How the Georgia World Congress Center Authority and the Atlanta Falcons structure the deal will determine whether a new open-air football stadium or an expanded Georgia Dome is a winner or a boondoggle for the state.
Industry watchers said that the negotiations -- for a new stadium, and less so for an expanded Dome -- will involve who owns the facility, how much the state will have to pay for new construction or expansion, team lease terms, and what revenue sharing of lucrative parking and food and beverage sales will resemble.
Other questions will include how much the building will it cost, the amount the state will have to earn to pay off bonds it will use to fund its part of construction and who will manage the facilities if there is a new stadium and the Dome continues operations, which the GWCCA officials have said they would prefer.
"They'll first have to figure out what the Falcons are willing to put up and the rest of the deal will float from that," said Ken Bernhardt, a Georgia State University marketing professor.
Victor Matheson, associate economics professor at the College of the Holy Cross in Worcester, Mass., said the real challenge will be to prove if it's prudent to undertake such an expensive project during such hard economic times. Some people will offer that it's a job stimulus. Matheson said the money could be spent just as easily in other areas, making that argument a wash.
"Even if the stimulus argument is accepted, building a stadium is likely to be a very inefficient generator of jobs for the price," Matheson said.
The GWCCA, a state agency that oversees operations of the Georgia Dome, the Falcons' current home, on Tuesday directed staff to pursue a "memorandum of understanding" as a next step between the agency and the team on stadium plans.
The agency said a new stadium could cost $700 million and be constructed on Ivan Allen Boulevard between Northside Drive and Marietta Street. The state projects that it could raise between $350 million and $400 million if it goes to the bond market in 2013 or 2014. The remaining cost would be paid by the Falcons.
The Falcons have not commented publicly since Tuesday, and the GWCCA on Friday issued the following statement: "It wouldn’t be appropriate at this early stage to speculate as to what business terms surrounding a potential new stadium are priorities for the GWCCA. Business terms will be developed with the Atlanta Falcons during the ‘Memorandum of Understanding' process, which could take up to a year to finalize."
The underlying factor, Matheson said, is the Falcons are under intense pressure because of the changing economic dynamics of the National Football League.
"Under the current collective bargaining agreement, teams are required to have a payroll that is a fixed percentage of the average team revenue of the league, " Matheson said. "‘Unlike salary caps in the NBA, in the NFL, there is both a cap and a floor. As other teams like the [Dallas] Cowboys build monster, revenue-generating stadiums, it drives up the league average, increasing the salary floor that teams like the Falcons are required to hit."
Dallas' new Cowboys Stadium cost $1.2 billion, while the New Meadowlands Stadium for the New York Giants and the New York Jets topped out at $1.6 billion. To pay for the behemoth fields, the teams raised ticket prices, increased parking fees and designed luxury suites to sell for top dollar.
The Falcons' deal to play in the Dome doesn't allow them to capture as much of the proceeds and the situation is less competitive than it is for other teams in the league. In fiscal 2009, the Dome had revenue of $31 million, according to the GWCCA. The Falcons received $16.6 million while the Dome kept $14.3 million for operations and to pay down debt.
"Only ticket revenue and television revenues are shared throughout the league, so all of those hot dogs [Cowboys owner] Jerry Jones is selling in Dallas means money in Jones' pocket, but higher salary requirements for everyone else," Matheson said. "Hence the drive by teams like the Falcons to have someone else build them a new stadium in order to generate the revenues needed to meet payroll."
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