Anchoring Retail and Hospitality to Sports Stadiums: Does It Work?

The Braves described the Battery Atlanta to Commercial Observer as “a sports and entertainment experience at the intersection of Interstates 75 and 285 in the Cumberland area. [It] offers an unprecedented entertainment experience 365 days a year, not just on game days.” The 2 million-square-foot, mixed-use development includes restaurants, bars and games such as bowling and mechanical bull riding, according to the team. It also has stores and a 4,000-seat live music venue.

The complex is owned by Braves Development Company, which in turn is owned by Atlanta Braves Holdings, a parent company that owns the ballclub and that itself is owned by media and entertainment giant Liberty Media.

Bob Ott, who was a Cobb County commissioner for 12 years, said the county governing board had been trying all that time to attract development to that area. Only after the ballpark was approved did the long-sought development arrive.

“It’s not just that site,” said Ott, who along with the late commission chairman Tim Lee led the drive to lure the Braves to Cobb from Downtown Atlanta. “It’s the whole surrounding area. [I live] under three miles from the stadium and, if you want to do a three-mile circle around that stadium development, lots of stuff has come in there. Restaurants. We couldn’t get restaurants to survive on Powers Ferry Road, and now we have new restaurants opening. There’s been three or four in the last three months.”

Now the Tampa Bay Rays — whose home has been the dingy Tropicana Field since the MLB franchise started in 1998 — have a plan for a new 30,000-seat ballpark that will follow “the example set by the Atlanta Braves,” according to the Wall Street Journal. The new park will anchor “a massive redevelopment project that would put the new stadium at the center of a multi-use residential and commerce district in the heart of St. Petersburg.”

And, in Flushing, Queens, home of the New York Mets, owner Steve Cohen may be trying to reverse-engineer such a development. Last year he presented a plan to erect 1,100 affordable apartments and a new school on land across the street from Citi Field. The area was once known as the Iron Triangle, filled with body shops and other automotive repair facilities. Cohen has also applied to open a casino in the area around the ballpark, and there are plans for a separate soccer stadium in the area. 

All of which begs the question: Is the Braves’ ballpark concept worthy of being a model for other teams and cities to follow?

To J.C. Bradbury, a professor of economics at the Cobb-based Kennesaw State University, the answer is a hard no.

“The Battery didn’t work,” Bradbury said in an email. “I see no reason a similar design in St. Petersburg would work.”

Bradbury is the author of a 98-page report, published in March of last year, which found among other things that Truist Park and its surroundings — far from stimulating Cobb’s economy — instead are costing taxpayers about $50 per resident per year to service stadium debt and fund operations. That’s $15 million annually for the county as a whole.  Contacted earlier this month, Bradbury said that the passage of time has not cured the situation, and he remains an opponent of the project.

“The evidence is clear that Truist Park has failed as an economic development project,” he wrote in the report. “It is important that local leaders acknowledge the reality of the project’s negative returns and running deficit, and other communities should heed the lesson.”

Cobb County property value growth, whether near the stadium or all over the county, has been typical for the Atlanta region. The region has benefited from booming employment, which means the Battery and its individual parts have had no outsize influence on the county’s $57 billion economy, Bradbury wrote. He also found that Cobb taxpayers are on the hook for police and security when events at Truist draw large crowds.

A Rays spokeswoman declined to comment, but referred Commercial Observer to the team’s website, which contains a rundown of that team’s plan. The rundown shows an 8 million-square-foot development with 4,800 residential units, a quarter of them affordable; 1.4 million square feet of office and medical space; 750,000 square feet of retail; 750 hotel rooms; a 4,000-seat performance venue; a 100,000-square-foot conference and meeting space; 50,000 square feet for community groups; and 14 acres of open space besides the ballpark. Called the Gas Plant area after a gas plant that once operated there, the plan places the cost at more than $6 billion. Hines is the developer. 

The Rays’ site does not identify how costs would be divided between the team and public entities such as the state, Pinellas County (where St. Petersburg is located) and the City of St. Petersburg. In an Oct. 13 writeup of a Pinellas County commissioners meeting, the Tampa Bay Times reported that negotiations on a term sheet were ongoing and that some of the cost of the stadium would come from the county’s tourist tax fund, a 6 percent levy on hotel stays and short-term rentals.

Ott, the former county commissioner, said the Bradbury report was myopic and misguided in its take on the Braves’ complex.

