The Atlanta Braves envision revenue streams in renting out property around new stadium.
ATLANTA -- It is a real estate deal, as much as anything. J.C. Bradbury, an economist with Kennesaw State University, said he saw it coming late Monday afternoon when the Braves announced they had purchased property 13 miles to the north in Cobb County and were moving the team out of Atlanta after 50 years.
The Braves would use a portion of the 60 acres of land bought to build a stadium. And the rest?
When Cobb County released some details of its share of funding for $300 million of the $672 million project, the Braves released a statement calling the campus "our neighboring mixed-use development." That is, for the club to rent out.
It is a revenue stream the Braves desperately needed. Even in an era when clubs are trying to build downtown to be closer to the business district, the Braves felt they had no choice but to move to the suburbs.
At a time when other clubs are enriching themselves with local television rights deals, the Braves are locked into a below average local TV contract. The executive team that runs the Braves for the team's owner, Liberty Media, could not expand its payroll sufficiently with that TV deal. The Braves were going to fall behind as salaries climbed.
The club, for years, tried to work with the city of Atlanta to control the land around Turner Field, develop it and attract more business. The talks failed because the city had other, more pressing infrastructure needs. The team saw no choice but to move.
A formal vote is expected to be taken Nov. 26 by the Cobb Commission, and it seems like a formality unless there is a full revolt in the county.
Andrew Zimbalist, an economist at Smith College, said there still are a number of questions about the deal and the value of the 60 acres the Braves purchased. Was the club steered toward a sweet deal? Are they getting a break on property taxes?
"There are all sorts of things that have not been laid out here," Zimbalist said.
In some respects Cobb County makes out well
The $672 million price tag includes infrastructure costs, such as roads and parking. "That price sounds a little bit unrealistic. It sounds low to me," said Zimbalist, meaning cost overruns could happen.
Lee said the partnership was a "win-win" for the Braves and Cobb County. He is right in some respects.
On average, Zimbalist said, teams spend about 35% of development costs. The Braves are spending 55% and are taking on 90% of the upfront costs. The Washington Nationals, for example, covered none of the costs of their new stadium, Bradbury said.
The Braves are sharing $6 million in revenue, which is also unusual, Zimbalist said. That figure is usually smaller.
The most onerous part of the document released by Cobb was the "reallocation of existing property tax revenues" of $8.6 million to help pay down the county's $276 million bond investment in the stadium. Lee said no organization or entity in Cobb County is going to find its budget has been reduced, or "reallocated," to pay for the stadium. He said that revenue is coming available because a bond to pay for county green space will be paid off.
"It makes it sound like it is free money. It is not free money," Zimbalist said. "It is money that could have been used to reduce taxes or improve county services. It's a cost to the taxpayers of Cobb County. It's $8.6 million."
What has not been answered is whether the $8.6 million to pay the stadium bonds is equal to the bond money becoming available after the green space bond is paid off.
Cobb County will add a $3-a-night tax on hotels and motels in the district where the stadium will be built. There will also be a new car rental tax.
In addition, Cobb will raise the tax rates for businesses inside the stadium's district to help pay for the 30-year bonds to fund the stadium.
"Though I don't think the stadium will generate sufficient economic activity to offset the cost, Cobb residents are going to benefit and will likely be willing to pay for it," said Bradbury, who lives in Cobb County.
The Georgia Tea Party is not as confident. Chairman JD Van Brink said he will wait to examine the deal with county leaders before the organization weighs in with its political clout.
What is grating to some people is that Liberty Media CEO John Malone is worth $6.7 billion, according to a September 2013 report in Forbes. Shouldn't he build his own stadium?
"People feel, well, he has this treasure chest and should be relaxed about it, but that's not how our system works," Zimbalist said. "John Malone got rich because he made good investments. He wants to make a profit."
Within that $6 million the Braves will pay Cobb County is a $1.5 million share of the naming rights of the stadium. It is not certain how much the Braves can get for that, but Bradbury said Target Field, home of the Minnesota Twins, supposedly fetched $4 million-$6 million a year in naming rights
In the end, the Cobb County-Braves partnership was a real estate deal -- and about location, location, location.
"They are giving up something what everyone else has wanted," Zimbalist said, "and that's to have a stadium downtown near the business district." Zimbalist said.
PHOTOS: Braves' stadiums through the years