A tale of two Atlanta stadiums: Political fortunes rise, fall in deals

Updated Aug 13, 2016
AJC reporters Scott Trubey and Meris Luz discuss the differences between the building of the new Braves stadium in Cobb and the building of the new Falcons stadium in Atlanta.

Two stadiums backed by hundreds of millions of taxpayer dollars. Two strong-willed politicians at the center of the deals.

Atlanta Mayor Kasim Reed coasted to re-election. Cobb County Commission Chairman Tim Lee was buried by his opponent in a runoff last month.

The Falcons’ Mercedes-Benz Stadium in downtown Atlanta and SunTrust Park in Cobb County, future home of the Atlanta Braves, will undoubtedly shape the region for decades to come in ways still unknown.

Economists generally do not believe stadiums deliver on backers’ promises of jobs and investment, and indeed the current homes of the Falcons and Braves have done little to nurture renewal in surrounding neighborhoods.

But why were the political outcomes for Reed and Lee so different?

Elected officials, sports economists and political observers who spoke to The Atlanta Journal-Constitution said an absence of transparency and a Cobb electorate who wanted a say in the deal played the biggest roles in Lee’s fall. But there were other factors that didn’t break in Lee’s favor.

Bruce Seaman, a Georgia State University economist who has consulted for both teams, said conservative Cobb County always had the potential to be a political “powder keg” when it came to government spending on private interests.

“I think in the city [of Atlanta] there was not as much of the presumption that governments just have no role to play in these kind of things, and that was of course exacerbated in Cobb with the issue of how fast it was occurring, whether it was transparent enough, whether it was a secret set of deals,” Seaman said. “That does not mean there was not city opposition, there was big opposition within the city and the press was … certainly not quiet about it.”

Location is everything

A growing suburb, Cobb is already saddled with some of the worst traffic congestion in metro Atlanta. And residents’ angst over game-day jams lingers today as parking and traffic management for SunTrust Park remain mostly undefined.

By contrast, a new stadium for the Falcons near the Georgia Dome downtown, an area already served by mass transit and a tourist hub, had been bandied about for years before Reed entered negotiations.

Though Reed risked his political future to keep the Falcons in the city, he was aided by a key vote state lawmakers took in 2010, three years before he got involved. That year, lawmakers extended the city’s hotel-motel tax, the sole public funding source for the Georgia Dome, and allowed those funds to be used for a new facility.

Without that vote, it’s likely a deal would have been far more precarious.

Both stadium deals rely on a mix of public funds and investment from the respective teams.

For the Falcons stadium, taxpayers are covering $200 million of construction costs for the $1.5 billion facility through bonds. The lodging tax will repay the bonds and hundreds of millions of additional hotel-motel tax revenue will go toward debt service and operating and maintaining the stadium over three decades. The figure is likely to be more than $700 million, though there is no hard cap on spending.

Cobb issued $376 million in bonds to build the Braves stadium. The county also agreed to pay $35 million for capital maintenance over 30 years, pushing the public commitment to more than $400 million. That does not include millions more in transportation upgrades.

Politically, the Cobb deal had a more challenging structure. Instead of an existing revenue stream, Cobb’s financing plan diverts a portion of property taxes and uses revenue from various fees. It also raises the millage rate on nearby businesses and apartment complexes.

“The Falcons and Mayor Reed were able to say ‘visitors are paying for this, you will never have to,’ ” said William Perry, executive director of Georgia Ethics Watchdogs and a critic of both deals.

‘A big public conversation’

Reed and the city entered negotiations in early 2013 after the Falcons and the state had been in talks for about two years. State lawmakers punted on a vote to raise the Georgia World Congress Center’s debt limit in the face of widespread opposition statewide to public funding of a new stadium.

While polls at the time showed a large majority of Georgia voters opposed public dollars for a new Falcons stadium, Reed had polling that showed a narrow majority of city voters supported it.

Reed told the editorial board of the AJC in February 2013 that Atlanta would have “a big public conversation.”

“We’re going to give the public every piece of data that we can possibly give them. Everything is going to be known,” he said then. Reed, through a spokeswoman, declined to comment for this article.

Brian McGowan, the CEO of Invest Atlanta during stadium negotiations, recalled that the mayor told staff to gird for numerous public hearings on the deal and a community benefits agreement to help seed redevelopment on the city’s troubled Westside.

“There were no secrets,” said McGowan, who now works at the international law firm Dentons.

Still, the stadium agreement happened in rapid fashion to meet a tight deadline, much to the dismay of critics.

Council members held at least a half-dozen briefings and work sessions on the proposal, and the body approved the agreement within days of receiving the final draft in March by an 11-4 vote.

Councilwoman Felicia Moore, who voted against the deal, at the time called the vote “unprecedented” and urged her colleagues to take more time to deliberate.

Perry said the Falcons talks were more open than the Braves deal. But Perry is still critical of Reed for rushing a deal through.

Perry said Reed and the Falcons focused the public’s attention on the immediate impact of the deal – the $200 million in bonds covered by taxpayers, and not longer term costs.

Leaders also said the new arena would help Atlanta win marquee events, like the Super Bowl, which the city hosts in 2019.

Even after the City Council approved the deal, Reed, the Congress Center authority and the Falcons negotiated deals to buy two historic African-American churches to make way for Mercedes-Benz Stadium. The city and Blank’s family foundation also completed a community benefits package, a requirement before construction bonds could be issued, to put millions into community revitalization.

