Black Friday is just around the corner and massive storewide sales are aimed at convincing people that newest iPhone 5 is so much better than the iPhone 5 that was released not that long ago.
Anyone who has leased a car can attest that upgrading to a newer model every few years does wonders for your self-esteem.
Leasing a new car and getting the latest smartphone may make sense for some consumers, but what about when it comes to a baseball stadium?
The Atlanta Braves announced this week that they are purchasing 60 acres of land in nearby Cobb County, a suburb of Atlanta, with the intention of building a new stadium set to open in 2017. What is the price tag for this endeavor? The move will cost a cool $672 million, with Cobb County taxpayers reportedly footing the bill for approximately $450 million.
It is not unusual for teams to upgrade and build a new stadium, but the Atlanta Braves are about to set a dangerous precedent in the United States.
Turner Field, opened in 1996 as Atlanta's Olympic Stadium, has been home to the Braves since 1997 and now the team, after only 16 years in the ballpark, is planning to leave.
The Braves claim it would cost $150 million to maintain Turner Field and another $200 million to enhance the stadium experience. From a business prospective, it makes sense if you can obtain a brand new stadium for less than the cost to retrofit a new one, especially when the government is willing to underwrite a majority of the capital costs.
Since Turner Field opened, Major League Baseball teams have built 16 new stadiums, with enhanced activities to attract spectators to the ball park. The new trend in stadium construction includes less seating capacity and more restaurants and games.
In making such a bold plan to leave a stadium that is less than 20 years old, one would hope that John Schuerholz, President of Baseball Operations for the Braves and club owner Liberty Media, calculated the political fallout.
Interestingly, some analysts who have closely followed the negotiations between the city of Atlanta and the Braves hypothesize that the move is nothing more than a negotiating tactic to get the city to pay for traffic mitigation around the stadium. That's one possibility, but the stadium is surrounded by highways with easy access. The real attraction for the Braves is the fact they can build a new stadium with only $200 million down.
If the Braves are successful in leaving the City for the suburbs and walk away from a stadium only 20 years old, that could open the door for other ball clubs to do the same. Stadiums then become the equivalent to car leases, where every 20 years they trade in for a new one. There's only one problem with this strategy. In car leasing there is always someone else willing to purchase that used car. However, in baseball there are little to no interested buyers.
Imagine a future, in the year 2024, when the Yankees, Mets, Nationals, Twins and Cardinals, after less than 20 years in their stadiums, decide that they need new ballparks. Taxpayers, who collectively spent more than $4 billion on these five stadiums, would then be stuck with the facilities.
What's left is a perfectly good baseball stadium with freshly cut grass and no one to play on it. Oh, and a loan that still requires payment from the city.
Department stores spend millions of dollars every year to prevent theft and improve their balance sheets. This holiday season, the taxpayers of Atlanta and Cobb County should look into ways to protect their bottom line.