FAQ about Cobb Braves Stadium

Here is a post to get things started. I have been asked many of these questions about the stadium, so I made one big post with my answers. I may update these answers to include more information.

 

How much economic benefit do sports stadiums typically confer on communities?

Economists have reached a consensus conclusion that sports stadiums do not produce economic benefits to communities at large.  Studies of the economic impact of stadiums consistently find no significant increase in economic activity associated with sports teams or stadiums.

How can stadiums not boost local economies? Fans are buying tickets, eating at nearby restaurants, and buying merchandise around the stadium. There must be an increase in economic activity, right?

There is no denying that fans spend large sums of money to attend sporting events; however most of these expenditures do not represent a net increase above spending prior to the addition of a new team or stadium. Most people who attend games at a local sports stadium would likely have spent that money at other local businesses (e.g., movies, restaurants, retail stores); therefore, most of the dollars spent at the stadium are new spending.

What about tax revenue?  Won’t the new stadium generate new tax dollars?

Property tax will not be assessed on the stadium; however, the adjacent property that will house mixed-use development will pay property taxes.  Sales taxes will be paid by patrons, and sales in Cobb County that would not be made without the stadium will increase tax revenue.

How might the proposed stadium produce a positive economic impact for Cobb County?

Any spending that occurs within Cobb County that otherwise would not have occurred absent the new Braves stadium is net new spending to the County.  Though the net impact to the Atlanta metro area (which includes Cobb County as well as the Braves current home in the City of Atlanta in Fulton County) likely will be negligible, there will be a net increase to Cobb County.  Fans from outside Cobb will now travel to Cobb to spend money that they otherwise would not have spent in Cobb County.  In addition, money spent by Cobb residents who previously spent money outside of Cobb but now spend it inside Cobb (for example, Cobb residents who would otherwise spend money at Turner Field) represents an increase in economic activity in Cobb.

What is the construction cost of the stadium?

$672 million

What does the County pay?

(Most specifics from MDJ, 11/15/2013)

Up front:

Cobb County: $14 million for infrastructure/transportation improvements around stadium

Cumberland CID: $10 million toward footprint of the stadium.

Total upfront payment: $24 million

Annual:

Hotel tax:  $940,000 from County’s existing 8% hotel tax.  Annually the tax collects approximately $11 million, which goes to Exhibit Hall Authority. The authority keeps 62.5% and returns 37.5% to the County. Bonds used to pay off Cobb Energy Performing Arts Centre, excess must be spent within year on travel and tourism.

Car rental tax: $400,000 generated from new 3% tax on car rentals in the County.

Parks bond extension and reallocation: $8.67 million.  Three voter-approved general obligation bonds for parks (approved in 1996, 2007, and 2008) are scheduled to expire in 2017 and 2018.  The bonds are funded by 0.33 mills property tax.  Instead of expiring, the bonds will be extended for 30 years.   

New Cumberland Special Service District tax: $5.15 million. This is a new tax district that adds 3 mills in property taxes in the area and allows for the taxing of apartments.  Commercial property owners in the existing Cumberland CID pay 5 mills in additional property taxes. The area of the district will be similar to the existing CID.

New Cumberland Special Service District hotel circulator fee: $2.74 million. This revenue is generated from a $3 per night charge for hotels in the district footprint.

Total annual contribution: $17.9 million

Other:

Cobb County: $3.5 million for pedestrian/shuttle bridge over I-285 (not included in $672 million proposal)

What do the Braves pay?

(From MDJ, 11/15/2013)

Up front:

$230-$280 million (minimum contribution of $230 million; unclear why this value has a range)

Annual:

Rent: $3 million

Naming rights: $1.5 million

Parking: $1.5 million

Marquee advertising: $100,000

Total annual contribution: $6.1 million.  This total contribution is guaranteed according to County finance director Jim Pehrson.

How does the Cobb stadium deal compare with other recent stadium deals?

