Falcons stadium opposition signals shift
JAN 19, 2013 12:42p ET
But Blank isn't getting a lot of help from Georgia Gov. Nathan Deal and other politicians. Deal supports using $300 million in revenue from an existing hotel tax to partner with Blank on a new complex to replace the 21-year-old Georgia Dome, but he says the owner must do the heavy lifting.
Jockeying between major sports franchises and governments over the financing of new stadiums is nothing new, but the chilly reception the Atlanta proposal has gotten from the public and many state lawmakers is surprising some in this business-friendly state. Though the team is red-hot, the Georgia Dome is in good shape and nearly two decades younger than Louisiana's Superdome. And the state is coming off several years of painful budget cuts.
Similar dynamics are playing out in Miami and Birmingham, Ala., as fans and taxpayers appear to be more circumspect about spending public money on stadiums used primarily by privately-owned teams.
Statewide polls in Georgia show that less than a third of residents support a new stadium, even if Blank covers most of the construction cost. So the politicians' message to Blank: If he wants it, he has to sell it.
"The Falcons have a strong case in favor of a new stadium, and I think it's incumbent on them to educate the public on all the facts," Deal said in a statement Friday.
In Miami, the NFL's Dolphins want local and state governments to help renovate Sun Life Stadium. But team officials are navigating public outrage at Major League Baseball's Marlins, which took public money for a new stadium, only to turn around and cut its player payroll by dumping fan favorites.
In Birmingham, the mayor is having trouble persuading city councilors to chip in more money for a new downtown stadium for the region's minor league baseball team, the Barons.
The outcry suggests public opinion is catching up with research that casts doubt on claims that the investments are a good deal for taxpayers because they create jobs and foster economic activity. Lack of statewide support also reflects urban-rural political divides: Voters far from city centers don't believe they benefit from the deals.
Public stadiums dotted the map for most of the 20th century, but the pace of public-private partnerships for new construction or renovation projects has accelerated over the past two decades. Dallas Cowboys owner Jerry Jones now controls a $1.15 billion stadium that Arlington, Texas, voters helped finance with increases in sales and hotel taxes. In the New York City area, residents are paying in various ways both for the new $1.6 billion NFL stadium that will host the 2014 Super Bowl and the demolished old stadium it replaced.
In Indianapolis, the state owns 4-year-old Lucas Oil Stadium, for which the state, city and surrounding counties covered most of the $720 million construction cost. Naming rights and a $100 million contribution from the Indianapolis Colts covered the rest. Minnesota officials and the NFL's Vikings last year struck a deal to essentially split the cost of a planned $975 million stadium in Minneapolis.
Blank -- the Home Depot co-founder whose team already plays in a publicly financed, publicly owned facility -- has spent years in closed-door negotiations with state and city leaders for a new stadium that would not only host Falcons and college football games but could compete for a Super Bowl.
The outline, unveiled in December, assumes about a $1 billion construction cost, with Blank responsible for 70 percent and the state covering the rest with bonds backed by existing hotel and motel taxes in Atlanta. But the plan requires that state legislators raise the state debt limit, and Blank could face an uphill battle in the Republican-controlled legislature.
Deal said the Georgia Dome will eventually need a new roof and could become obsolete. He noted that the plan would simply extend existing hotel taxes that cover the original stadium's construction debt, which is nearly paid off. That would put the cost of a new nearby complex on people from "out of state," Deal argued.
"I think once people know there aren't state tax dollars involved here -- that this won't compete with funding for schools or Medicaid or public safety -- that we could see a change in public opinion on the issue," Deal concluded.
That's different from notable cases like Cincinnati, Ohio, where county authorities in 2010 had to cut public services to avoid defaulting on debt payments for two stadiums because the bonds were backed by sales tax revenues that tanked in the Great Recession.
In Minnesota, some officials are already worried that gambling revenues earmarked for new stadium debt won't be sufficient.
Georgia's top legislative leaders, both Deal allies, also have punted to Blank to sell his plan. "I don't think the case has been made," said House Speaker David Ralston of north Georgia. The Senate's top-ranking member, Atlanta Sen. David Shafer, said only, "I'm still considering the proposals."
Then there are outright opponents such as Sen. Vincent Fort, an Atlanta Democrat and Deal critic. He said a state that has furloughed teachers and "doesn't seem to have a problem with 650,000 uninsured residents" should have different priorities.
"A playground for a billionaire isn't a priority for me," he said.
A spokeswoman at the Georgia World Congress Center Authority, the state entity that would own the new stadium, declined to make agency executives available for an interview. She cited the sensitivity of negotiations.
Authority leaders have said they don't necessarily need a new stadium. Their fear is that Blank, with his $700 million commitment, could opt to build his own open-air stadium that would become a competitor.
Efforts to contact Falcons executives were not successful.
Judith Grant Long, an urban planning professor at Harvard University and an expert on sports complex financing warned in a recent book that it is difficult to measure the true cost of stadium investments.
There's infrastructure: Atlanta Mayor Kasim Reed, a supporter of the stadium project, has suggested that as much as $200 million could be required.
There are operating costs, management duties and revenue sharing. Under the preliminary Georgia plan, Blank would cover most operations, but he'd also reap revenue from seat licenses, premium seats and concessions and could negotiate for corporate naming rights.
That kind of power in Minnesota has led to a public smack down from Gov. Mark Dayton, who blasted the team for even considering passing on its stadium costs to fans in the form of seat licenses.
In Louisiana, Gov. Bobby Jindal recently used naming rights as a carrot to phase out direct subsidies to the New Orleans Saints, the principal tenant of what is now called the Mercedes-Benz Superdome. Louisiana taxpayers still own the stadium, but Mercedes is paying Saints owner Tom Benson.
The Falcons deal proposes a $2.5 million annual rent payment from Blank to the state.
Georgia's Congress Center Authority would maintain control over negotiating contracts with existing clients for events for the Southeastern Conference Championship football game, NCAA basketball tournaments and the Chick-fil-A preseason and postseason college football games. But Blank would be a player in making "citywide bids," like those for Super Bowls and college football's new championship game.
Deal's statement and his previous public interview on the Falcons have not delved into those details.
Long, the expert on stadium financing, also noted future maintenance and eventual demolition costs beyond initial tenant agreements: 30 years in the Falcons' case. "These are not static deals," she wrote, but "dynamic, living deals that should be assessed over their full duration."
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