July 2, 2022

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Sports Really Satisfies

The City Is Steadily Rolling Toward a Pricey New Domed Football Stadium | Metropolitik

Metro government is caught in a thicket of legal and financial obligations that could cost the city more than a billion dollars stemming from the city’s 1996 lease with the Tennessee Titans.

The lease, signed under former Mayor Phil Bredesen on terms favorable to the professional football team, is a relic of the city’s past — a time when Nashville sought the cachet of a major U.S. city. It put Nashville on the hook to guarantee a stadium in “First Class Condition,” an ambiguously defined term that rests on a standard set by comparable sports facilities around the country. Now, the two options considered by current Mayor John Cooper require Metro to put billions of dollars of public money toward the team’s facility: either a completely gutted Nissan Stadium, or a brand-new domed arena neighboring the current stadium.

Stadiums comparable to the Nissan facilities have been torn down or overhauled in the past 26 years, pushing that First Class Condition standard (and the city’s associated financial obligations) higher and higher. The city stopped its upkeep reimbursements at some point in the past few years — Nissan Stadium was mentioned once in a decade’s worth of capital improvements budgets, when the city listed $25 million for miscellaneous improvements in 2016. The Titans say they’ve incurred another $27 million in maintenance, for which they haven’t been reimbursed. The team factored back payments into its estimation of the city’s total obligations, a whopping $1.8 billion through 2039 — a number that finally came out at a May 19 Metro Sports Authority meeting.

In May, the mayor released Metro’s Capital Improvements Budget, pinning a new stadium at $2 billion. After 72 hours and a few questions from councilmembers, Metro finance indicated it had made a “clerical error,” and the number settled at $2.2 billion.

Much of the deal has moved along at a pace set by the Titans. As a for-profit company that sells football, the team naturally has a strong interest in a shiny new domed stadium. Though ostensibly interested in spending as little taxpayer money as possible, the city has agreed not to contest the Titans’ numbers with its own due diligence, essentially accepting the team’s astronomical estimates.

The day the Titans lobbed Metro’s billion-dollar obligation at the Metro Sports Authority, the mayor dropped a press release that ended in surrender: “We have no plans to commission another study to tell us what we already know: renovating the stadium would cost Nashvillians hundreds of millions of dollars.”

Rather than play hardball (conduct minimal Nissan upgrades, challenge the Titans to sue) or play softball (respond with its own renovation estimates), the city has chosen to not really play ball at all. Metro, represented in negotiations by the mayor’s office, has deferred to the team at major junctures in stadium talks. According to a tweet from Cooper’s former scheduler Ariel Hughes, the Titans have had a standing Monday meeting with the mayor since the fall. In early May, news broke that the Titans had decided on an architecture firm to do concept designs for a new stadium.

The mayor’s office has focused on communicating the advantages of a new stadium while minimizing its multibillion-dollar price tag. Cooper’s main argument rests in a complicated financing plan that will piece together state and local tax revenue, a $500 million gift from the state and a still-undetermined contribution from the Titans expected to be around $700 million. If this is close to right, the city will attempt to close a $1.2 billion gap with a combination of hospitality tax revenue and a special sales tax district. This district would route state and local sales taxes toward stadium debt payments — all taxes collected inside the stadium (even for non-Titans events, like, for instance, a World Cup) and half of all taxes collected in the 130 acres surrounding the stadium, currently an industrial floodplain.

The mayor reduced the complexities of the plan in a carefully worded Tennessean guest column on May 12: “I will not sell public land, raise the sales tax, or spend property tax dollars to fund this stadium,” he wrote. Councilmember At-Large Bob Mendes clarified on his blog that the plan would spend quite a bit of sales taxes, a preview for the kind of scrutiny any deal might face when its various components move through the Metro Council later this year. Cooper also argues that the stadium will unburden Metro’s general fund, the financial heartbeat of the city that currently backs Nissan Stadium debt. Rather, the new plan will burden the general fund indirectly, creating time-sensitive pressure to quickly develop the East Bank into a stadium district that can generate enough sales tax to back $1 billion in debt. Already, the mayor has planned another $1 billion in infrastructure upgrades to redevelop the East Bank. The city has just one financially comparable project on its capital improvements books — Clean Water Nashville, an overhaul of Nashville’s sewer system that started more than 30 years ago.

Economists are in rare agreement as to how poorly sports teams perform as public investments as compared to transit, infrastructure and schools. According to experts, sports stadiums siphon up spending and rearrange tax revenue rather than attracting outside spending or generating new tax revenue. City leaders have sold a new stadium on the merits of hosting high-profile events. In reality, the mayoral administration has been backed into a corner by a decades-old lease and remains deferential to the negotiating party sitting across the table, seeing a multibillion-dollar opportunity to develop a new commercial district downtown.