A Nov. 11 announcement that Major League Baseball’s Atlanta Braves will be building a new stadium in suburban Cobb County and will receive some form of local government funding has brought an age-old debate on whether public dollars for sports facilities makes economic sense for municipalities back to the forefront.
The Braves, whose current home ballpark called Turner Field opened in 1997, announced that their new stadium will be constructed 14 miles away in time for the 2017 season. The Braves said they are "putting a significant financial investment" into the construction of the stadium that will seat in the neighborhood of 41,000 fans and cost roughly $672 million. The Braves planned new home less than two decades after opening Turner Field comes after failed attempts with the city of Atlanta to gain funds and assistance necessary for stadium upgrades and to enhance transportation issues around the ballpark.
Cobb County officials announced
The question of governments such as Cobb County utilizing public money for sports venues was raised on Nov. 6 during a panel called “Stadium Financing: Boon or Bane” at the Bloomberg State & Municipal Conference in New York. Gregory Carey, managing director at Goldman Sachs & Co. who heads the investment banking company’s sports finance and surface transportation finance group, argued that the pros of governments investing in stadiums and arenas for their sports teams outweighs the cons. One example cited by Carey was how the $400 million the state of Minnesota is putting in toward a new stadium for the Minnesota Vikings comprises roughly the payroll tax paid by the National Football League franchise that would be lost should the team have relocated out of the area.
“If the Minnesota Vikings left Minnesota just the income tax alone that the player payroll pays basically pays for the investment that the state is putting in,” said Carey, who is considered one of the top underwriters of professional sports stadium deals. “Then you have consumption at the games, people coming to hotel rooms, the economic velocity.”
Carey also pointed to the Orlando Magic’s new Amway Arena and how the city using its hotel occupancy tax for the project has paid positive economic dividends to the downtown area for both National Basketball Association games and other events.
“Now you have an arena that is a facility that is drawing 160 dates a year, the city is getting the non-basketball revenues, the concerts and the like,” he said. “Arenas are the best thing to use for economic velocity so people go out, they go downtown.”
While most government financing has been for professional sports facilities, Carey said public funds used to construct a new college arena for the University of Louisville has also proved successful. The $238 million KFC YUM! Center, which opened in 2010, was financially developed with assistance from the Louisville Arena Authority. Carey said today Louisville, a public university, is now the highest grossing college basketball team in the nation and the arena has also boosted other athletic programs at the school such as volleyball and wrestling while also generating economic activity in the city’s downtown area.
“It’s the seventh most active building in the United States right now and your anchor tenant is a men’s college basketball team,” said Carey. “It’s creating this tremendous velocity downtown.”
