A new open-air stadium downtown for the Atlanta Falcons would be of enormous benefit — to the Atlanta Falcons. Neither local taxpayers nor the region’s economy is likely to accrue much advantage from a new arena built on public land, in part with public money, experts told The Atlanta Journal-Constitution last week.
“Economists have studied the economic impact of stadiums to death, and the clear consensus is that there is no positive impact,” said author and sports economist J.C. Bradbury of Kennesaw State University. “Economists don’t agree on a lot, but right wing, left wing, they all agree on that.”
And this wouldn’t even be a new team, just a shift of Falcons games from the 19-year-old Georgia Dome to a stadium that would be built on nearby Ivan Allen Boulevard.
“It’s just adding zero to zero,” Bradbury said.
Many options are still on the table — perhaps including renovation or expansion of the Georgia Dome, where the Falcons now play.
But Tuesday, the Georgia World Congress Center Authority said it had drafted a “memorandum of understanding” on plans for a $700 million stadium. If they reach a formal agreement, officials said, the state or the authority would issue bonds to raise $350 million to $400 million, while the team would cover the rest of the cost.
Falcons owner Arthur Blank bought the team for $545 million in 2002 and is now said to be seeking a better revenue-sharing agreement with the authority.
A new stadium would provide the Falcons a more lucrative arrangement of luxury boxes, club seats and preferred seating, such as placement on the 50-yard line.
There’s also the possibility of landing a Super Bowl. Despite suggestions that Atlanta has been passed over because of the ice storm during the 2000 game here, the real reason, most industry experts agree, is the league’s preference for new stadiums.
Unlike money from television contracts, much of the revenue from a stadium does not have to be shared with other National Football League clubs.
“The team gets to keep the lion’s share of local revenue. That’s why they want a new stadium,” said Dennis Howard, professor of business at the University of Oregon and an expert on sports financing. “My question would be, ‘What’s in it for the state of Georgia? What’s in it for the city of Atlanta?’”
Kansas-based architecture firm Populous released its findings Tuesday on the possibility of a new stadium, bringing to an end two years of studies on ways to keep the Falcons downtown.
The GWCCA, which oversees operations of the Georgia Dome, hired Populous in 2009 at a cost of $145,000 to propose a master plan for the Dome. When the Falcons made it clear they preferred an outdoor stadium, the firm’s directive was broadened to consider a retractable roof for the Dome and new stadiums, one with a retractable roof and the other open-air.
The effort got a boost when the state Legislature agreed in 2010 to extend the hotel and motel taxes used to pay off the bonds for the Dome to 2050. The bonds were to expire in 2020.
The Falcons need to play catch-up, according to Forbes magazine. An August 2010 Forbes analysis on the value of NFL teams ranked the Falcons 26th out of the league’s 32 teams. The Falcons were worth $831 million in 2009, according to the magazine. That compares to the top two teams, the Dallas Cowboys ($1.8 billion) and the Washington Redskins ($1.6 billion), the magazine said.
“The Falcons’ quest for a new stadium is problematic because the state is not about to tear down the Georgia Dome, which is located in downtown Atlanta and is the only money-making venue in the Georgia World Congress Center,” the magazine said. The congress center authority also operates the nation’s fourth-largest convention facility and Centennial Olympic Park.
When government officials have argued that the incentives and enticements are the right thing, they have often cited commissioned reports that agree.
And it’s true, wrote economists Dennis Coates and Brad Humphreys in a 2008 paper: “The clear consensus among consultants who produce ‘economic impact studies’ is that professional sports franchises and facilities generate sizable job creation, incremental income increases and additional tax revenues for estate and local governments.”
Proponents talk about the fans coming from near and far to spend millions of dollars on the team, money that not only supports the area, but ripples through the community.
Well, not exactly, economists say. In fact, say Coates and Humphreys, most of the spending goes to owners and players who may live elsewhere. So the ripple effect is probably higher for events like bowling, plays and restaurants, they write.
“Professional sports can reduce local income rather than increase it,” write Coates and Humphreys.
Even if the money stays in the community, the overall economy gets no stimulus if spending on sports is simply being shifted from other local spending.
And, if most fans already live in the area, then even a glitzy new stadium provides only slight help to the region’s hospitality sector, Howard said. “These are portal-to-portal fans. They are driving from home to the stadium. Their spending on food and beverages will be in the stadium itself.”
Boosters are quick to point out that state funding of the project will come through hotel taxes, not from fees or taxes imposed on residents.
But economists say spending on sports can’t be judged unless you consider how it shifts money from other programs, investment and tax cuts.
Hotel tax collections could be going to everything from schools to public safety officers to road repairs, said Victor Matheson, economics professor at College of the Holy Cross in Worcester, Mass.
“It is basic human nature that people tend to be cavalier with ‘free money,’ ” he said. “You win $1,000 in Vegas and you spend a bunch of money on things you never otherwise would. Hotel taxes seem like free money to municipalities because no voters are paying for them. Thus, this money is more likely to be wasted than taxes that you had to ‘work’ for. Doesn’t mean that this is smart economic policy, however.”
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