Sports

The Atlanta Braves Won the World Series. Their Stadium Is Still a Taxpayer Boondoggle.

The economic benefits are a home run that never came, and never should have been expected.

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Though long balls may be flying out of Truist Park when the Cincinnati Reds and hometown Atlanta Braves play Thursday on MLB Opening Day, one thing we won't be seeing is the economic dinger that the $672 million stadium was promised to bring. 

When the stadium development was announced in 2013, its booster coalition of team executives, elected representatives, and business leaders pitched it as a "home run for Cobb County," arguing the project would generate sufficient economic activity with associated tax revenues to cover the stadium's costs with a bountiful surplus. This windfall thus justified the $300 million that Cobb committed to construct the stadium in order to lure the team from its downtown Atlanta stadium, Turner Field, built just 17 years earlier for the 1996 Summer Olympics. 

Critics of the deal questioned why the public should shoulder a burden that the team's corporate owner could easily cover, especially when economists overwhelmingly agree that stadiums cost taxpayers more than any economic benefits they might generate. 

Subsidy advocates responded with a common refrain: "This time will be different!" 

They argued that the uniqueness of the project rendered past experiences irrelevant. In addition to its favorable location at a major interstate junction that would make it accessible to non-Cobb residents, Truist Park would be part of a mixed-use development called The Battery Atlanta, transforming the area into a year-round commercial hub. As Atlanta Braves Development Company CEO Mike Plant described it: "We're going to build a city and we're going to create tons of jobs, tons of density and year-round tax revenues. And that's what's going to make this whole formula set a new standard and result."

The rosy projections were supported by several preliminary economic impact studies commissioned by the Cobb Chamber of Commerce—a key backer of the deal—which claimed to show large fiscal returns from the project. However, consultant reports trying to forecast economic benefits are notorious for their faults (e.g., confusing all stadium-related spending as new spending, over/under-estimating benefits/costs, counting added taxes as a benefit instead of a cost), and rather than provide objective assessments they are intended to serve as public relations documents to justify taxpayer subsidies.

Now that five years have passed since the stadium has opened, speculative projections colored by wishful thinking can be replaced with analysis of hard data, which I have compiled in a comprehensive report. The findings are consistent with limited economic impacts identified in other stadiums, which contradicts the grand slam predictions of Truist Park's economic homer-palooza.

Though Cobb sales tax revenue increased following the stadium's opening, the uptick of around $3 million per year is quite small relative to the county's $25 million annual funding burden of the stadium. Approximately one-third of Battery spending came at the expense of other Cobb businesses, as residents reallocated some leisure spending from local restaurants, bars, and shops to the stadium development. Thus, the gains have not been a boon to the entire community.

Cobb property values, both near the stadium and countywide, progressed similarly to other parts of metro-Atlanta, showing no distinct change after the stadium project was announced or opened. This doesn't support the contention that being the "home of the Braves" made Cobb County a more attractive place to live and work, and thus increased property tax collections through greater tax assessments. Instead, Cobb has increased property tax rates since the stadium was announced in 2013.

County budget documents show that Cobb runs a deficit of about $15 million per year to fund its stadium obligations, which translates to about $50 per household. This may seem like a reasonable cost to baseball fans like me who benefit from having an MLB team nearby; however, it's far from the revenue that was promised.

Cobb County's experience is an important example that demonstrates stadium subsidies are bad public policy. Even though Truist Park was primed to succeed with a favorable location and ancillary development, it was unable to overcome the dismal economics of stadiums. If Truist Park can't generate a positive return with all its advantages, then it is unlikely that any other stadium will either. 

The findings are troubling given current trends in stadium subsides and construction across the country. Teams tend to replace their stadiums after 27 years, which is about how long it has been since our last stadium construction boom. Unfortunately, taxpayer funding for sports arenas and stadiums has been on the rise in recent decades:

Since 1970, state and local governments have devoted $33 billion in public funds to building sports venues for major professional sports teams, and the average contribution is growing. NFL teams in the Buffalo, Nashville, and Washington areas are seeking subsidies for new stadiums approaching $1 billion each. These projects are likely just an early swell in a coming wave of stadium replacements, for which team owners are sure to seek public assistance.