These at-times heated negotiations were fraught, but produced tangible results, including changes to stadium design itself, McGowan said.

“There were a lot of pitfalls,” McGowan said. “[Reed] took a lot of political risk in my opinion.”

While the Falcons stadium had been in the headlines for several years, the surprise announcement of the Braves’ move to Cobb in November 2013 shook the Atlanta area.

Lee and his negotiating team secretly hammered out the basics of a deal for hundreds of millions in public funds for a $672 million stadium. The Braves, meanwhile, planned what was originally a $400 million, privately funded entertainment district on the stadium site. (That figure has since grown to $550 million.)

Cobb leaders held a handful of spirited town hall meetings in the days after the Braves announcement.

At one town hall meeting in late November, a Cobb resident asked if Lee had thought about asking taxpayers if they wanted to invest in the Braves.

“No,” Lee boomed into the microphone.

Two days before Thanksgiving, just 15 days after the initial announcement, Lee and the commission approved an agreement setting out the guiding principles of the deal, despite calls to delay action.

Speaking from the Braves new office overlooking the shell of the soon-to-be-completed stadium, the team’s president of development, Mike Plant, said the stadium is already a financial success for Cobb, citing rising property values and increased revenue from the hotel-motel tax. He sidestepped a question about whether the team should have sought more public input.

“In a public-private partnership, that’s not our part of the process,” Plant said.

Lee, for his part, rejects criticism over a lack of transparency. He has long equated the Braves deal with the closed-door negotiations state and local leaders conduct to convince corporations to relocate their headquarters or build a factory.

“This project followed the same process that every other major economic development project in the State of Georgia goes through,” Lee said in an e-mail to the AJC.

‘Don’t need your feedback’

In the days immediately after the Braves announcement, Lee’s office was flooded with correspondence about the stadium, with negative comments outweighing positive ones by a factor of four to one, the AJC reported at the time.

“You will be out of a job next election if you go through with this,” one prescient constituent wrote.

Many voters told the AJC in the weeks before Lee’s runoff they supported the Braves’ move, but not the way the deal was struck.

Commissioner Lisa Cupid, the sole dissenting vote in the November 2013 meeting, said she felt rushed to approve the initial pact.

“It was just, ‘We know what’s best for you and if you’re not on board you clearly don’t know what’s best for Cobb… . We don’t need your feedback, we’ll show you at the end,’” Cupid said, describing the chairman’s attitude.

But it was a May 2014 commission meeting to seal other key legal agreements that became a national spectacle.

Supporters of the Braves deal claimed all 12 speaking slots, shutting out critics from speaking before the commission. As tensions rose, Lee refused to open more slots, repeatedly telling opponents they were out of order before police officers removed a handful of critics, images that garnered the county negative national media attention.

Lee has staked his political reputation on the Braves deal, calling SunTrust Park and the surrounding entertainment district the biggest economic development project in the recent history of the county. He railed against what he characterized as unfair media coverage.

Meanwhile, Lee’s challenger, retired Marine Col. Mike Boyce, found an elevator pitch that resonated with Cobb voters: If we can vote on a $40 million park bond, why can’t we vote on $400 million for a stadium?

It was a pitch Lee couldn’t counter. In the lead up to the runoff, Lee tried to pivot to focus on tax rate cuts and the hiring of 80 new police officers, but these achievements were dwarfed by the stadium issues.

Plant, the Braves executive, declined to comment on the results of the runoff election. He said he’s already reached out to Boyce and they would meet in a few weeks.

“He’s the new leader, chairman of Cobb County,” Plant said. “We have nothing but great admiration and respect for Tim.”

Reed, meanwhile, built a national reputation and political resume on other issues such as pension reform and jobs.

“Kasim Reed was never vulnerable in any way,” said Kerwin Swint, a political scientist at Kennesaw State University. “That’s not the case with Tim Lee.”

Two stadiums

What: Mercedes-Benz Stadium

Pro teams: Atlanta Falcons, Atlanta United FC

Size: 71,000 (expandable to 75,000)

Overall construction cost: $1.5 billion

Sources of funding: The city of Atlanta approved $200 million in bond financing to fund a portion of construction of the state-owned facility. The bonds are funded by a portion of the city’s hotel-motel tax that funds debt on the Georgia Dome. The Falcons, the NFL and the sale of personal seat licenses will cover the remaining construction costs. Hundreds of millions of dollars in additional hotel-motel tax revenue will go toward operations, maintenance and interest. The projected value of the public funding is likely more than $700 million.

What: SunTrust Park

Pro Team: Atlanta Braves

Projected construction cost: $672 million

Size: 41,000 seats

Sources of funding: Cobb County issued $376 million in bonds to help construct the stadium, with the Braves covering the remainder. Additionally, the county has committed $35 million in capital maintenance over the next 30 years and is funding supportive transportation infrastructure. The county intends to pay its share using rent paid by the Braves for the use of the county-owned stadium, revenue raised from a current hotel/motel tax and a new lodging fee for a bus system, a rental car fee, a Cumberland district tax that raises the millage rate on businesses and apartments in the Cumberland Mall area and a portion of property taxes currently going to service the debt on parks bonds.

What: The Battery Atlanta, an entertainment and residential district surrounding SunTrust Park

Projected Cost: $550 million in private funds from the Braves