The Georgia Dome (“Dome”) has been the home of the National Football League (“NFL”) Atlanta Falcons since 1992.[1] On December 10, 2012, the Georgia World Congress Center Authority approved the blueprint for the terms of a New Stadium to replace the Dome.[2] On March 18, 2013, the Atlanta Falcons and the City of Atlanta agreed to build a new downtown stadium and the City Council voted 11-4 in favor of use of a City hotel/motel taxes to pay $200 million towards construction costs and costs maintaining and operating the New Stadium through 2050. [3] On August 24, 2015 it was announced that Mercedes-Benz USA had entered into a naming rights deal and that the official name of the New Stadium would be Mercedes-Benz Stadium.[4] The owner of the Mercedes-Benz Stadium will continue to be the Georgia World Congress Center Authority.[5] Ground was broken on May 19, 2014.[6] The Mercedes-Benz Stadium will be the home of the NFL Atlanta Falcons and the Atlanta United AFC, an expansion team of Major League Soccer (“MLS”).[7] It is the hope to ultimately host the NFL Super Bowl in 2019 in Atlanta.[8]
The Mercedes-Benz Stadium is likely to be ready for occupancy for the 2017 NFL season.[9] The Mercedes-Benz Stadium has raised the bar and will compete with “Jerry’s World,”[10] home to the Dallas Cowboys. The Mercedes-Benz Stadium is described as an iconic landmark for the City of Atlanta.[11] The design of the Mercedes-Benz Stadium drew inspiration from the Atlanta Falcon’s team logo and created a falcon-like exterior that utilizes the latest innovative and transparent building materials.[12] Inspired by Oculus in the Ancient Roman Pantheon, the Mercedes-Benz Stadium’s unique roof opening will provide tremendous flexibility in hosting a wide variety of events.[13] Eight unique roof panels can open in less than eight minutes creating a camera lens like effect that exposes the inside of the facility to the open air on game and event days.[14] The pinwheel shaped roof was created by 360 Architecture (acquired by HOK).[15] The Mercedes-Benz Stadium will feature a triangular translucent panel that will open to create a Falcon wing-like exterior.[16]
A first of its kind, a true game changer at nearly five stories tall and 1100 linear feet in diameter, the Mercedes-Benz Stadium’s 360 degree HD video halo board will not only be the largest video board in the NFL, but in the world.[17] The Mercedes-Benz Stadium will feature the highest levels of environmental sustainability, including LEED certification, sustainable building material, zero waste facility, water conservation, renewable energy, energy usage reduction – to name a few. The Mercedes-Benz Stadium will be equipped with a Tech Lounge and have all the elements of a smart stadium environment connected through IBM network technologies.[18]
The Atlanta Falcons are owned by Arthur Blank, co-founder of Home Depot, who has an estimated net worth of $2.5 billion.[19] In February of 2002, Blank purchased the Atlanta Falcons franchise for an approximate cost of $545 million.[20] Blank also paid a $70 million expansion fee in 2014 to bring the next MLS team to Atlanta.[21]
What follows is the general transactional review of the Memorandum of Understanding between the Geo L. Smith II Georgia Wood Congress Center Authority (“GWCCA”) and the Atlanta Falcons for the construction of the Mercedes-Benz Stadium[22]:
- The parties to the various agreements include:
- Geo. L. Smith II Georgia World Congress Center Authority (the “GWCCA” or “Authority”)
- Atlanta Falcons Stadium Company, LLC (“StadCo”) (a wholly-owned subsidiary of the Falcons)
- Atlanta Falcons Football Club, LLC (the “Falcons”) (the Falcons are a guarantor of all of StadCo’s obligations described below)
- The Atlanta Development Authority (d/b/a Invest Atlanta) (“Invest Atlanta”) (bond issuer)
- City of Atlanta (“City”) (provider of hotel motel tax revenue for repayment of the bonds and certain other accounts described below)
- New Stadium Project:
- Construction of a new operable roof, state-of-the-art, multi-purpose stadium to be the home field of the Falcons (the “New Stadium Project” or “NSP”), the successor facility to the Georgia Dome.
- It is the goal to have the NSP completed for the 2017 NFL season.