The economic benefits of stadiums are nothing more than a tired trope used to goad the public into funding corporate welfare. It's past time to acknowledge that sports stadiums are poor channels for economic development and stop funding them.

NEXT: The Natcon About-Face

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  1. Unexpectedly.

  2. This article is kind of biased. The author mentions "sales taxes". He states that there was little net gain because taxes collected from the stadium could have been obtained from other businesses in the area. He kind of leaves out "amusement taxes", "parking taxes", "hotel taxes" and others. Look into the cost of a ticket for anything, MLB, NFL, NBA, NHL, shows, concert etc. etc. There is a host of taxes on every ticket. None of them are mentioned by the Author. There's no mention of the "parking taxes" collected even when there is no event at the stadium. Pittsburgh, the City closest to me has a 40% tax on parking. The lots at Heinz Field, PNC Park and the PPG Arena are used daily even when there isn't an event.

    1. The author discusses sales taxes because they are easy to identify and centrally reported. The point is not that the sales taxes "could have been obtained from other businesses in the area" but that the hard data shows that those sales taxes (and the associated sales) were diverted from other businesses in the area - specifically, those near the already-existing Tucker Field. All the other taxes (amusement. parking, hotel, etc) also applied to the diverted business. It's a classic case of substitution effect. The subsidy proponents counted it as incremental revenue when it was really just a substitution of existing revenue.

      Enterainment is a category of goods like any other and the Law of Supply and Demand still applies. The demand for entertainment is largely fixed. When you introduce a new good within the category, you may see some small incremental increase but mostly you'll see cannibalization as buyers change how they spend their entertainment dollars. Absent winning the lottery, they don't have new dollars to start spending on your new entertainment instead of the food, clothing, medicine, etc that already consumes the rest of their budgets.

  3. Never ceases to amaze me why people will want their hard earned dollars going to support a billionaire organization. It's always a loss and the organization is more than capable of building whatever stadium they wish.

    I think I'm just more surprised that Fulton county had the good sense to not pay for the boondoggle.

    It looks like NY will be the next to get fleeced with the Buffalo football stadium. Wonders never cease.

    1. Agree, they seem to lose their mind when it comes to sports teams.

      1. What it comes down to is fear. A team will leverage that another city in another state is willing to fund their stadium, so if current city refuses, the whole organization leaves town and takes the jobs with them. Politicians don't want the immediate blowback of the loss of jobs (even if it's ultimately small, like less than a thousand), so they overcompensate to avoid the punishment.

    2. Right! How many "welfare queens" would be needed to account for the same expenditure?

  4. None of these things pay for themselves. If they did the owners would make the investment.

    1. Sometimes owners do because the stadiums and developments do bring in returns-the problem is that those returns seldom manifest in taxes. And yet owners are quite happy to accept free money from the city. There's so little cost in goodwill from accepting taxpayer money and so little benefit to self-funding that every owner is going to try to force the city to pay for it.

      It's ultimately up to local governments to say no to this, permanently.

  5. I used to believe in the argument that all stadium financing was a loser. Then Nashville put an arena and a stadium downtown, and an overall development plan around them. Those projects paid off incredibly.
    Still only works if you have a massive tourist industry to bolster

    1. It's worth noting, with Atlanta, a couple of other factors. For one, the MLB punished Georgia by not letting them host an All-Star Game last year, which would have brought in some extra revenue. Overall attendance was still down last year due to ongoing pandemic concerns and MLB's virtue signaling. And the overall trend is that attendance for MLB teams spikes in the year FOLLOWING a WS victory, so they might see a drastic uptick in attendance and revenue this year.

      It probably doesn't affect the big picture that much, but there's some different extenuating circumstances going on.

  6. Stadium subsidies appeal just enough to labor and to corporate interests that, when combined with ransom or we leave demands, they get approved. Despite the evidence.

    Rejecting this welfare for the rich should be a bipartisan cause. Instead, the owners play cities against each other, just as corporations play off states. Why should they stop when the sucker game keeps working?

  7. Move to Iowa. They don't have any major professional sports teams whose bills you have to foot.

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