9/9: Revenue falls short at Coolray Field

By J.C. Bradbury

When former county administrator Jock Connell announced the building of a new stadium to host the Gwinnett Braves, he made a bold statement: “We anticipate it paying for itself from Day 1. The decision we made before going into this was it had to be financially feasible.”

Connell would soon renege on his now-infamous promise by admitting that car rental taxes would be necessary to fund the stadium. Last week, an investigation by The Atlanta Journal-Constitution’s David Wickert revealed that not only was the stadium failing to generate sufficient revenue to cover its debt obligations — which don’t include the $31 million in tax revenues the county already devoted the project — but that the car rental tax would not be enough to cover the deficit.

Now, revenue from the existing hotel-motel taxes is needed to cover the county’s debt obligation.

Three-and-a-half years ago, I wrote in this paper, “Using even the most optimistic estimates from the county’s feasibility study, revenue from the stadium will fall short of paying off the debt.” I included the numbers to prove it, and that was before it was announced that the estimated $45 million cost of the project would balloon to $64 million. My projection was ignored and received no response from county officials.

Some politicians who spearheaded the deal to build the stadium think we should be happy that no property taxes will be directly funding the stadium.

Aside from the fact government revenues from all taxes are largely fungible, are Gwinnett citizens really unharmed because the revenue their leaders extract from them doesn’t come from property ownership? The issue isn’t where the money comes from, but that hard-working citizens of Gwinnett County have less of it.

Deputy county administrator Aaron Bovos assures us that it is “conceivable” that future stadium revenue will outperform the current forecast. We can conceive of many things, but reality is that it is unlikely that attendance will skyrocket; parking revenues will turn around; Coolray Heating and Cooling will tear up its 16-year, naming rights deal to pay significantly more than its current fee; and Braves owner Liberty Media will turn over the stadium’s concessions revenue to the county out of the kindness of its corporate heart.

Stadium proponents who claimed the project would be a financial boon to the community chose to ignore the numerous academic studies of past public stadium projects that found stadiums to be financial losers that had no positive effect on the local economy. The supposed economic stimulus of sports stadiums is a myth that has been so thoroughly debunked by economists — a group famous for their penchant to disagree — that a recent survey of the American Economic Association found that 85 percent of its members favored eliminating government subsidies of professional sports franchises.

What about the fans who do spend money to attend games? Aren’t they helping boost the economy?

The problem is that most of those in attendance are Gwinnett residents who likely would be spending their incomes on other local entertainment options if there was no stadium; thus, there is no new infusion of cash into the economy. This is a classic case of the seen versus the unseen: We see fans watching baseball games, but we do not notice the fewer restaurant patrons, empty movie seats and unused bowling lanes at other area establishments.

The Gwinnett stadium isn’t a victim of circumstance; its problems were foreseeable and consistent with past stadium projects. It’s not going to pay for itself any more now than it was on Day 1.

Economist J.C. Bradbury is professor and chairman of the Department of Health, Physical Education, and Sport Science at Kennesaw State University.

3 comments Add your comment

Patrick Edmondson

September 9th, 2011
5:30 pm

The story with the Gwinnett Braves stadium is the same as it always is. Corporate sports convince politicians how profitable it will be to their constituents who will pay for it. Then sweetheart deals result in only the corporation and the politicians enjoying status and privilege of special accommodations at their stadium. Next all are surprised the stadium has not done as well as promised and they hold the area hostage to build a bigger better stadium; or they will take their ball and go home like petulant children. And the next corporate owner and new slate of politicians tell taxpayers how much we will profit by giving financial breaks to the sports corporation. Gwinnett was just more blatant than most. But the process is afoot in Atlanta again.

Stephen

September 9th, 2011
2:01 pm

I largely agree with the piece, but disagree on its leap from revenue effects of the stadium to utility/welfare effects. All of those Gwinnett patrons we see at the game as opposed to bowling allies or restaurants- have they not just demonstrated revealed preference? It’s possible that Gwinnett residents have been unharmed or even made better off despite losing revenue on the stadium, since they’re benefiting from the additional utility of getting to go to the baseball game as opposed to Oasis Bowling or Miss Shuckums.

A Former Student

September 9th, 2011
12:02 pm

I love J.C.’s opinion on events and issues as he is not afraid to say what needs to be said. Another great piece here.