Large Tax Implications For A New Titans Stadium In Nashville

Photo: Nissan Stadium (home of the Tennessee Titans) in Nashville Photo Credit: PJMixer / CC

The Center Square [By Jon Styf] –

The future of Nashville’s Nissan Stadium, home to the NFL’s Tennessee Titans, will be one of the city’s and state’s biggest tax debates in coming years.

Nashville Metro Council Member At-Large Bob Mendes broke down the upcoming decision-making process, acknowledging the financial details of any stadium rebuild or remodel still are unknown and it is not clear when those details would be clearer.

Axios Nashville reported last week stadium renovation estimates have jumped from $600 million to $1.2 billion, and the city and Titans are now considering the cost of a rebuild instead.

“Together with the Titans, we are evaluating the costs [and] benefits of multiple scenarios,” Nashville Mayor John Cooper tweeted last week. “Revised cost estimates require us to closely review whether a new stadium would be a better long-term financial decision. We won’t settle for anything but the best-case scenario for Nashville.”

The Titans’ lease at the stadium requires the city to provide a “first-class stadium,” but the definition of that remains unclear, Mendes said.

“To make these decisions, for each approach, we need to know the required upfront Metro spending requirement, the difference in long term tax revenue, and the difference in how much city-owned land will be given away,” Mendes wrote this week.

The Titans, for their part, have investigated and outlined stadium needs. Not only have the construction costs risen, but they believe there are more infrastructure needs at the stadium, which opened in 1999, than they anticipated.

“The stadium’s structural frame was built with concrete and needs to be largely replaced with steel,” a Titans statement said. “The mechanical, plumbing, and electrical systems need to be completely replaced. The window system throughout the building is so antiquated that it is not even manufactured anymore.

“All of these new revelations are adding up and moving a renovation price nearly double what we initially anticipated. When you consider the present and future needs of our current stadium, it’s possible that another path, such as a new, modern stadium that could better serve its community’s needs, might be a more responsible option to explore.”

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Mendes said he believes a development on Nashville’s East Bank will be a linchpin to the plan.

“On the one hand, there are many serious, existing needs around the city that could be addressed with a few hundred million dollars of new infrastructure spending,” Mendes wrote. “The only reason the East Bank is going to the top of the list is because the new neighborhood supposedly is needed to create new tax revenue for the stadium. How a taxpayer feels about prioritizing the East Bank for infrastructure spending should depend on how badly they want financing in place for a new stadium compared to other things the infrastructure money could buy.”

The state of Tennessee conceded 50% of the tax revenue from any East Bank development back to the Titans and stadium upgrades during last year’s legislative session. That agreement covered 130 acres Mendes said is Nashville’s property and is “a parking lot now.” Mendes said he assumes the Titans also will want to own some of the land for development and the Titans will want a similar tax deal from the city.

“I’m assuming that a renovation or a new stadium will require at least 50% of the sales tax generated by the new East Bank neighborhood,” Mendes wrote. “In fact, as I understand it, the new neighborhood is a mandatory feature of any stadium deal. I’m told that the new neighborhood is necessary to create sales tax revenue to help finance the stadium.”

The state tax law, which Gov. Bill Lee signed last May, said plans for the 130 acres around the stadium could “include hotels, retail establishments, eating and drinking places, and other similar establishments.” Once those are in place, the annual sales tax amount given back to the team was estimated to be $10 million.

Mendes later added the entire East Bank development is much larger than the parking lot and stadium area.

“The East Bank should be thought of as the entire area from PSC Metals up to Oracle,” Mendes said. “For my post yesterday, I was using a smaller definition and I should have made that clear. I was focusing in yesterday’s post on the stadium and city-owned parking lots because (I think) that is the area where taxes will be captured for the stadium and infrastructure in the immediate area.

“To the extent that the tax capture area were to end up being larger than the current stadium and parking lot footprint, that would add a new dynamic. If that were the proposal, we would have to know that capturing tax dollars from an area that is already developing for one purpose means you are taking them from some other purpose.”

Americans for Prosperity Tennessee Chapter is urging local government officials to not spend billions of taxpayer dollars on the stadium.

“Nashville has more pressing issues than paying billions of dollars to replace a perfectly good stadium for billionaires,” AFP State Director Tori Venable said. “Taxpayer-funded sports arenas are a boondoggle, and Tennesseans know it. I hope city officials recognize this and reject this greedy attempt to spend taxpayer money.”

The Titans, meanwhile, are working on a solution that doesn’t involve money coming directly from Nashville’s general fund.

“We remain committed to our original mission: find an elegant solution to upgrade the stadium to first-class, NFL-quality standards and remove Nashville’s general fund from stadium business once and for all through a re-imagination our current lease structure, which as it stands today, puts the burden of an aging stadium’s costs on the city and Nashville’s general taxpayer,” the Titans’ statement said. “With all this in mind, we need to take a step back and re-evaluate if a stadium renovation is the most responsible option forward and explore other paths.”

Another part of the draw of a new stadium would be luring large events from other sports. The NHL’s Nashville Predators, for example, will host the Tampa Bay Lightning on Saturday at Nissan Stadium.

The city also is a finalist to host World Cup matches in 2026, which recently led to an economic impact report from the Nashville Convention & Visitors Corp on the financial benefits of hosting four soccer games. Sports economists who have studied similar events disagreed with the estimated $700 million impact, however.

New stadiums typically also bid for large events, such as the Super Bowl.

Tax breaks, however, could follow those events as well. Atlanta and its Mercedes-Benz Stadium, which opened in 2017, waived sales taxes on the Super Bowl and the Final Four, and lawmakers in Georgia have proposed a bill to waive taxes on potential tickets for a 2026 World Cup if the city’s host bid is approved.

About the Author: Jon Styf, The Center Square Staff Reporter – Jon Styf is an award-winning editor and reporter who has worked in Illinois, Texas, Wisconsin, Florida and Michigan in local newsrooms over the past 20 years, working for Shaw Media, Hearst and several other companies. Follow Jon on Twitter @JonStyf.