Coming This Fall: Football… Stadium Financing

Editorial | Bob Mendes

We love football. The Titans are our team. We can’t wait to see Derrick Henry stiff-arming DBs into the first row again. Acknowledging that, let’s talk about the business of paying for a new stadium.

The Titans want, and Mayor Cooper proposes, that Nashville build a new enclosed football-only stadium. We have all seen the incredible multi-billion dollar facilities in Los Angeles, Atlanta, Las Vegas, and elsewhere on television. Sofi Stadium in Los Angeles cost $5 billion, and was built entirely with private money. There was no public spending by the city or state. Mercedes-Benz Stadium in Atlanta cost $1.5 billion and used $214 million in public spending. Most recently Las Vegas opened its $1.97 billion Allegiant Stadium using $750 million of public funds. 1

With the greatest respect to our beloved Titans, the team’s ownership cannot afford to put a billion dollars or more into a new stadium like what we’ve seen in other cities with different ownership. In fact, the team’s President, Burke Nihill, has been clear that “[t]he Adams family is quite literally just putting all of the Adams’ assets in the mix…Things that the family has owned for 50-60 years. They’re being sold, they’re being liquidated to be able to help pay for this contribution. 2 The NFL also has team debt limits in place that prevent teams from becoming overleveraged with loans. 3

Keep in mind that the current stadium lease obligates Metro to maintain the stadium in “first class condition.” The city commissioned a study in 2017 that said this cost was about $300 million through the life of the current lease. The team recently claimed the

obligation is $1.8 billion. It will be important to drill down further on this because the current lease obligation may be viewed by some as a minimum that Metro has to pay in any scenario.

Where does that leave Nashville? I believe we will see the Titans and Mayor Cooper propose a $1.9 to $2.1 billion stadium with more than $1 billion of state and local public tax dollar spending for initial construction and long term capital expenses. This would be the largest appropriation of public tax dollars for a stadium ever in the United States. 4 This public spending is expected to be supported by $500 million of state general obligation bond proceeds, 100% of the state and local sales tax generated in the stadium and from parking, 50% of the state and local sales tax from an adjoining 130 acres, 5 plus a portion of Davidson County’s hotel occupancy taxes. We don’t know the details yet of how the team will finance their share. However, we should remain aware that the Raiders’ share of financing in Las Vegas reportedly included $300 million of personal seat license sales to ticketholders and naming rights. 6

The best information available suggests that the team and the Mayor’s Office will announce the terms of a deal in August or September 2022 with an eye toward introducing the necessary legislation to the Metro Council in October and obtaining approval before the end of 2022. The team wants to commence construction and I suspect they all want it done before Nashville’s August 2023 municipal elections get underfoot.

Heading into the fall, here are some of the moving parts I’m watching: 1. What are the actual terms that are announced?

2. Stadiums always have substantial cost overruns. Who’s paying for that?

3. There will be debate about the Mayor’s claim that the deal won’t impact the “general taxpayer.” I think people will want to explore whether the city and state government can commit more than $1 billion of tax dollars without an impact on taxpayers.

4. What other public benefits (e.g., affordable housing, jobs, etc…) come along with the proposed deal?

5. How does the proposal and its dedicated revenue streams for construction and long term expenses compare to Metro’s current lease obligations?

As a member of the Metro Council, I’ve been following these developments closely 7 and will continue to do so. Feel free to email me 8 with any questions or comments.

BOB MENDES has served as an At Large Member of Nashville’s Metro Council since 2015 and is the chair of the Council’s East Bank Stadium Committee. Mendes Practices at Sherrard Roe Voigt & Harbison, PLC.

Endnotes

1 For information about these and other stadiumdeals, see Watson, S. Pay to play: How 21 NFLstadiums have been financed, Bufallo News (Sept.5, 2021), available at https://buffalonews.com/news/local/pay-to-play-how-21-nfl-stadiums-have-been-financed/article_319a3686-0c28-11ec-a568-db-cbdd817498.html.

2 Styf, J., Titans CEO says Nashville would owe nearly $2B toward Nissan Stadium renovations under current lease, The Center Square. (May 19, 2022), available at https://www.thecentersquare. com/tennessee/titans-ceo-says-nashville-wouldowe-nearly-2b-toward-nissan-stadium-renovationsunder-current-lease/article_72097a56-d793-11ec- 8804-573cb0ef99d0.html.

3 Wickersham, S., Sources: NFL, teams agree to raise debt limits $150M for each club. ESPN. (2020, May 12, 2020), available at https://www.espn.com/ nfl/story/_/id/29165716/sources-nfl-teams-agreeraise-debt-limits-150m-club.

4 The largest state and local use of tax dollars on a stadium in history is $850 million for the recently approved $1.4 billion new football stadium for the Buffalo Bills. See Watson, S., Tan, S. (2022, April 3), How the costs break down for new Buffalo Bills stadium. Buffalo News. https://buffalonews.com/news/ local/who-pays-for-what-here-is-how-the-costs- break-down-for-new-buffalo-bills/article_532872e2- ae9c-11ec-bd57-5f0465cd6118.html.

5 For 130 acres, think of that as a square area of about one-half mile on each side surrounding the stadium, or more likely, a rectangular area of about three-quarters of a mile by one-quarter mile. The proposal most likely will be to put hotels, bars, and restaurants – all large sales tax generators – into the 130 acres surrounding the stadium and any adjacent parking.

6 Candee, A., FAQ on PSLs: How personal seat licenses for Raiders stadium will work, Las Vegas Sun, (Aug. 24, 2017), available at https://lasvegassun. com/news/2017/aug/24/faq-psls-personal-seat-licenses-raiders-stadium/.

7 I have posted about these issues frequently this year and expect to continue as new information emerges. My posts are collected here: https://www. mendesfornashville.com/news/category/Stadium

8 bob.mendes@nashville.gov