By Maria Saporta and Amy Wenk
The Atlanta Falcons and the Georgia World Congress Center Authority have agreed to the terms of a business deal to build a new retractable roof stadium.
The GWCCA board approved the non-binding business terms in a special called meeting Monday morning.
In a press briefing before the board meeting, officials from the GWCCA and the Atlanta Falcons explained that the agreement calls for the state convention center to own the building, but for the football team to assume all operations and receive all revenues during the 30-year term of the business deal.
The Falcons will pay GWCCA a rent of $2.5 million per year, with a two percent increase each year.
“It is a good day for the city and the state,” said Atlanta Mayor Kasim Reed in response to the GWCCA board approval of the business terms. “I support the construction of a new stadium, and I think it’s just part of the process. I’m pleased they were able to come to an agreement today.”
Now, both parties will be working to develop a legally-binding Memorandum of Understanding, which they hope to finalize by mid-January. By that time, the Falcons and GWCCA will need to decide on a site.
Currently, there are two sites under consideration — one about a half-mile north of the Georgia Dome along Northside Drive and the other directly south of the Georgia Dome.
Frank Poe, executive director of the GWCCA, also announced Monday morning that within 24 hours, they will be issuing a request for qualifications from architectural firms interested in designing the new stadium. The goal is to select an architect sometime in February.
Currently, it is estimated that the new stadium will cost about $1 billion, and that about $300 million of that will be covered by the current hotel-motel tax. The Atlanta Falcons and the National Football League would be responsible for the balance of the project’s costs.
“The next 30 days will be busy,” said Rich McKay, president and CEO of the Atlanta Falcons. The parties would like to agree to an MOU by mid-January because it is expected that they will need to get approval from the General Assembly to increase the bond limit for the public funding from $200 million to $300 million.
If the legislature fails to increase that bond limit, Poe said: “It would pretty much put the brakes on (the stadium deal)”
McKay said that one of the greatest areas of complexity in negotiating the business terms has been determining how to balance the interests of the football team with an ongoing enterprise — the GWCCA.
Currently, the GWCCA books events — from sporting competitions to conventions — in the Georgia Dome. Determining the priorities of those events and being able to accommodate all the various parties in the new stadium have added “complexities” to the negotiations.
The Atlanta Falcons have been committed to building a new stadium because they have said that the existing business agreement in the Georgia Dome have put the Atlanta team at a disadvantage when compared to other NFL teams.
McKay explained that when the existing Georgia Dome opened in 1992, the business deal was considered attractive among football teams.
But that quickly changed in the mid-1990s when more and more stadiums were being built with public funds while sports teams were able to keep most if not all of the revenues generated by the facility.
Most recent deals, however, have been structured with about 65 percent public funding and 35 percent private funding.
“This deal is not that,” McKay said. “I wish it was, but it’s not.”
When asked about the site, both GWCCA and the Falcons said that they were keeping their options open.
“We are comfortable on either site,” McKay said. “Both have a different set of good and bad issues to deal with.”
The deal brewing on a new $1 billion stadium for the Atlanta Falcons is drastically different from the deal at the Georgia Dome — and potentially more advantageous for the Falcons.
“It’s really apples and oranges,” said Poe, who oversees the GWCC and the Georgia Dome.
The GWCCA operates and maintains the Georgia Dome,which was built with 100 percent public funds. It nets about $2 million to $3 million in revenue each year from the dome, Poe said in the Monday morning press briefing.
If a new stadium is built, that structure would look very different. First, it is being built with two-thirds private investment. The Falcons would operate and maintain the stadium.
The team would buy license rights for 30 years for the facility, paying an annual rent of $2.5 million per year to the GWCCA, with a two percent increase per year.
The Falcons would keep all revenue streams from the new stadium, including tickets, premium seating, food and beverage, sponsorships, naming rights and some parking revenue.
The new deal would put the Falcons in a position to possibly generate more revenue, as it tries to attract more events, such as the Super Bowl.
“We sit at the bottom of the list as far as stadium deals,” said Rich McKay, president and CEO of the Falcons. “This deal puts us in a position where we control our own destiny.”
A new stadium could increase the value of the franchise, which today ranks No. 28 among the 32 NFL teams with an estimated worth of $837 million and profit of $15 million.
“We’ve operated as a tenant,” McKay said. “In a new facility, we will run that experience … We are in the business of trying to provide a top-flight experience for our customer.”
But ultimately, McKay said the deal “only makes sense if we maintain and grow the events.”