The estimated $948 million pricetag for a retractable roof stadium for the Atlanta Falcons would probably prove to be significantly low, experts say, adding to questions about how the facility would be paid for.
Two professors who study stadium deals said estimates are generally low to make such projects palatable to governments and the public.
“One of the real rules in these analyses is they always underestimate cost,” said J.C. Bradbury, chairman of the Health, Physical Education, and Sport Science department at Kennesaw State University.
"When they say it will cost $900 million, I’m thinking, ‘How much over a billion is it really going to be? ‘”
That could be critical in negotiations between the Falcons and the Georgia World Congress Center Authority, which represents the state because the stadium would be on its property.
Falcons and GWCC officials on Wednesday unveiled a plan to build a $947.7 million stadium with a retractable roof either on a GWCC-owned truck parking lot just north of the Georgia Dome, or at an unspecified site south of the field.
The idea of a new stadium wasn’t new -- the two have been in talks for more than a year -- but until this week the leading scenario was for a less-expensive, open-air stadium and the Dome remaining in operation for other events.
Under the latest plan, the 20-year-old Dome, which cost $214 million to build (about $396 million in current dollars), would be demolished. With its retractable roof the new stadium would be used for a wide range of events. Backers say a state-of-the-art facility could draw more to Atlanta -- including the Holy Grail of sports events, the Super Bowl.
Paying for it is the issue.
Rick Burton, a professor of sports management at the Falk School at Syracuse University, said cost overruns that can add 5 percent to 10 percent to the price tag are common and that the more time passes between the time a deal is struck and the first dirt is turned also beefs up the final numbers.
“It sounds to me like they are trying to price point this so they can say that they can do this for just under $1 billion,” said Burton.
Infrastructure improvements would also run up the numbers. Roads around the truck lot under consideration are not designed for football traffic, state Department of Transportation leaders have said. Utilities would have to be moved or upgraded, and it’s unclear who would bear that cost.
The only identified funding source for the stadium so far is an estimated $300 million that would come from the same hotel-motel tax that has been used to retire debt on the Georgia Dome. The legislature last year approved an extension of the tax to 2050, specifically to help fund a new Falcons home field.
The remainder of the cost, at least at this point, would come from the Falcons or other revenue sources, though the team is not ready yet saying how much it would be willing to pay or what the other options might be.
To this point, no local or state tax funding has been suggested beyond the hotel-motel taxes, the bulk of which are paid by visitors.
“We’ve done a lot of different looks at it, as to how you do it, whether you pledge revenue and try to (borrow) against that,” Falcons President Rich McKay said Wednesday. “I wouldn’t commit in any way, shape or form what that final deal is going to look like.”
If the Falcons follow the example of other teams, options to raise money to offset costs could include selling naming rights and raising ticket, parking and concessions prices.
Another potential source: personal seat licensing, in which fans pay a large one-time fee to buy the rights to a seat before gaining access to season tickets. Other NFL teams have used the fees to help boost revenue.
But each source has its drawbacks. Naming rights have been a tougher sell in the post-recession economy, especially if the price is hundreds of millions of dollars.
Fans can be sensitive to increases in ticket and concession prices that can make attending the game expensive, the experts said. Sports teams already face indications that some fans are staying home to watch the action on big-screen HDTVs.
Another funding source likely would be the “G-4” stadium-construction program enacted by NFL owners in December. The Falcons would be eligible for as much as $200 million from the league toward a new stadium — provided the team, or owner Arthur Blank, puts up a matching or greater amount.
Of the $200 million from the league, $50 million would be a grant, $50 million would be a loan to be repaid by the Falcons and the other $100 million would be repaid from incremental increases in the visiting-team share of revenue in the new stadium. However, if the stadium failed to generate sufficient new revenue, the Falcons would be responsible for the balance of the $100 million.
Mark Geiger, a spokesman for the GWCC authority, said the final cost is unclear because there is still too much to be negotiated.
“That’s hard to say because you are going by a report,” he said. “We are talking generic numbers about a proposed stadium.”
The $947.7 million figure came from a report by Populous, a Kansas-city based architectural firm that has been helping develop proposal for the Falcons and the authority.
About the Author
