By David Pendered
Atlanta, host of the 2019 Super Bowl, can take heart in a report issued Thursday by Moody’s Investor Service. Moody’s predicted that the Super Bowl in Houston will raise tax revenues that are pledged to repay bonds issued to build NRG Stadium.
The report about Houston is good news for Atlanta. The stadiums in Atlanta and Houston are both financed with taxes on hotel rooms. Thus, good news for Houston could well spill over to Atlanta when its hosts the 2019 Super Bowl.
History suggests Atlanta has reason to expect a tax windfall from the Super Bowl. Moody’s reviewed tax collections in New Orleans and determined the bowl contributed to increased collections in two years but not in 2002, which was played five months after the 9/11 attacks that dampened the travel and leisure sector.
Moody’s estimated that this year’s Super Bowl will generate an additional $1 million on taxes charged on hotel rooms. The extra money represents 3.5 percent of the entire $28.5 million in hotel taxes collected in 2016.
Moody’s said the tax on rental vehicles is expected to increase by the same proportion. The report did not provide the sum collected via the car rental tax.
Atlanta issued $200 million in bonds to help fund construction of the Mercedes-Benz Stadium. The bonds are to be repaid with proceeds of the tax on hotel and motel rooms.
In Houston, the NRG Stadium was built in 2002 with $62.9 million in bonds issued by Harris County. The bonds are to be repaid with proceeds of the hotel tax, according to a Dec. 6, 2016 report by Fitch Ratings.
The Houston bonds have another source of financing – the car rental tax. This funding source is not part of the financing deal in Atlanta.
Atlanta Mayor Kasim Reed opted to use the city’s car rental tax to help pay for the renovation of Philips Arena. The deal was aimed at keeping the Atlanta Hawks basketball team in Atlanta.
Terms of the Philips Arena deal call for Atlanta to provide $142.5 million and the Hawks to provide $50 million. Atlanta intends to repay bonds with $110 million from an extension of the existing car rental tax; $12.5 million from the sale of Turner Field; and $20 million from the future sale of surplus property.
Here’s how Moody’s analysts describe the method of their calculation:
- “We increased the occupancy rate and the average daily room rate for the five days leading up to the Super Bowl. In both the Super Bowl and normal cases, we assumed 80,000 total available hotel rooms for five days and the 2 percent HOT on all room revenues.
- “In the normal case, we assumed a 62 percent occupancy rate – which was the 2016 average for the region – and the 2016 average daily room rate (ADR) of $104.65.
- “For the Super Bowl case, we increased the figures to a 90 percent occupancy rate for five days and an average daily room rate of $209.30, which is twice the 2016 average. If Super Bowl demand leads to even higher occupancy and prices, then we would expect HOT receipts to climb higher.”
Atlanta’s Super Bowl LIII will be the third big game hosted by Atlanta. It will be the first Super Bowl to be played in the Mercedes-Benz Stadium, which is slated to open for the 2017 season.
The NFL announced Atlanta at its 2016 Spring League Meeting. Falcons owner Arthur Blank was quoted in a story by nfl.com as saying:
“Mercedes-Benz Stadium will be an outstanding venue for the game and with all of the attractions and hotel rooms within a mile of the stadium this is going to be the most walkable Super Bowl ever,” team owner Arthur Blank said in a statement posted on mercedesbenzstadium.com. “Atlanta has truly transformed since it last hosted the Super Bowl in 2000 and I’m grateful to the NFL and team owners for this very special opportunity.”