By Scott Trubey and Maria Saporta
Friday, May 21, 2010
The Atlanta Falcons want an open-air stadium as a replacement to the 18-year-old Georgia Dome, and they have a site in mind on property just north of the Georgia World Congress Center.
But such a plan may be a Hail Mary pass.
The state authority that owns and operates the 71,000-seat Dome and the nation’s fourth-largest convention center insists it must have an enclosed venue to support the city’s powerful tradeshow industry and remain the hub of SEC Championship football, as well as compete for other blockbuster sports events such as the NCAA Final Four.
If both sides stick to their positions then that would lead to a two-stadium solution, which would be one of the more expensive outcomes.
“A two-stadium approach, intuitively, is the most challenging strategy to consider,” said Frank Poe, the newly minted executive director of the Georgia World Congress Center (GWCC).
A possible compromise could be building a dome with a retractable roof, but both the Falcons and GWCC officials said that would add significant expense to both the building and the operations of a facility.
In interviews with Atlanta Business Chronicle, Falcons owner Arthur Blank and team President Rich McKay said a site at the corner of Simpson Street and Northside Drive fits the team’s priorities for an outdoor venue with tailgate-friendly parking they say will help improve the fan experience.
And an outdoor stadium with natural grass could serve as the venue for a Major League Soccer expansion team, and be the centerpiece for Atlanta’s bid for World Cup soccer.
“An outdoor venue, with respect to football and soccer, is a better fit,” McKay said.
In addition to having to develop a viable business model for two large venues, there also would be other complications in a two-stadium solution. The GWCC would have to buy more land to relocate its truck marshaling yard, the logistical hub for the scores of tractor trailers needed for every convention.
And a new stadium north of the GWCC would also be farther from the two MARTA stations that currently serve the Georgia Dome.
The GWCC is examining a ground-up renovation of the Georgia Dome to bring its concourses, suites and amenities up to date. It could cost half a billion dollars.
But the Falcons, whose lease ends when the original bonds for the facility are repaid — which could be in 2018 or 2019 depending on hotel/motel sales tax revenues — opposes a Dome overhaul.
“In the renovation model, we are not comfortable at all that that would be a solution for [the next] 25 to 30 years,” said McKay, who added that the end result of a nearly ground-up renovation might not be worth the considerable expense.
The Dome has had $55 million in improvements over the past four years.
Both sides insist the process is early, and they remain open to negotiations. But both the Falcons and GWCC officials clearly state their preferences.
Blank said the Falcons want a solution that takes into account the needs of both the GWCC and the franchise.
And McKay said, “We’ve got to hear from our fans.”
Poe, who became the GWCC’s chief on April 1, and Falcons officials have signaled their desire to keep the team downtown. A bill extending the hotel/motel tax that funded the bonds for the Georgia Dome was passed by the state legislature in April and awaits Gov. Sonny Perdue’s signature.
The extension of the 2.75-cent hotel/motel sales tax, Blank said, was a major step, and the team wants to have a clear plan for the future within 12 months.
“I’ve made it clear we would be a substantial investor,” Blank said. “This is a public-private partnership.”
The hotel/motel sales tax would be extended to 2050, provided the Falcons remain at the Georgia Dome or a “successor facility” on World Congress Center property.
The tax generated $16 million in fiscal year 2010, down from $19 million in fiscal 2009 because of the falloff in tourism spending.
A successor facility or Dome overhaul will far exceed the original cost of the Georgia Dome.
The original Dome was constructed for $220 million, and although it is less than 20 years old, it is the fourth-oldest stadium in the National Football League. And Falcons officials have said the current lease, which will end no later than 2020, is no longer favorable to the team.
Atlanta is a top 10 market. But the Falcons rank fourth from the bottom of a 32-team league in annual revenue. Forbes values the team at $872 million — 29th in the league.
The deal the Falcons signed with the state-owned Georgia Dome made sense in 1992. But the majority of NFL teams have renovated their old stadiums or built new ones since then, often entering into far more lucrative public-private partnerships.
