Why the need for a New Stadium?



Towards the end of 2009, Atlanta Falcons’ owner Arthur Blank began mentioning the “need” to build a new home for his up and coming team. The idea of a new stadium sounded good at first, but as the details continue to unfold, Falcons fans and city residents are beginning to see that that “good” may not be in their best interest. Sure, it will create temporary jobs. And eventually it will bring revenue to the city. But it does not make sense. The Falcons do not need another stadium because the facts show that it would not be about the fan experience, but more about the money in the owners’ pockets.

In 2008, the Dome was renovated. The building was painted inside and out, new and refurbished chairs were installed, and both monitors were enlarged. Why the need for a new stadium? Attendance is always low. The Dome is seldom more than 75% full. At times, it is barely 50% full. A new stadium with higher ticket prices will only decrease attendance. Why the need for a new stadium? The Georgia World Congress Center has made reference to Personal Seat Licenses (PSL). A PSL is a one-time fee that the owner of a seat will have to pay in addition to the season ticket price of their seat. The three most recent built football stadiums’ PSLs range from $1,000-$150,000. There are multiple stories about people who have held seats for over 20 years and are unable to renew them because of this license implementation.

Although I would love to have a new stadium, there is no need for one. Increased season ticket prices and PSLs will only push the real fans, like me, out into the streets. In addition, city residents will have to endure another tax increase.

Lemuel A. Way

 

Owner Profits Profit the City

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Lemuel is quite correct that a new stadium would mean increased ticket prices and that one primary purpose of a new stadium is to increase owner profits. However, an objective cost-benefit assessment must also consider the potential resulting increase in taxes collected.

Most manufacturing and sales analysts agree that selling a fewer number of high-margin items is preferable to selling a greater number of low-margin items because less energy and fewer resources are expended for equal or greater profit. A new stadium allows the team owner to increase the cost of both single-game and season tickets. But because the stadium is funded by tax dollars, the owner's overall expense per game increases very little. The owner can afford to sell fewer tickets because the profit margin on each sale is higher. From a tax collection standpoint, this means more taxable revenue offset by fewer tax credits, which means that the tax authority collects more business income tax dollars. Depending on the owner's incorporation structure, the state could stand to collect higher personal income taxes as well.

In addition, a higher ticket price means a higher sales tax collected per ticket. Say, for example, that a current ticket costs sixty dollars. At a five percent rate, the city collects three dollars per ticket in taxes. If ticket prices increase to, say, eighty dollars, the tax collected is four dollars per ticket. Ticket sales can fall up to twenty-five percent without decreasing the overall sales tax collected. If sales fall by only twenty percent, the city stands to collect significant additional sales tax dollars.

Evaluating the matter from a purely economic perspective, the potential tax revenue increase alone is enough to justify serious consideration of a new stadium.

Maggie Worth