The hot dogs at the gleaming new $1.6bn home of the Atlanta Falcons may be cheap, but the way major sports drain tax dollars is an enduring scandal

The Atlanta Falcons’ new stadium, which hosts its fourth ever NFL game on Sunday, is a technological marvel: the iris-shaped retractable roof; the mammoth video “halo board” that rings the ceiling aperture; the concession stands that sell hot dogs for a throwback $2 price. And, best of all, the $1.6bn edifice cost Georgia taxpayers a relatively inexpensive $200m.

Or the stadium cost the public at least $700m, more than any other building in NFL history. Definitely one of those.

The funding saga for Mercedes-Benz Stadium points up the elusive nature of US public sports subsidies in the modern age. A couple of decades back, a team owner could just go before a city council or state legislature and ask for a check. That’s how the Georgia Dome, the Falcons’ previous home scheduled to meet the wrecking ball in November at age 25, was built: a $214m gift from the state treasury. These days, though, elected officials are slightly warier of handing over a simple wad of bills – and sports owners have grown more clever at obscuring their demands.

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The Falcons story begins in early 2013, when team owner Arthur Blank was seeking $300m in state hotel tax money toward a new stadium to keep up with the Dallas Cowboys’ recently opened $1.15bn home (itself aided by $325m in city sales taxes). Running into public criticism, he announced a compromise: He’d settle for a mere $200m, covering the rest out of his own pocket.

But there was a catch. Thanks to a clause buried deep in the stadium agreement, Blank would get to convert this initial subsidy into a gift that kept on giving: Any hotel-tax money collected after the first $200m would be put into a “waterfall fund” that the team could use for future “maintenance, operation and improvement” of the new stadium. Since those would normally be team costs, this meant Blank would get to stick taxpayers with the bills for future upgrades to his new playpen.

Blank eventually acknowledged the present value of all this future money would be “close to $700 million.” Add in a handful of other goodies – $30 million in sales tax rebates on construction materials, $24m in city-provided land, a pedestrian bridge that was supposed to cost $12 million but ended up coming in at almost twice that – and the final public tab could end up clearing three-quarters of a billion dollars.

If there’s one lesson that concerned citizens and sports fans should take from all this, it’s to check the fine print. When University of Michigan urban planning professor Judith Grant Long conducted an exhaustive study of the total public expense on sports venues built in recent years, she found hidden costs added 40% on average to the public’s official price tag. (One of the more memorable cases: the New York Yankees’ new stadium, initially sold as being entirely privately funded, ended up costing the city and state more than $800m to relocate parks, building parking garages, and provide other sundries.)

Facebook Twitter Pinterest Falcons owner Arthur Blank cuts the ribbon opening Mercedes-Benz Stadium as NFL commissioner Roger Goodell looks on. Photograph: Dale Zanine/USA Today Sports

In exchange, the public gets to experience flashier video boards and more ergonomic cupholders – and, almost invariably, heftier ticket prices. As for providing an economic boost to their host cities, though, 30 years of academic studies have found little if any upside: whether you tally sales taxes, income taxes, or per-capita income, they all remain stubbornly flat when a new venue opens.

“There is absolutely no way Georgia will earn back $700m, at least in the lifetime of any local taxpayer,” says West Virginia University economist Brad Humphreys. Money spent at stadiums, he notes, is mostly redirected from elsewhere in the same area so if Atlantans spend more at Falcons games, that’s offset by them spending less at local restaurants or at the movies. And while Blank will reap the rewards of new luxury suites and all the ads on those giant video boards, Atlanta won’t see any of this revenue: The Falcons are paying neither rent nor property taxes on the stadium.

This – socialize the costs, privatize the profits – has been the common scenario in US sports ever since the late 1980s, when team owners, following in the footsteps of auto manufacturers and computer chip plants, discovered they could extract tax breaks and even direct cash grants from mayors eager to promote “economic development.” (The timing was anything but random: Cuts by President Reagan to federal funding of cities had led local officials to try anything and everything in search of an economic boost.) Though these stadium gambits aren’t always successful, when they are, the payoffs are bigger than ever: The Falcons’ record payday will soon be eclipsed by the $750m (plus likely the cost of new roads and other infrastructure) that Nevada is bestowing on Oakland Raiders owner Mark Davis for a new stadium in Las Vegas.

There have been some more hopeful signs of late that the stadium subsidy game may be facing, at the very least, some new pushback: The mayor of Anaheim successfully rejected a demand from Los Angeles Angels owner Arte Moreno for $245m worth of free land; Seattle has pitted multiple arena developers against each other to get the best deal possible; the mayor of Calgary has insisted that any plan for a new hockey arena allow taxpayers to recoup their costs. But then there are the Falcons and Raiders deals, and undoubtedly more lined up to follow. So, Atlanta football fans, eat all the cheap hot dogs you can – you’re already paying for them.