When the Dallas Cowboys developed the $1.3 billion Cowboys Stadium, which opened a year ago, owner Jerry Jones and the city of Arlington, Texas, brokered a deal for more than $325 million in bond financing backed by sales tax revenues.
Most NFL teams now expect up to 85 percent of revenue from ticket sales, suites, sponsorships, concessions and parking. The Falcons currently get nowhere near that percentage.
The extension of the tax does not necessarily mean the team would only consider a stadium on the World Congress Center campus, Blank said. Other locations could be considered, but the GWCC location has a built-in advantage because of the hotel/motel tax.
There are many reasons for the Falcons to want a new stadium, including more and larger suites to sell, and other new revenue opportunities.
A new stadium or extensively renovated Georgia Dome could make Atlanta a viable bidder again for the NFL’s biggest prize, the Super Bowl. Atlanta has not played host to the NFL’s championship game since 2000, and city leaders have said a new facility — likely a domed one — was needed for Atlanta to successfully bid again.
McKay, the Falcons president, said the new Meadowlands Stadium in metro New York is a leading candidate for the Super Bowl in 2014, and despite a freak ice storm that marred Atlanta’s Super Bowl in 2000, the Big Peach’s winter weather is far superior to that of the Big Apple.
Blank also covets a professional soccer team, and the Falcons are one of the lead partners in Atlanta’s bid for World Cup action. The stadium, if built, would be designed to play host to a round of World Cup soccer matches if the United States is named the host nation by the Féderátion Internationale de Football Association (FIFA) for tournament play in 2018 or 2022, McKay said.
But another motivator is parking, a major potential revenue generator. The Georgia Dome is limited to 5,264 parking spaces, of which 3,170 are surface spaces.
The lack of surface parking stymies tailgating, a critical part of the fan experience, Blank said.
“The parking situation we have today is not acceptable,” Blank said. “It’s not acceptable to our fans and it’s not acceptable to us.”
The average NFL stadium has nearly 12,000 spaces, and the Falcons would like to at least reach that average figure.
McKay said the Falcons would prefer a sustainable approach to parking, including potentially using grass instead of impervious surfaces.
But any solution to the parking problem would require more land, which would be costly, especially in downtown.
The Simpson Street-Northside Drive site, which houses the GWCC’s truck-marshaling yard, would have to be enlarged substantially. New land to relocate the logistics hub would have to be acquired and developed to support the operations of GWCC, the cornerstone of Atlanta’s $11.4 billion hospitality industry.
“That space would have to be replicated,” Poe said.
Another logistical headache could be access to MARTA. Two MARTA stations — Vine City and the station tied to Philips Arena — are within 1,000 feet of the Georgia Dome. But the Falcons’ preferred site north of the GWCC is at least a half-mile from either transit station.
Both sides say MARTA access is a major consideration in placement of a stadium.
“No question it would be more challenging, but MARTA is still very much within reach,” McKay said of their favored site.
Poe said a new master plan calling for a heavily renovated Dome should be completed in 60 days. A massive overhaul of the existing Dome — which could cost a half-billion dollars — could save the state and Falcons the expense of constructing an open-air stadium and managing two buildings or building a new domed stadium with a retractable roof.
A retractable-roof stadium could top $1 billion to develop, based on recently opened facilities around the NFL, and annual operating costs tend to be 40 percent higher, Falcons officials say.
A two-stadium solution would require keeping both facilities up to date, and the existing Dome would be without the Falcons, which produce about 80 percent of its annual revenues excluding the hotel-motel tax. A new revenue stream would be required, and it is not clear if portions of the hotel/motel sales tax could be used to operate two facilities.
“That’s a high hurdle to cross to go with that approach,” Poe said. “You have to figure out how they co-exist with activities for the Dome and the stadium.”
But Blank and the Falcons disagree.
“The two-stadium solution, we feel, is a viable solution,” Blank said, though he conceded that neither the team nor the state had run the numbers to determine if the Georgia Dome could operate independent of the Falcons.
The team has been through the analysis for a renovated Dome, Blank said, “but we don’t feel like that’s a viable option.”