The Center Square [By Jon Styf] –
Metro Nashville announced a deal on Monday with the Tennessee Titans to build an estimated $2.1 billion new stadium.
Stadium cost estimates were previously about $2.2 billion with $1.5 billion in public funding.
The announced deal was light on details on the specifics on how each funding mechanism will operate. While Nashville officials attempted to frame the deal as a win for city taxpayers, the deal as announced includes at least $1.26 billion in taxpayer funds.
Of that, $500 million will come directly from the state of Tennessee.
“The Titans just hit the lottery,” said John C. Mozena, president of the Center for Economic Accountability. “No, seriously. In this year’s budget, the state lottery is projected to bring in $499 million. That funds things like college scholarships and grants for foster children, military veterans of the Iraq and Afghanistan wars, low-income adults getting their first degrees and many other worthwhile students. So yeah, $500 million is one heck of a jackpot for the Titans.”
Those funds come from sales and use taxes at the new stadium and half of those taxes in a yet-to-be-determined 130 acre, mixed-use development district outside of the stadium that would receive its own set of taxpayer benefits.
Metro Nashville’s press release claimed that $840 million of the funding for a new stadium would come from the Titans, the National Football League and personal seat licenses for tickets at a new stadium. But it was unclear how much of the funding deemed to be from the Titans was actually public funds.
Overages on stadium costs and ongoing maintenance, for example, were to be Titans obligations but are planned to be paid for with sales tax funds from the stadium, stadium district and a 1 percentage point increase in Davidson County’s hotel-motel tax. Metro Nashville’s math led to a claim that only 60% of the stadium would be publicly funded.
“The comparison to ‘other small markets’ is a total non-sequitur talking point pushed out by stadium boosters,” economist J.C. Bradbury said in response. “Giving away $1.5 billion in tax dollars has the opportunity cost of whatever you could have bought with $1.5 billion.”
Bradbury has repeated that sales taxes, which are the main funding mechanism for the state of Tennessee, are the same as general fund dollars. He also has pointed out that all of the economic research on stadium projects has shown that spending at new stadiums and districts is not new spending, as Cooper claimed, but instead the diversion of spending from other areas of a city or state.
“‘Residents’ tax dollars can go to core city services because the Titans have stepped up to cover future ongoing maintenance of the new stadium,” Cooper claimed. “I’d also like to thank Governor Lee and our partners at the state legislature for recognizing the Titans’ enormous economic contributions.”
The stadium plan will still need to be approved, in parts, by Metro Nashville’s council. Cooper deflected questions about whether the state would pull its $500 million lump sum contribution for the stadium, approved in this year’s budget, after Nashville’s council did not approve a measure to bring the Republican National Committee to Nashville.
In making the announcement, Nashville said that Venue Solutions Group — hired for at least $250,000 to analyze the city’s current stadium lease obligations — had come back with an estimate of $1.75 billion to $1.95 billion for that obligation.
“Since it was obvious the expert hired by the Mayor’s Office would issue a report supporting the Mayor’s position, I was clear in the summer that any report must include a reconciliation showing how the consultant came up with $300 million in 2017 and a bazillion dollars now,” said Nashville Council member Bob Mendes, Chair of Nashville’s East Bank Stadium Committee. “Until we get the full report with a reconciliation showing how $300 million became $1.75 billion to $1.95 billion, it’s hard to take this ‘preliminary findings’ one-pager too seriously.”
Mendes’ committee is scheduled to now meet over the next few months, including a meeting where it will bring in economists to discuss the financial mechanisms of sports stadiums, before the council votes on bonds for the stadium.
Titans CEO Burke Nihill added that PSLs will be sold for the new stadium but would not say what the mechanisms would be for those who hold PSLs at the current Nissan Stadium.
Mendes pointed out that it isn’t extremely clear at this point how far the city and state’s sales tax obligations will go toward future maintenance at a new stadium. That same fund will also be used for the demolition of the current Nissan Stadium.
“Burke Nihill just confirmed this clearly,” Mendes said about tax dollars being used for ongoing stadium maintenance. “He described that the Titans will ‘backstop’ the cost of long term capital expenses if the dedicated tax revenue is not sufficient. It’ll be important to see how deep the tax revenue sources dedicated to long term capital costs are.”
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.