A lotta Falcon money
Arthur Blank was damn near deified in Friday's Atlanta Journal-Constitution, which offered most of its front page to host an adoring press release trumpeting the retired Home Depot mogul's $545 million deal to purchase the Atlanta Falcons.
The announcement followed several days of news leaking from Atlanta insiders -- and several years of attempts by the heirs of Rankin Smith to unload the sadsack franchise so they could divvy up their dad's cash.
The spin doctors worked furiously -- not to get real news out about the sale, but to conceal the one fact they really don't want you to know or guess: It won't be long before Blank will demand a new stadium. If Blank follows the lead set by other pro franchise owners, a morally crippled lot at best, any balking by the public at the idea of a new football pleasure palace will be met with an ultimatum: Give Art what he wants, or say, "Adios, Falcons."
The Georgia Dome, only a decade old, is nonetheless an over-the-hill loser compared to newer NFL stadiums with their turbo-charged revenues. And this deal is all about money.
To understand the gap, consider that the Georgia Dome produces only a paltry $4 million a year for the Falcons, plus some rather meager percentages. The state keeps much of the parking, concessions and signage income -- treasure greedily and totally snatched by most other NFL warlords.
By comparison, the Tampa Bay Buccaneers get everything, and reap about $40 million a year from Raymond James Stadium. Other franchises get even more. Heck, the state of Louisiana provides Saints owner Tom Benson with all of the usual stadium windfalls -- and then gives him another $12 million a year in mad money for, well, for being such a nice guy.
It's those lush fountains of cash that will be demanded by Blank.
Although Blank's Home Depot partner, Bernard Marcus, may have ponied up a $200 million charitable contribution to build an aquarium, the Falcons aren't a philanthropic endeavor. No way, no how.
Major league sports is a business. And it's an enterprise where the skyrocketing net worth of teams, now heading toward $1 billion for outfits such as the New York Yankees and the Washington Redskins, directly depends on extorting new stadiums from state and local governments.
It's simple math. The price Blank has offered Rankin Smith's son, Taylor, for the Falcons isn't a record -- but it's close. Only three deals have topped Blank's ante -- the Redskins ($750 million), the NFL's new expansion Houston Texans ($700 million) and the New York Jets ($635 million). Those stratospheric prices can't be justified by ticket sales, overpriced beer or even the lucrative TV contracts.
The Falcons, according to a September article in Forbes, is the lowest valued NFL franchise, and has an anemic annual operating profit of only $5 million, a third of the league's average. Performance like that won't recoup Blank's investment.
Thus, to make Blank's adventure a happy one, the proposed deal definitely includes provisions for a new taxpayer-paid-for sports palace, according to one of the nation's leading sports financial consultants, who is knowledgeable of the terms of transaction.
In fact, a new stadium is essential. Financial World has commented: "Today a new facility is a necessity rather than a luxury. [A new kind] of improved facility can increase a team's revenues, and therefore its value, through additional sky boxes, concession stands. ... Without a new facility, many owners simply cannot afford to field competitive teams."
The first consultant didn't want to be named, but a second stadium expert and NFL insider, Marc Ganis of Chicago, also confirms that a new stadium is in the Falcons' future.
"Blank's job will be to make the team buzz," Ganis says. "He's going to need to build interest in the team, build the market."
Then, when everyone is feeling warm and fuzzy about the Falcons: Surprise!
The team will pop open its plans to build a new stadium -- which could easily cost $500 million or, considering the way deals are done in Atlanta (every politician, plus every relative and pal of every politician, has to get a cut of the action), the community may be looking at a $1 billion price tag.
"The stadium will be built in the suburbs to the north" of the Perimeter, says the first NFL consultant. "It will be closer to where the fans are," fitting in with the NFL's current game plan of demanding stadiums be built in affluent suburbia and far away from poor, urban cores. The NFL loves blacks on the field, but not living around stadiums.
Underscoring the likelihood that a new stadium is mandated by Blank's purchase are the half-hearted denials. To put the lid on the real news, the AJC teamed up with Falcon owners, old and new. What appeared beginning Friday has been well-scripted propaganda. The AJC obediently asked no tough questions.
For the public, the door was slammed shut on the information. As a Falcons mouthpiece told me, "This is private business, and Mr. Smith isn't giving interviews."
