In March, the Forsyth County Commission approved a $2.6 billion entertainment development that will include an arena suitable for a National Hockey League franchise. Though the NHL has said it is not in expansion mode, the development, called The Gathering at South Forsyth, seems to be a good plan.
My colleague Matthew Kastel and I were asked to examine the project, a state-of-the-art mixed-used development that aims to become the entertainment hub of North Georgia, to determine if the project would provide economic value. We concluded that it will, based on both sound economic projections and a comparison to similar projects.
Credit: Handout
Credit: Handout
First, why were we asked for our expert opinion? I have been a sport management professor for more than 30 years. My specialization is sport law, sport finance and sport facility management. I have worked with venues around the world and am the lead author of a sports management textbook. Matthew Kastel is the stadium manager for Oriole Park at Camden Yards in Baltimore, Md. He also is the immediate past president of the Stadium Managers Association, the premiere organization for large stadiums used by professional and collegiate sport teams around the world. Together, we have more than 60 years of high-level experience in the sport venue industry and are teaching the next generation of venue managers.
In addition to a billion-dollar arena, the project includes 1.6 million square feet of office/retail space, two or three hotels (around 500 rooms), a practice hockey rink, a fire/police station and structured parking. The expected economic impact would be significant, including $37.3 million in annual tax revenue. The project is expected to generate an estimated 9,972 jobs.
The Ernst & Young economic impact report developed for the county provided an annual economic impact of $272 million for the arena alone, which was only $4 million less than a separate and independent study conducted by the developer. The project’s construction period is slated to generate $3.3 billion in economic output. The Gathering at South Forsyth will directly pay for itself with the tax revenue it generates. The increase in local property values will be icing on the cake for Forsyth residents and businesses. A halo effect from the mixed-use development will positively impact surrounding businesses, including gas stations, restaurants and retailers.
New sport investments sometimes pay off for the local and regional communities. The Battery generated $2.6 million in 2023 tax revenue for Cobb County. That more than covered the county’s $1.75 million general fund contribution to cover debt service. SAP Center in San Jose, Calif., home to the NHL’s Sharks, opened in 2014. A 2017 study commissioned by the city of San Jose and conducted by JLL, an independent real estate and investment management firm, found the project generated more than $600 million in new tax revenue for the city in its first three years. Nationals Park in Washington, D.C., home to MLB’s Washington Nationals generated more than $2 billion in new tax revenue for the city and spurred $10 billion in surrounding development. Golden 1 Center in Sacramento, Calif., home to the Sacramento Kings, opened in 2016. Three years later, the team produced an economic impact study that showed that the arena generated more than $1.3 billion in economic activity in its first three years.
There is no one perfect economic impact study. However, after reviewing the numbers raised by the Ernst & Young analysis (conducted and paid for by Forsyth County, not by the developers), we felt the numbers are relatively conservative. This project was not overhyped.
Many projects have floundered by being anchored to a downtown corridor. The pandemic led many people to start working remotely, and people abandoned downtowns. In fact, some cities, such as Seattle, have seen close to 60% of their downtown storefronts vacated. Building The Gathering in a suburban location diminishes the risk that might exist with a downtown location.
The trend for several years has been destination locations. Areas where there are multiple activities on one footprint. Think Patriots Place, AT&T Stadium and The Battery. They have created an economic engine where someone can park and do numerous activities throughout the day without having to get back in the car until it’s time to go home.
The Gathering at South Forsyth has the benefit of being anchored by a 20,000-capacity arena. A football stadium is much harder to justify because of the limited event days. Even with a football team and concerts, a large stadium might host 25 event days a year. A baseball stadium might have 82 home games and several other events each year. An arena, on the other hand, can sometimes attract close to 200 event days a year. This creates greater opportunities to generate ticket revenue, taxes, sales and employment opportunities.
The rise in popularity of NHL hockey will also add to the success of this mixed-use development if an expansion team is awarded. In addition, there has been significant growth in the youth sport competitive marketplace, such as travel teams and championships. Through the right marketing efforts, the region can become an attractive hub for youth sports, leveraging park and recreation facilities, SoFo Sports Park and The Gathering at South Forsyth. All the ingredients are there: hotel rooms, major airports, tourist attractions and a strong sports environment.
Not only will The Gathering at South Forsyth be a positive economic engine for the region, it will do so by taking care to enhance but not disrupt the community the people of Forsyth County love and call home.
Gil Fried is a professor in the College of Business at the University of West Florida.