- Material Authority Provisions:
- The contribution to NSP Costs is limited to the bond proceeds received from the Invest Atlanta bond issue ($200 million), the NSP site and the Herndon Homes land, and the net proceeds from the sale of seat rights sold through NSP Opening.
- Private Contribution: All NSP costs in excess of the Public Contribution to be paid by StadCo.
- Additional Private Contributions:
- Up to $50,000,000 for infrastructure costs to be paid by StadCo.
- $15,000,000 contribution from Arthur M. Blank Family Foundation for NSP Neighborhood Catalyst Fund
- Additional Public Contributions: $15,000,000 in tax allocation district dollars from Invest Atlanta for community investment.
- StadCo is solely responsible for all NSP Cost overruns.
- The Authority will own the NSP site and the stadium.
- The Georgia Dome will be demolished.
- The Authority may redevelop up to 60,000 square feet on the Georgia Dome site.
- The Authority will have approval rights over all Material Design Elements of the NSP and the selection of the Lead Architect and General Contractor.
- License from GWCCA to StadCo: GWCCA will own the NSP and will grant StadCo the right to license its use for 30 years (and up to three (3) five-year renewal terms) for an annual fee of $2.5 million with 2% annual escalators. The Club will guarantee the obligations of StadCo under the license.
- The Falcons will enter into a Non-Relocation Agreement coextensive with the License term and guarantee all of StadCo’s obligations.
- Non-Relocation Agreement: GWCCA, the Club and Invest Atlanta would enter into a Non-Relocation Agreement, co-terminus with the license, with the following proposed terms:
- Cross-Default: Cross-defaulted with the License and the Club sublicense from StadCo.
- Obligation: To play all home games in the NSP (except as requested by NFL).
- Public Remedies: All specific performance and equitable remedies including, without limitation, TRO, preliminary and permanent injunction and mandamus and Alternative Remedies set forth below.
- Alternative Remedies (at option of the Public): Liquidated damages in an amount to be determined, but sufficient to repay the HMT Revenue Bonds and to reimburse Public for loss of all public benefits associated with Club home games played at NSP for remainder of License (and not as penalty or forfeiture).
- MBE/FBE GOALS: The Falcons have committed to participate in an Equal Business Opportunity (EBO) Plan that will include a minimum goal of at least 31% participation by MBE/FBE in connection with the design and construction of the NSP.
- O&M Agreement: GWCCA and the City would enter into the Hotel Motel Tax Operating and Maintenance Agreement, pursuant to which the City would agree that all HMT revenues not required under the Funding Agreement to provide for the payment in full of the HMT Revenue Bonds (including appropriate reserves) shall be deposited with a separate GWCCA HMT Fund Custodian, where such funds shall be applied to pay for any costs relating to the construction and operation of the NSP, as provided in the HMT law. The application of such surplus HMT revenues would be governed by the terms of a separate License Agreement between GWCCA and StadCo, the general terms of which are embodied within the MOU.
- The Authority will maintain and control the master booking calendar for the GWCCA Campus, including the NSP.
- The Authority will continue as event manager for all Georgia Dome Legacy Events transitioned to the NSP, and will have new stadium usage rights for other events.
- The Authority and StadCo will develop a site coordination agreement and parking agreement to coordinate all NSP and GWCCA Campus activity.
- StadCo will be responsible for all operation, maintenance, and capital improvement costs necessary to satisfy the Quality Operations Standard. StadCo may use available surplus hotel/motel tax proceeds to offset such costs.
- The Authority will have budgetary approval over StadCo’s capital improvement plans for the NSP.
- StadCo will reimburse the Authority up to $2.5 million in to-be-incurred professional fees and costs.
According to one source, the public’s contribution is more than just the $200 million in construction costs supported by a hotel/motel tax. The additional costs include:
- Previously established costs include $200 million in up-front construction costs, $30 million in construction sales tax rebates, and $24 million in land costs, for a total of $254 million.
- Once the first $200 million in public stadium bonds were paid off, anything left over of the Falcons’ share of the city’s 7% hotel-motel tax — 39.3% of the tax proceeds, according to the latest MOU released Friday — “will be applied for the maintenance, operation and improvement” of the new stadium. The MOU doesn’t put a total cap on this annual subsidy, but from the chart of past hotel-motel tax collections, we can see that the Falcons’ share of the hotel-motel taxes is currently about $17 million a year.
