This message is in regard to the stadium project for moving
the Braves to Cobb County. I'm not
opposed to the stadium per se. I do think it's important that everything is
disclosed publicly and that everything is done lawfully.
Cobb Commissioners approved the deal by a vote of 4-1 (Cupid
opposed) after 12 days of consideration. No specifics have been revealed of how
the assessment was done. I sent the following message to the Commissioners recently
and have sent additional messages since asking specific questions.
*Braves Stadium project Evaluation as Rental Property*
Much has been said about transparency in the Braves stadium
project but several matters of importance have not been addressed. I will send
a series of questions over the next few days. By sending only one or two small
questions at a time I hope that there will be minimal
disruption for you as compared to sending a larger number at once. Since all
Commissioners will be voting on these issues, any or all are encouraged to
respond. I will share what you send me with others exactly as you send it. I
prefer that there be no answers that resemble “the lawyers say it’s OK”. The
lawyers don’t vote on it. I think it’s reasonable to expect that all of you
will understand the arrangements and any of you can explain it to the people of
Cobb County.
*Analysis of the Stadium Investment*
We know that you all were forced to decide in very few days
whether the deal with the Braves was or was not good for Cobb County in overall
terms as well as in financial terms. I don’t know how that was done. Since I don’t
know how you examined it, I’ll share my own analysis of the deal in which I
looked at it as an investment in rental property.
In short, I found that the deal is comparable to buying a
house for $200,000 expecting to rent it at $526 per month, with that rental
rate locked in for 30 years. I quickly decided that, as an investment, I wouldn’t
do that.
The deal is this: Cobb County will own a stadium valued at
$672 million. The stadium will be leased to the Braves for 30 years for their
exclusive use.
ALL of the Braves contributions are *rent *as they are
renting the stadium which is to be *owned entirely by Cobb County*. The Braves
do not have ownership in the stadium.
Braves will contribute *rent* :
Land, 15 acres valued at $600,000 per acre, total value $9
million.
Cash up front:
$230 [$230 million minimum, $280
million
possible]
Annual rent: $6.1
million per year for 30 years
To get all the Braves’ money into a common form so they can
be added together, we add the land ($9 million) and cash ($230 million) to get
$239 million. Now, using annuity calculations, we find the *equivalent amount
in monthly payments for 30 years*. [An
interest rate must be assumed. The County expects the rate for bond debt to be
4.75%, so that is used here for calculation.]
$239 million annuitized for 30 years @ 4.75% = *$15,107,059* per year
*$15,107,059 per year for 30 years is equivalent to $239
million in cash
today.*
$15,107,059 is the annual rent payment for 30 years
equivalent to $239 million paid today.
Adding: $15,107,059
+ $6,100,000 (rent actually paid
annually) = $21,207,059
$21,207,059 - Total Annualized Rent Paid by Braves for 30
years*
*Cobb County will own an asset, the stadium valued at $672
million. That asset is rented to the Braves at a fixed annual rate of
$21,207,059 per year for 30 years. *
*Compare this to buying a house for $200,000 and renting it
for $526 per month with no increase for 30 years.*
672,000,000 ÷ 200,000 = 3360
$21,207,059 ÷ 3360 = $6,311 per year
6311 ÷ 12 = *$526/month*
Inflation effects, assuming 2% annual inflation:
With an annual inflation rate of 2%, one dollar collected 30
years in the future will have the buying power of approximately 55 cents today.
Put another way, a payment of $1 received this year would have to rise to $1.81
in year 30 to have the same purchasing power.
If the Braves extend the deal for the five year option they
will be paying a TOTAL of $6.1 million per year in rent as all the fixed rent
was annuitized for the first 30 years.
That would be equivalent to renting the $200,000 house for
*$151 per month*, money with 2014 buying power of about *$83 per month* (2%
annual inflation).
“No matter what they say it's about, it's always about
money" – Bill O'Neil
Source:
Email from Larry Savage, Marietta GA, Subject: Braves Stadium in Cobb County,
May 22, 2014
Comments
Renting a $200,000 house should cost
about $1500 per month, but thanks to the Cobb County Commission, and the
Georgia Legislature, Cobb taxpayers will rent this to the Braves for 10 cents
on the dollar. In 20 years, Cobb
taxpayers will have the opportunity to tear down this stadium and build a new
one for the Braves.
“Go Braves and take them Falcons
with ya” Sue Stanton
Norb Leahy, Dunwoody GA Tea Party
Leader
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