Government loves economic losers and may fund another one in Georgia
For whatever reason, governments struggle to escape the draw of an economic loser. Sure, everyone loves an underdog story, but the inclination to repeatedly invest in obvious boondoggles is more than a little troubling.
Georgia is no exception to this phenomenon either. The home of my beloved Braves—the Battery—is a clear example. Cobb County contributed $300 million toward building the stadium, which was supposed to be a solid investment in the county’s future. Years later, a Kennesaw State University (KSU) study tells another story.
“Stadium-induced tax revenue has fallen well short of covering Cobb’s public investment in the stadium, costing taxpayers nearly $15 million per year to service stadium debt and fund operations, which translates to approximately $50 per Cobb household,” reads the report. While I’ve spent plenty of time at the Battery and enjoy it there, Cobb County’s investment was demonstrably imprudent, but history may soon repeat itself.
“A Georgia-based auto dealer and first-time developer announced plans Monday to pursue a $2 billion mixed-use campus and arena in Forsyth County with the goal of bringing [an] NHL franchise back to metro Atlanta,” according to the Atlanta Journal Constitution (AJC).
The project is called “The Gathering at South Forsyth.” It involves plans to redevelop 100 acres of land to build a large hotel, over a million square feet of commercial space, a community center, residential units, a fire station, and an 18,000-seat arena reportedly to house an NHL team. The Gathering at South Forsyth would be a bigger development than the Battery.
County officials seem giddy about the concept, and to hockey fans and many of those in south Forsyth, this may sound like an exciting concept—at least at first. However, after giving it more thought, the proposal should elicit a collective groan from suspicious Georgians and taxpayer watchdogs.
Buried within the AJC article are some of the most important lines for taxpayers to read: “Details on the project’s financing and whether state or county financing would be involved were not immediately available.” That information is too important to leave out of the public debate.
If the concept’s author plans to bankroll the development using only private funding and refuses to accept subsidies and sweetheart deals from the government, then more power to him. He should feel free to do whatever he pleases with his own money—so long as it is legal. If that’s his plan, then I hope the endeavor proceeds swimmingly, but there’s reason to believe that this isn’t the case.
Mega projects like stadiums often depend on hefty public investment. In fact, the Braves stadium seems like a downright steal compared to the Falcons’ Mercedes-Benz Stadium, which drew around $700 million in public funding. So if taxpayers believe that they are unlikely to be called on to provide some form of financial assistance to aid the construction of a possible NHL stadium, then I’m afraid I’ve got some bad news for you.
Public investment in such construction could take various forms, but whatever the method, the return on investment promises to be underwhelming for taxpayers. “The large and growing peer-reviewed economics literature on the economic impacts of stadiums, arenas, sports franchises, and sport megaevents has consistently found no substantial evidence of increased jobs, incomes, or tax revenues for a community associated with any of these things,” per the KSU study.
Moreover, there are questions over whether stadium subsidies are a moral use of taxpayer money. As the Berkeley Economic Review noted, “It is important to consider that public financing is largely helping billionaires pay less for a service that they can afford.” Put simply, it isn’t the role of the government to give the mega-wealthy handouts. It seems like education and public safety would be a better place to dump hundreds of millions of dollars.
Putting all of this research aside, would an NHL team thrive in Georgia? Under the right leadership, it is certainly possible, but don’t forget that Atlanta had a hockey team before—the Thrashers. Thanks to financial struggles and flagging attendance, the team fled for Canada where the franchise still remains. It seems like this could happen again.
In the coming weeks, I presume more information will trickle out regarding the planned development and how much taxpayers will have to dole out. It’s certainly plausible that the Gathering at South Forsyth will rely on 100 percent private funding and financing, but I am skeptical. If it requires a dime of taxpayer money, public officials should consider Cobb County’s experience with the Braves stadium and learn to eschew economic losers.