- Under the MOU, the hotel-motel tax funding for the Falcons would be extended through the year 2050. Thirty-seven years’ worth of $17 million payments equals $629 million. [23]
The Mercedes-Benz Stadium is a continuation of a trend where there is a greater infusion of private capital into the stadium equation, where owners are contributing a larger portion toward the stadium development costs. The NFL is helping those owners through the G4 Loan program and fans are helping to fund their new stadium by purchasing personal seat licenses. So the trend toward private funding has involved the components of the sale of seat licenses, the utilization of proceeds from naming rights and corporate sponsorships, the NFL’s G4 Fund, suite leases, and the utilization of contractually obligated income – advertising, sponsorship, and signage revenue, private equity, investors, and commercial debt, rental income, stadium user fees, parking revenue, vendor-supplier trade agreements, and integrated partnerships.
| Stadiums that have opened since 2009 are heavily privately funded:[24] | ||||
| Stadium | Year | Total Cost* | Private Funding | Public Funding |
| Cowboys Stadium Dallas Cowboys |
2009 | $1,194.0 | $750.0/63% | $444.0/37% |
| MetLife Stadium Giants/Jets |
2010 | $1,600.0 | $1,600.0/100% | $000.0/0% |
| San Francisco 49ers | 2015 | $987.0 | $873.0/88% | $114.0/12% |
| *costs in millions | ||||
The new Minnesota Vikings stadium has an approximate construction cost of $1.027 billion. More than $525 million or nearly 52% of the stadium will be paid for by private funds made up of a contribution of Vikings’ private financing and equity and Minnesota Sports Facilities Authority’s sale of stadium builders’ licenses. The Vikings’ private financing and equity includes certain NFL financing in the form of a loan repaid by stadium revenues.[25]
If the Mercedes Benz Stadium ultimately costs $1.4 billion and the public contribution is limited to $200 million that translates to an 86% private and 14% public contribution equation.
[1] http://gadome.com/about/Default.aspx
[2] http://www.ajc.com/news/news/gwcca-approves-falcons-stadium-blueprint/nTRYP/
[3] http://www.ajc.com/news/news/local/key-stadium-vote-could-come-today/nWwwt/
[4] http://www.atlantafalcons.com/news/new-stadium/article-1/Mercedes-Benz-Named-Partner-of-New-Stadium/bded0da1-6b84-4fb0-b548-3ebb8ce36322
[5] http://www.ajc.com/news/news/local/key-stadium-vote-could-come-today/nWwwt/
[6] http://www.ajc.com/news/sports/football/at-stadium-groundbreaking-blank-lobbies-for-a-supe/nfzg3/
[7] Id.
[8] http://www.ajc.com/news/sports/football/at-stadium-groundbreaking-blank-lobbies-for-a-supe/nfzg3/
[9] http://mercedesbenzstadium.com/fast-facts/
[10] http://www.thepostgame.com/blog/futuresport/201504/atlanta-falcons-new-stadium-ibm-partner-technology-nfl-super-bowl
[11] http://mercedesbenzstadium.com/overview/
[12] Id.
[13] http://mercedesbenzstadium.com/overview/
[14] Id.
[15] http://www.si.com/soccer/planet-futbol/2014/04/16/atlanta-mls-expansion-stadium-falcons-arthur-blank
[16] http://www.forbes.com/sites/maurybrown/2015/01/15/video-of-new-atlanta-falcons-stadium-design-is-a-jaw-dropper/
[17] http://mercedesbenzstadium.com/overview/
[18] Id.
[19] http://www.forbes.com/profile/arthur-blank/
[20] Id.
[21] Id.
[22] http://www.gwcc.com/about/stadium/reports/Overview_Document.pdf , http://www.atlantaga.gov/Modules/ShowDocument.aspx?documentid=7103
[23] http://www.fieldofschemes.com/2013/03/18/4735/falcons-stadium-cost-to-taxpayers-counting-hidden-subsidies-554-million/
[24] https://cbsminnesota.files.wordpress.com/2011/12/nfl-funding-summary-12-2-11.pdf
[25] http://www.vikings.com/stadium/new-stadium/faq.html#cost