The Tennessee Titans and Nashville Mayor John Cooper on Monday unveiled details of a potential $2.1 billion deal to build a new Titans stadium.
The deal would be the largest of its kind in Nashville’s history.
The new, enclosed stadium located closer to Interstate 24 would be funded through a mix of private contributions and state and local revenue bonds, with the largest portion — $840 million — coming from the Titans, personal seat license sales and the National Football League (pending NFL approval).
State legislators have dedicated $500 million in one-time bonds to the project.
The remaining $760 million would be funded by Metro Sports Authority revenue bonds backed by a new 1% countywide hotel occupancy tax, in-stadium sales taxes and half of the state and local sales tax revenues from a 130-acre area surrounding the stadium. Beyond debt service, that sales tax revenue would be used to fund stadium maintenance and infrastructure costs.
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As part of the deal, the Titans would absorb approximately $62 million owed by the city for outstanding maintenance obligations and remaining bond debt under the current stadium lease. The team would also assume responsibility for construction cost overruns and maintenance obligations in the event that the area’s sales tax revenue underperforms for the duration of a new 30-year lease.
The costs of demolishing Nissan Stadium and completing any new stadium-related infrastructure are included in the deal, according to a Monday news release.
The plan will require approval from Nashville’s 40-member Metro Council. Cooper’s administration intends to file initial legislation in time for the council to review it in early November.
A new stadium could break ground as early as fall 2023 and be complete as early as the 2026 NFL season. Plans include a 1.7 million-square-foot stadium with a turf playing surface and capacity for up to 60,000 people. The stadium enclosure will likely feature a translucent, stationary roof.
High renovation cost estimates
Negotiations to raze Nissan Stadium and build anew have been ongoing since February, when the city and team paused plans to upgrade the existing 23-year-old stadium after cost estimates exceeded expectations by more than $600 million.
Metro owns the existing stadium and dozens of acres of surrounding parking lots. The city’s current agreement with the Titans requires Metro to provide a “first-class” stadium and shoulder maintenance costs through 2039. The Titans previously estimated Nissan Stadium renovations could cost $1.8 billion.
An ongoing study commissioned by Metro Council to estimate the cost of Metro’s current obligations is expected to be complete by Nov. 1.
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Venue Solutions Group, the company assessing the stadium’s condition, stated last week that its preliminary findings show Nissan Stadium obligations would cost the city between $1.75 and $1.9 billion over the remaining 17 years of the lease.
“This new stadium proposal protects Metro taxpayers by not spending a single dollar that could be spent elsewhere on our core priorities like education and public safety,” Cooper stated in a news release Monday. “Doing nothing was not a legal option for us, and renovating the current stadium proved to be financially irresponsible, so we are proposing a new stadium paid for by the team, the state, tourists and spending around the stadium — not by your family.”
But the sales tax revenue that would fund a new stadium’s revenue bonds comes with strings attached.
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New stadium funding sources
State statutes dictate the proceeds from the 1% hotel occupancy tax can only be used for construction costs and debt payments for an enclosed stadium or future stadium updates. Under the deal’s current form, Metro would reserve the right to “turn off” the hotel occupancy tax once the debt is paid, according to Cooper’s administration.
All sales tax proceeds from the stadium premises and the partial sales tax diversion for the yet-to-be-defined 130-acre area surrounding the stadium can be used only to fund stadium costs, debt payments or the cost of infrastructure necessary for the stadium to operate for the duration of the lease.
If revenues from the hotel occupancy tax and state-designated sales tax diversions far exceed what’s needed to cover the debt and maintenance, those excess funds would be unavailable for use toward other public needs.
It’s also not immediately clear if Metro will need to backstop the revenue bonds with other funding sources to offer additional security to bondholders (the city did this for a portion of the bonds for the Convention Center). Cooper’s administration aims to avoid or minimize this possibility, and the Titans have not asked Metro to backstop the bonds during negotiations.
The proposed site for the new stadium is perched at the center of Cooper’s sweeping plan to transform a 338-acre stretch of the Cumberland River’s east bank, which is currently home to parking lots, industrial land and 113 acres of Metro-owned property including the existing Nissan Stadium.
The 130-acre sales tax revenue boundary will be drawn by Metro Council with approval from the state and will likely encompass roughly a third of the area contemplated by the Imagine East Bank Vision Plan.
The stadium deal would require Metro to provide a minimum of 2,000 parking spaces for stadium use compared to the current 7,500 spaces, releasing approximately 66 acres of Metro-owned land for other uses. The East Bank vision proposes this land could be dedicated toward a new multimodal boulevard, park space and affordable housing.
The Titans will announce expansions to community programs and other commitments to prioritize small businesses and the local workforce later this week. This will include hosting up to four Tennessee State University home games each year without cost to TSU.
Voters will not be able to directly weigh in on the deal as they did with the 1996 stadium deal, which was funded using property tax-backed bonds, because state law does not provide a referendum option on revenue bonds.