During the process to approve partial taxpayer financing of Atlanta’s new Mercedes Benz stadium, I was perhaps one of the most frequent and outspoken of the critics. Atlanta had and has many infrastructure needs. The decision to tie up a dedicated revenue stream for three decades in order to replace a 20-year-old Georgia Dome didn’t seem to be the highest priority.
I lost the battle. And I moved on. Others, apparently, have not.
One of the benefits of building a new stadium is that favorable consideration is given to that city to host a Super Bowl. Atlanta is now in the running to host “the big game” in either 2019 or 2020. The bid package for review includes a requirement that sales taxes on the ticket sales to the game be waived. This would require legislation to be approved by the Georgia General Assembly this year. This is also giving critics another opportunity to resume fighting lost battles.
The argument of the critics is standard fare for populists, which is the message that is selling this political cycle. “No more giveaways to the billionaire owners and to the NFL”. “Let the NFL pay the sales tax if they want to come here so badly.” The problem with populism is that it sells to people that usually think someone is taking something from them. When sold, the net result is that it usually costs the people who bought this message some money.
Let’s start with very simple math. The sales tax on tickets would be roughly $10 Million which would be waived under the terms of the NFL’s bid package. The state’s portion of this is $5 Million, with the balance going to Fulton County, The City of Atlanta, and MARTA. Every city that is competing with Atlanta already waives their sales taxes for events such as this by law. Georgia and Atlanta do not, putting us at a disadvantage and likely keeping the game out of Atlanta.
If we don’t waive this tax, the NFL is holding the cards and will likely choose one of the other cities like Miami, Tampa, or New Orleans – all who have this exemption Georgia is seeking already in place. That’s just how markets work. The NFL has the power of the decision, and they will likely keep it on their terms.
So the choice is this: If the state holds firm, the state gets $0 in sales tax, and we get no Super Bowl. If we waive the sales taxes only on ticket sales, then the state and local governments get the sales taxes on all the increased sales that surrounds the Super Bowl. This includes not only the merchandise and concessions in the game, but all of the increased restaurant meals, rental cars, hotel stays, and other expenses the couple of hundred thousand tourists and business folk the game brings in over that weekend.
Economic impacts for recent games range from $700 Million on the high side (Arizona) to about $250 Million on the low end (Dallas, with an ice event), but those aren’t the numbers that matter if you’re a purist standing on principle. The numbers that matter are this:
If Atlanta is chosen to host a Super Bowl, the net sales tax increase is projected to be $30 Million. If we don’t waive the ticket fee, we get nothing other than a slow seasonal weekend in February that doesn’t usually draw conventions, fill hotels, or draw area residents into shops, bars, and restaurants.
The investment of $5 Million in waived state sales tax revenue would net the state $15 million in sales tax alone. That doesn’t count any additional hotel taxes, rental car taxes, or income taxes that would also be raised. The state and local coffers would be unambiguously better off.
Will many of Atlanta’s large corporations see a benefit? Sure. But where is the roughly $400 Million of economic impact going to be felt? By bartenders, waiters, restauranteurs, Uber drivers, and the other people who would have an exceptionally good weekend and pocket some extra cash on what would otherwise likely be a cold and quiet few nights.
Legislators have a choice. They may either approve a standard convention waiver that should apply to all large events and are customary to support a convention industry – and in doing so increase the wallets of not only the state and local treasuries but of everyday Georgians alike. Or, they can listen to those that still want to spite a local billionaire in order to win a battle in a war that has already been lost. A battle where the real casualties would not be the net worth of Arthur Blank, but would instead be a loss of incremental income to the state, and to the wallets of many who make a working class living in Atlanta’s hospitality industry.
Charlie Harper is the Executive Director of PolicyBEST, a public policy think tank focused on issues of Business & Economic Development, Education, Science & Medicine, and Transportation. He’s also the publisher of GeorgiaPol.com, a website dedicated to State & Local politics of Georgia.