent, when they moved into a new $720 million stadium that was financed with more taxpayer money than the others.
Even the increases reported by the ticket-price surveys understate the economic impact of new stadiums on some fans because the figures exclude “premium” seats, defined as seats that come with an amenity such as access to a private club or dining area.
A trend in newer stadiums — one the Falcons have underscored in talks with the GWCC — is to move some club-seating areas from their traditional locations in the middle bowl to the lower level. Just 55 percent of the Georgia Dome’s 5,740 club seats were occupied last season, according to GWCC figures. Moving some club seats closer to the field can give lower-bowl ticket-holders access to amenities, but also can force them to upgrade to premium seat prices.
The average NFL price last season for a ticket in general seating areas was $77.34, compared to the Falcons’ $68.91, while the average for a premium seat was $242.32, according to Team Marketing Report’s survey.
A new stadium could introduce Atlanta to the personal seat license, which no local pro team has tried to date. Sixteen NFL teams have sold PSLs.
According to a study prepared for the GWCC by sports management consulting firm Barrett Sports Group and obtained by The Atlanta Journal-Constitution, the Giants brought in $371 million, the Jets $293 million and the Cowboys at least $500 million from personal seat licenses. The Giants’ and Jets’ PSLs ranged from $1,000 to $25,000 per seat, depending on location, and the Cowboys’ from $2,000 to $150,000.
The study estimated the Falcons potentially could generate $100 million to $200 million from PSLs. But Boland, the NYU professor, said the team would have to tread cautiously, partly because the market’s fan loyalty is divided between pro and college football.
“You’re going into the teeth of a very divided football market in Atlanta,” he said. “While the NFL and bankers will want [the Falcons] to charge a PSL, they’re going to have to be very careful with pricing.”
Teams have taken differing approaches with PSLs. In New York, for example, the Giants charged a license fee on every seat in the stadium, while the Jets excluded upper-level seats.
An NFL program designed to help teams finance new stadiums is based on the premise that new stadiums mean more revenue. The Falcons could borrow up to $150 million from the NFL, as well as qualify for a league grant of another $50 million. Up to $100 million of the loan could be repaid over 15 years from incremental increases in the visiting-team share of revenue from the stadium.
Aside from tickets and PSLs, other revenue streams that would grow in a new stadium include sales of luxury suites, advertising and concessions, according to the Barrett study.
The New York, Dallas and Indianapolis stadium deals differed in significant ways. But what they had in common was that each generated substantial additional revenue that drove up franchise values. Similarly, the Barrett report concluded that a new stadium here likely would increase the Falcons’ value “in the $175 [million] to $225 million range” and advised the GWCC that “consideration could be given to including a profit-sharing provision if [the] team is sold within a certain period after development of a new stadium.”
In Forbes magazine’s most recent annual survey of the NFL, the Falcons were estimated to be worth $814 million, 27th in the 32-team league.
The 125-page Barrett report, dated April 19, was based on an open-air stadium, which was the focus of negotiations between the Falcons and the GWCC for more than a year, and has not been updated to reflect the change in plans, announced April 25, to a retractable-roof stadium.
For some Falcons fans, the economics are far less complex. King, the season-ticket holder who figures she has missed only three home games since 1981, just wants her tickets to remain within reach.
“Yes, I sit in a prime seat, but the people down there are your loyal fans, not your business people,” she said. “If you price us out of those tickets, then you’re going to have people sitting down there who only come for the social event.”
THE STORY SO FAR
Sept. 7, 2006: Falcons owner Arthur Blank broached the idea of a new stadium, predicting in an interview with The Atlanta Journal-Constitution that the team would have one in a decade or so. A new stadium “is not in the back of my mind; it’s in the front of my mind,” Blank said in that interview, adding that the team would spend the next few years investigating the matter.
April 13-14, 2010: The Georgia Legislature approved an extension of the existing hotel-motel tax in Fulton County through the year 2050 as a partial funding vehicle for a new or renovated stadium on Georgia World Congress Center property in downtown Atlanta.
May 18, 2010: Falcons president Rich McKay said in an interview with the AJC that the team’s preference would be an open-air stadium, rather than a renovated Georgia Dome, or a retractable-roof facility.
Feb. 22, 2011: The Georgia World Congress Center Authority, a state agency that oversees the Dome, agreed to enter formal negotiations with the Falcons on a $700 million open-air stadium. The idea was that the new stadium would be home to the Falcons and other outdoor events, while the Dome would continue to operate for events that required an indoor facility.
April 25, 2012: After more than a year of negotiations, the Falcons and the GWCC Authority officially abandoned the idea of an open-air stadium that would operate in tandem with the Dome, concluding that the financial and logistical challenges of two stadiums were too great. Instead, the parties said they had shifted their focus to trying to negotiate a deal on a retractable-roof stadium that would cost close to $1 billion and host indoor and outdoor events. The plan calls for continuing to use the Georgia Dome while a stadium is built nearby, then tearing down the Dome after the new facility opens.
What’s next: Negotiations continue between the Falcons and the GWCC Authority on terms of a possible deal. If a deal is reached, the Falcons hope to begin construction in 2014 and to begin playing in the new stadium in 2017.
COSTS OF BEING A FAN
The four teams that play in the NFL’s three newest stadiums — the Jets, Giants, Cowboys and Colts — last season ranked among the league’s seven most expensive teams in cost of attendance, according to Team Marketing Report’s annual survey:
Rank Team Average ticket* Fan Cost Index**
1. New York Jets $120.85 $628.90
2. Dallas Cowboys $110.20 $613.80
3. New England Patriots $117.84 $597.26
4. New York Giants $111.69 $592.26
5. Chicago Bears $101.55 $557.18
6. Baltimore Ravens $86.92 $486.19
7. Indianapolis Colts $85.34 $452.34
20. Atlanta Falcons $68.91 $391.64
NFL average $77.34 $427.21
*Does not include “premium” seats, defined as those that come with at least one added amenity (such as access to club areas).
** “Fan Cost Index” is a calculation of the cost for a family of four to attend a game, buying four average-priced tickets, two small draft beers, four small soft drinks, four hot dogs, parking for one car, two game programs and two caps.
PUBLIC-PRIVATE
A breakdown of the public and private sectors’ contributions to the construction costs of the three newest NFL stadiums:
Stadium location Team(s) Cost Public Private
East Rutherford, N.J. Giants, Jets $1.7 billion 0% 100%
Arlington, Tex. Cowboys $1.2 billion 30% 70%
Indianapolis Colts $720 million 86% 14%
Source: 2010 report by Barrett Sports Group for the Georgia World Congress Center Authority.
Note: Based on the latest cost estimate of $948 million for the proposed Falcons stadium, and based on the GWCC’s estimate that the hotel-motel tax would cover about $300 million and the rest would be the responsibility of the Falcons and the NFL, the breakdown for a new stadium would be 32 percent public funding and 68 percent private. However, all figures are preliminary, a deal remains under negotiation and some experts expect the cost to rise beyond $1 billion.
