Stadium Finance

The Atlanta Falcons are in the process of trying to build a new stadium. They have proposed developing the surrounding area in conjunction with the State and have also proposed that the State finance some of parking around the stadium.

The Falcons are in a common predicament of most professional sports teams these days: the public and the fans are hesitant to take on debt to help finance the large cost of these stadiums and they feel that the wealthy owners should be contributing more to the process.

With the current price of a stadium costing over $1 billion to construct it is easy to see how this debate continues between the club owners, league administration, State administration and tax payers. The tax payers do not want to be on the hook for a huge bill, the State may make decisions for personal and political reasons instead of business and the club threatens to go to another city if they do not get help with the construction costs.

One of the ways that clubs ask for financing help is by presenting the potential economic impact that a new stadium will have to the area. Even though this is a very common means to justify construction, the numbers may not be accurate. It is very difficult to determine how much revenue an event brings to the area and consider all the factors that it involves: people coming in vs. people leaving the area, tourist money spent on food, lodging, entertainment, gas and retail outlets for the event and not for another reason. They also like to tout the job creation that a new Stadium will have, but is it true? What kind of jobs are they; are they full time professional positions with benefits or part time, seasonal, blue collar without benefits? There is a great difference between the two that is not often accurately explained.

One of the ways that clubs are working with their municipalities is to get tax benefits and deferred payments on the stadiums. This makes it easier for the teams to build, but it limits the amount of tax revenue to the area. In an effort to work together to find the best solutions, clubs and their towns have started looking into creating self-standing developments that house multiple entertainment, lodging and food choices. These developments keep the tourists in one spot and expand the area that they are built on and can make them more sustaining.

It will be interesting to see what happens in Atlanta and the other professional cities when their time comes to build a new Stadium. Will it continue to be subsidized by the town or the state for tax purposes or will teams develop entertainment centers to support the stadium?

http://www.athleticbusiness.com/stadium-arena/state-s-role-in-new-atlanta-falcons-stadium-expanding.html?topic=5,300&eid=277204494&bid=997546