By Maria Saporta
Published in the Atlanta Business Chronicle on Friday, November 9, 2012
As the Atlanta Falcons and the Georgia World Congress Center Authority continue negotiating toward an agreement on a new retractable-roof stadium, the question must be asked — what if the deal falls through.
Although it is not something team owners or city and state officials want to talk about, the Atlanta Falcons would have options.
The current agreement calls for the Atlanta Falcons to continue playing at the Georgia Dome until all the bonds are paid off. That is expected to happen between 2017 and 2018. But it is also possible that the Atlanta Falcons could pay off those bonds early and be free to move to another city or to another part of metro Atlanta.
For example, in late September, the Los Angeles City Council approved a $1.2 billion plan to build a downtown football stadium. It has been nearly two decades since Los Angeles has had a professional football team — both the Rams and the Raiders left the city in 1994.
So the National Football League has a real opportunity to bring a team back to the second-most-populous metro area in the country. Because the deal for a stadium in downtown Los Angeles is moving forward, all the city needs is a team.
The NFL would have two options — to add another football team, expanding from 32 to 33 teams, or to approve the relocation of an existing team that is not encumbered with a lease keeping it in its current location. It just so happens that the Atlanta Falcons easily could become one of the few unencumbered teams in the NFL.
Asked about whether the NFL would consider adding another team franchise, Commissioner Roger Goodell was non-committal.
“Right now, expansion is not something we have discussed,” Goodell said while he was in Atlanta on Nov. 5. “Right now the focus is to find a stadium solution [in Los Angeles].”
But Goodell also implied that it’s never good to take an existing team for granted.
“The community has the ability to control that — to make sure the team is successful on a local basis,” Goodell said about preventing the Falcons from leaving town. He did say that after meeting with Gov. Nathan Deal and Atlanta Mayor Kasim Reed, he was impressed with the process that had been put in place to build a new stadium.
He also said it’s important for the city and the state to address any concerns that exist, “which is what I think this community is doing, which is very smart.”
People close to Atlanta Falcons’ owner Arthur Blank say he is committed to Atlanta and that his preference is to locate the stadium in downtown Atlanta.
But if a deal with the GWCCA were to fall apart, it is more likely that Blank would explore options to build a new open air stadium somewhere else in the Atlanta region than to relocate to another city.
Currently, the bonds on the Georgia Dome are being paid by a portion of the hotel-motel taxes that are collected in the city of Atlanta. The state legislature passed a bill a couple of years ago to extend the tax only if a new stadium is built on Georgia World Congress Center property. The hotel-motel tax also could go toward renovating the Georgia Dome.
It is estimated that the hotel-motel tax would generate about $300 million to help repay bonds on a retractable roof stadium, estimated to cost about $1 billion. Blank and the Falcons have said they would be responsible for the private-sector cost of the project — expected to be about $700 million.
The cost of a retractable roof adds at least $200 million to the cost of building an open air stadium. To be part of the GWCC and part of the convention center complex, it would have to either be a closed stadium or one with a retractable roof.
In other words, the Atlanta Falcons could forgo building a stadium on GWCC land, choose to build an open air facility at another location and have a cost difference of $100 million rather than $300 million.
But right now, it appears that all the sides are working together to build a new stadium south of the Georgia Dome.
It is expected that the two parties could agree on a non-binding term sheet within the next couple of weeks and have the legally binding Memo of Understanding signed by the end of the year.
“I am hopeful,” Blank said on Nov. 5 after a meeting with Goodell, Deal and Reed. “It was really just a status meeting for the mayor and the governor both — to make sure they understand where we are in the process. It’s a complicated transaction. And we’re trying to make it a win-win for everybody.”
Blank went on to say that “the mayor and the governor are both supportive of the project. They continue to give us guidance on steps we need to go through. We are in a good place.”
Frank Poe, executive director of the Georgia World Congress Center, had briefed Deal on Nov. 2 about all the issues involved.
“I think we are pretty far along,” Poe said. “We still have a couple of items to tweak, and then we need to review it with our board.”
Once an agreement is reached between GWCCA and the Atlanta Falcons, the stadium deal could still fall apart.
There could be a move at the General Assembly to rescind the agreement to extend the hotel-motel tax for building a new stadium. The state also will need to increase the GWCC’s bonding capacity to help with the project financing.
Some community leaders have questioned whether there is a need for a new stadium, arguing that the Georgia Dome is more than adequate.
But Goodell said it is important to remember that Atlanta is competing with other markets that have made significant investments in their NFL facilities.
“To get a Super Bowl back to Atlanta, you need to have a stadium that’s appealing to fans but also brings in the most revenue,” Goodell said.
Currently, the Atlanta Falcons rank 28th among the 32 NFL teams in the revenue it generates. That’s largely because of the current agreement that exists between the Falcons and the Georgia Dome.
Also, independent reviews estimate the value of the Atlanta Falcons team is 30th out of 32 teams. Again, the Atlanta Falcons believe a new stadium is key to increasing the value of the team.
As Goodell said: “Nothing brings a community together like a football team.”