Team

Year

Cost when built

Cost in 2013 $

% Public

   

(in millions)

(in millions)

 
Miami Marlins

2012

$515

$525

70%

Minnesota Twins

2010

$522

$560

75%

New York Yankees

2009

$1,600

$1,746

33%

New York Mets

2009

$632

$690

34%

Washington Nationals

2008

$611

$664

100%

St. Louis Cardinals

2006

$344

$400

12%

San Diego Padres

2004

$449

$557

57%

Philadelphia Phillies

2004

$458

$568

50%

Cincinnati Reds

2003

$320

$407

82%

         
Mean  

$606

$680

57%

Median  

$515

$560

57%

         
Cobb-Braves Stadium    

$672

45%

 

Source: ballparksofbaseball.com, with further investigation from various sources

 

Are hotel taxes paid only by visitors?

No. The party who remits the tax to the government is not necessarily the party who bears the burden of the tax.  The reason for this is that a buyer or sellers can adjust the amount they buy or sell of the taxed commodity.  Let’s assume the case of a $100 hotel room in the Cumberland CID district that is taxed at the 8% rate plus the $3 CID circulator fee.  If the hotel owner raised his/her rate from $100 to $111 to pay for the new tax, buyers may choose to stay at another location just outside the taxed district for less than $111, causing lost revenue to the owner, lost tax revenue to the county, and the hotel patron being less happy by choosing a hotel in a less desirable location.  To combat the response to the tax, the hotel owner may lower his/her price to keep his rooms filled.  If he/she lowered the room rate to $90, the hotel patron would pay $100 (the previously non-taxed room rate) and the hotel owner (a local) would bear the entire burden of the tax by receiving only $90 for a $100 room.  The reality is that both the hotel owners and hotel patrons share the burden of the tax, and the proportion of the burden is determined by how sensitive hotel owners and patrons are to hotel prices.

Are car rental taxes paid only by visitors?

Except in rare cases, car rental taxes will be paid entirely by Cobb residents. Visitors from outside Atlanta will most likely not arrive in Cobb County and then rent a car.  In most cases they will rent a car at the airport in Clayton/Fulton Counties or drive to Cobb in their own car.  Most car rentals in Cobb are by Cobb residents with car trouble.

 

Is the reallocation of the park bond revenue costless to taxpayers?

No. The taxes that paid off the park bonds were set to expire. Absent their extension these funds would no longer be collected, thus lowering the tax burden of Cobb property owners.  Another option would be to extend the bonds to fund other government services that Cobb residents might value more than funding a baseball stadium.  While the extension of the bonds does not increase taxes collected from property owners above what they pay now, it does impose a cost over taxes that would be paid absent the stadium, either in terms of lower future taxes or alternate government services.

The Cumberland area bears a larger share of the tax burden than the rest if Cobb County. Is this good or bad?

As a principle of fairness, it seems desirable that people who benefit a government project bear more of the cost.  The Cumberland area will benefit more from hosting the Braves than other parts of Cobb County from visitors spending their money in and around the new stadium.  However, it is also true that this area will suffer more traffic congestion, vandalism, and crime from this influx of outsiders.

How is this project unique?

It is common for new stadiums to be built in economically depressed areas in the hope of stimulating economic development.  While there may be some new economic development that results from these projects, the impact is normally a fraction of what supporters of such projects predict.  The downside of opening a new business near a stadium is that if it is stadium -related, businesses mainly get traffic only during events (81 games plus a few non-baseball events), and thus it is hard to maintain this business on non-game days.  If the business is not related to the stadium then business may be disrupted during events, resulting in lost revenue on game days.  By locating the Braves in an area heavily devoted to entertainment, retail, and business commerce, the project may be more suitable for surrounding businesses.  Restaurants and shops may serve customers on both game and non-game days.  It is difficult to know what the exact outcome will be, but this approach is somewhat unique.

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One thought on “FAQ about Cobb Braves Stadium

  1. Pingback: 11/24 News Roundup | Cobb Braves Info

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