“There was a cooperative plan between the Braves and the county. The Braves delivered what they said they would deliver, and it has been financially successful, contrary to what he said,’’ said Ott. “There are five funding sources for the stadium, one of which was county funds. In the beginning, it was $8.6 million of county funds that went toward servicing the debt. One of the things I put in place in the [memorandum of understanding] was that as revenue increased that number had to come down. My understanding is that in 2022 revenue coming in was such that none of that $8.6 million — none of that — was coming from the general fund anymore, because the other funding sources were paying the debt.”

Even as the stadium cost went up — according to the Bradbury report, original cost estimates were $622 million to $672 million — Cobb County’s contribution was capped at $300 million, Ott said.

In a report that the Braves franchise commissioned, Smith College economics professor Andrew Zimbalist, an outspoken critic of the multimillion-dollar sports venue industry, said that, between 1970 and 2010, the median public contribution to professional sports stadiums was 79.6 percent. At Truist, the public share was 45 percent, not including the $1 billion-plus that the Braves have invested in area real estate.

“It’s been a net fiscal plus for Cobb County,” Zimbalist said in a phone interview.

A Braves spokesperson echoed that sentiment in an email to CO. “Truist Park and Battery Atlanta are widely recognized as the most successful sports venue and mixed-use development of our generation, and is a transformational project for public-private partnerships with municipalities. We are extremely proud of our relationship with Cobb County and have delivered exceptional value to its residents while also providing all visitors and fans a destination for making memories with family and friends.” 

Atlanta’s office market could use the help. Vacancy rates are soaring and companies are trying to sublease excess space, a trend that a recent Wall Street Journal piece blamed at least partially on rising interest rates. The region was unlike New York, where companies bidded up offices to have a presence in Manhattan below 59th Street. In Atlanta, there is no individual market or neighborhood seen as compelling. Companies therefore demanded new state-of-the-art offices in concentric circles radiating out from the city.

Commercial real estate brokers describe the Battery as something of an oasis in a desert. Audrey Giguere, Cushman & Wakefield (CWK)’s Atlanta research manager, said the Cumberland submarket, which includes the Battery, had a 20 percent office vacancy rate, which is actually pretty good by Atlanta standards. She said that share was lower than the Atlanta metropolitan area’s overall vacancy — 23.2 percent in the second quarter — and that Cumberland was actually one of the strongest submarkets in the entire metropolitan area.

Even though the Cumberland area is quite small, Giguere said it made up 20 percent of the office leasing activity in the third quarter.

“It’s a pretty extraordinary submarket,” she said. “It is in our suburban area, but it performs like it might be in our CBD. There’s so many options, not just for people who want to go for a Braves game, but people who want to go to dinner. There’s retail, chef-driven restaurants; things that make it a wonderful place.”  

One obvious difference between what the Atlanta Braves have done and what the Tampa Bay Rays are trying to do is that the Rays hope to re-energize a part of the St. Petersburg market that they are already in. The Braves moved after the 2016 season from Downtown Atlanta to a new outpost in the city’s northwest suburbs. From 1997 to 2016, the team’s home was Turner Field, which had been the central venue of the 1996 Olympics, and was then remodeled for baseball.

For the Rays and the people who run St. Petersburg, they have to hope that their development will hold up against a similar one built on the Tampa side of the bay, called the Water Street campus, said Josh Faircloth, C&W’s research manager for central and northern Florida. That project, ironically enough, is centered around the Amalie Arena, where the National Hockey League’s Tampa Bay Lightning play.

“They’re kind of expecting the same thing,” Faircloth said, “with all the mixed-use, the restaurants, apartments, things that bring people in. “

For many politicians, a ballclub and a venue are trophies, symbols to voters that they did something to attract or retain big-time sports. A certain segment of voters are sports fans, and getting and keeping a team is something that gives them pride. For them, the numbers are meaningless. To this day, Brooklynites argue over who was more responsible for losing the Brooklyn Dodgers to Los Angeles — the team’s team-owner Walter O’Malley or New York infrastructure czar Robert Moses.

The Rays, of course, suffered widespread embarrassment earlier this month when the team attracted only 19,704 and 20,198 fans to a ballpark with a maximum capacity of 42,735 for two postseason games with the Texas Rangers, both of which the Rays lost. Still, the team has now qualified for the postseason five years in a row, and won American League pennants in 2008 and 2020, earning plaudits for fielding a contending team year after year despite playing in a small, low-revenue market and in an underproductive stadium.

The new ballpark would be the smallest venue in Major League Baseball.