Which, of course, isn't exactly correct. The public has a big stake in the Falcons, not only as fans, but as a community shanghaied into partnership. It's your $214 million that built the Georgia Dome. And, in a reverse rent deal -- the tenant gets paid -- millions annually that could go to real public purposes are used to enrich the Smith family, the overpriced players -- and, now, Blank.
Put another way: Rankin Smith, who died in 1997, paid $8.5 million for the franchise in 1965. If the deal goes through, his family will have recaptured the investment 63 times. That represents an annual increase of about 15 percent each and every year.
What makes that handsome increase possible is the public money. This is blatant redistribution of wealth -- from common citizens to the Falcons' owners.
The 71,228-seat Georgia Dome has many deficits. Parking is atrocious, and tailgate parties, which are considered vital to building attendance, are a challenge. Polls show fans feel the downtown area is unsafe. Domed stadiums -- especially in cities with relatively mild climates -- fail to ignite fans' excitement. Bottom line is that there are a lot of empty seats at Falcons games.
More important, there are only about 5,000 "club" seats at the Georgia Dome -- compared with, say, Raymond James Stadium in Tampa, which has 12,000. Also, no corporation has ever anted the several million dollars a year to plaster its name on the stadium -- and even if the rights were sold, the team wouldn't capture all of the money.
A new suburban stadium will be smaller -- 65,000 seats is a good guess. The NFL wants stadiums to be high-rent operations, with several times the existing posh "club" seating and even more luxurious suites. The team likely will demand pricey multi-year "licenses" in order to qualify for season tickets. Cheap end-zone seats? Hah! Poor schlubs can stay home.
The Falcons not only will get every dime passing through the publicly funded stadium, the team will negotiate ways to be paid for picking taxpayers' pockets.
Key to the deal will be schmoozing state and local politicos. The state owns the Georgia Dome, and the Georgia World Congress Center Authority oversees the stadium. The Falcons have another 18 years on its lease.
Blank's major concern, according to NFL insiders, is finding an escape clause for the current lease. One consultant says this must be accomplished within six years. The team could be liable for close to $200 million if it broke its lease.
"So what everyone will work for is cooperation, not confrontation," the consultant says. Interpreted: The team will walk away from the Georgia Dome with no serious penalty, and the public will get soaked for a new gridiron.
You'll be blasted with a lot of bombast about the value of football teams and stadiums in the near future. Basically, it's exaggeration and, often, mendacity. What you won't hear much of are experts such as Robert Baade, a professor at Lake Forest College in Illinois. In 1994, Baade studied 48 cities, including Atlanta, over a 30-year period. He found only two cities where the presence of sports teams nudged the economy -- Indianapolis (positive) and Baltimore (negative).
Of the 30 cities where there was a change in the number of stadiums or arenas 10 years old or less, 27 areas showed no relationship between the presence of a stadium and any economic benefit to the community. In all three of the remaining cases (St. Louis, San Francisco/Oakland and Washington D.C.), the stadium had a significantly negative impact.
"Sports investments appear to be an economically unsound use of a community's scarce financial resources," Baade concludes.
Underscoring the AJC's information-control role, on Friday, USA Today reported on Blank's deal, and suggested a new stadium was on the horizon. The AJC dismissed that "published report," never revealing the publication so readers could check themselves. To counter the "published report," the AJC provided no facts other than a claim by Falcons minority owner John Imlay. The daily's journalists offered such wording as: "From all indications ..." and "It appears ..." that Blank won't move the team or seek a new stadium.
Perhaps the biggest humiliation for the AJC came just four days before the sale was reported. The newspaper, responding to the storm of rumors about a deal, was told by Taylor Smith that the Falcons weren't for sale and hadn't been sold. "If this team was for sale, if anyone was motivated to sell this team, I would know it," Smith told the AJC. As it turned out, Smith was lying, something at which team owners are adept. The AJC never called Smith on his deceit -- because the newspaper is now part of the whole scheme.
So, when Blank, government officials and the AJC tell you, "Nah, we're not going to hit you up for a stadium," you should:
Hand Art your wallet, bend over and prepare to say, "Ouch!"
Senior Editor John Sugg -- who comments, "Have you noticed how Art Blank looks a lot like the Grinch? Or is it Dracula?" -- can be reached at 404-614-1241.
