Proposed stadium deal has Tennessee taxpayers on hook for much of $2.1 billion
Published 5:00 pm Tuesday, October 18, 2022
The Center Square
After announcing a deal to build a new Titans stadium that will cost at least $2.1 billion, the next step for Metro Nashville in the approval process will be to present the deal to the city’s East Bank Stadium Committee at 4:30 p.m. on Oct. 26.
The committee has become a clearinghouse of information on the stadium deal, lease obligations, bonding process and all of the particulars. Officials from the negotiating team for Mayor John Cooper’s office will present and then take questions on the deal.
Ultimately, Nashville’s council will be asked to approve five items with the stadium project, including a stadium development agreement, Titans lease, guaranty, non-relocation agreement and an intergovernmental agreement between Metro and the Nashville Sports Authority
The deal, as announced Monday, includes a $500 million payment from Tennessee, $760 million from revenue bonds from the Metro Sports Authority and another $840 million from the Titans, a National Football League loan and Personal Seat License sales at the new stadium.
That announcement did not include, however, if the Titans would be able to use sales tax funds to repay the NFL loan or the money it puts into the initial deal but that tax fund can be used for future and ongoing maintenance at the new stadium along with the demolition of the current Nissan Stadium.
The sports authority will attempt to get revenue bonds. Officials hope the city won’t have to backstop the bonds that would be based upon state and local sales taxes that the team will get to keep for sales inside the stadium and half of those taxes on a yet-to-be-determined development plot outside the stadium. The announced deal did not state if those tax funds sent to the Titans will be capped.
Economist J.C. Bradbury of Kennesaw State University in Georgia has pointed out that economic research on sports stadiums consistently shows that new venues divert spending from other areas of a city or county but do not create new spending. Using sales tax instead of general fund dollars is not different, despite Cooper’s claims, because those sales tax dollars are collected to fund the city and state’s general funds.
“My biggest question re stadium at this point: Renovation is 900mm build + 900mm maintain,” said council member Sean Parker, a member of the stadium committee. “Superdome is 2.2bn + ??? in maintenance for 30 years?”
While the new stadium deal includes more state tax funds, the mayor’s office announced the stadium particulars separately from the proposed East Bank development outside of the stadium, which mayor’s office officials previously said could receive public tax increment financing funds from the city.
“And now we finally know that the Titans and the East Bank are fundamentally the same,” said council member Freddie O’Connell. “We have a $500m line item for East Bank infrastructure in the Capital Improvements Budget. It’s going to be hard to know the full price tag of this deal and how it’s being paid for.
“We have liability. It’s been hard to assess how much. It will be hard to future proof. (How do we prevent a repeat of this in 20 years?) And we have a lot of priorities to address that will remain unresolved after this deal or some version of it gets completed.”
The East Bank Stadium Committee is scheduled to hear an analysis of the city’s current legal lease obligations to the Titans from Venue Solutions Group at a meeting at 5:30 p.m. on Nov. 9 and could re-schedule another previously planned meeting where it will hear from economists on the value of a publicly funded sports stadium.
John Mozena, president of the Center for Economic Accountability, commented that the deal was the “worst decision in Nashville since someone thought it’d be a good idea to let pedal bars piloted by drunk bachelorettes take over Broadway on any given Saturday night.”
Mozena’s group highlighted that the Titans deal would be the 12th billion-dollar-plus state or local subsidy deal of 2022 in the United States, four times the previous high mark for a calendar year. That number was nine last month.
“Stadiums suck at economic development since they spend all but a few days a year dark and silent, contributing nothing to the surrounding community,” Mozena said. “If you want proof, consider that last season, the Titans hosted 617,000 fans. An average-sized supermarket serves more customers in a year than that. Plus, the supermarket offers better jobs.”