Burke Nihill confirms that a new stadium will include public financing; Mayor’s Office prepares to sell a billion-dollar stadium to Nashville (and the bond market)
The Titans are preparing to extract hundreds of millions of dollars from the city in a deal that has been at least a year in the making. A brand-new stadium would be the crown jewel of a redeveloped East Bank, the central project of John Cooper’s planning department. Metro’s exact financing obligations aren’t yet clear but a deal will include a custom sales tax funding mechanism designed specifically for the Titans. The pieces are in place for a billion-dollar deal that will gamble the future of the city on the prosperity of the East Bank, all but ensuring rapid development before a new lease kicks in. While Titans CEO Burke Nihill sells it to Metro Sports Authority, Cooper must sell it to the public.
Any stadium deal that involves public financing is bad for the public. Based on Nihill’s comments last Thursday, it’s clear this one will. Compared to equal spending on public education and infrastructure, stadiums are abysmal investments. There have been attempts to misrepresent stadium benefits, like last month’s inflated NCVC World Cup economic impact study, but the economics are settled. One-off, high-profile events like the Super Bowl, the NFL draft, or an IndyCar race make the city look successful, but the numbers don’t work out in favor of residents. Publicly-financed stadiums are money pits where public officials throw away taxpayer dollars.
Nashville was desperate for national recognition in 1998 and shelled out. New York, Miami, or Los Angeles, the metropolitan tier Nashville likes to claim, do not pay for their stadiums—they make the billionaires do it.
It makes sense, then, that Nihill played a 60-second hype video before introducing himself at Thursday’s Metro Sports Authority meeting. He highlighted Titans’ PR events—flag football, a Titans-themed art show, “615 Day.” Eddie George and Jeff Fisher made appearances, as did the famous Derrick Henry stiff-arm. Professional football is a wildly profitable entertainment sector and the Titans, estimated at $2.625 billion dollars, are owned by a billionaire family preparing to ask for a massive handout from a city that can’t staff schools or pick up recycling. Appealing to emotion is a good way to sell a bad deal.
Negotiations have been a black box. The only time actual numbers are mentioned, they are last week’s underestimations. The price has steadily climbed from Metro’s most basic obligations under its current lease—a number no one has bothered to tell the public—to $2 billion, a figure with no basis in current negotiations that showed up in a Tennessean headline and would give the Titans the second most expensive stadium in the entire world.
“As the NFL standard has evolved, our building has not,” Nihill told the Sports Authority, one of multiple references to expectations, pressure, and standards from the NFL that Nihill never clearly defined. Nihill pointed out inadequacies in Nissan’s utilities, leaks, concrete, and windows, and referenced Nissan’s pre-9/11 construction to make a point about security concerns. Toward the end of the meeting, Nihill showed his hand. “A renovation of this facility would probably be a very uninspiring renovation,” he told the board.
Though Cooper crafted his image as Nashville’s dealmaker-in-chief, his posture in Titans discussions looks more like he’s negotiating on tilt. The city had not even figured out how to finance $600m in renovations and now the quoted price is in the billions. His laser focus on developing the East Bank, a multi-year vision laid out in recent presentations from planning and New York-based Perkins Eastman design firm, has Cooper pinned, saying things like this to the Tennessean:
“It’s going to be important to present to the community a stadium-solve which allows us to not only keep the team and to have a Super Bowl, but that has no burden on the general taxpayer.”
This quote indicates three key contours of ongoing negotiations. First, Cooper publicly stated that any deal must keep the team, which means he can’t credibly threaten to walk away. That would force the team and the NFL to finance the stadium privately, which they obviously can do. This is what happened in New York (MetLife, 2010, $1.7bn), Los Angeles (SoFi, 2020, $5.5bn), and Miami (Hard Rock, $350m renovation, 2015). To build Allegiant Stadium in Las Vegas for $1.9bn, the Raiders got $750m from Clark County backed by tourist taxes, the largest ever public commitment to a stadium. That deal has not turned out well for Las Vegas.
The Titans, on the other hand, can credibly threaten to leave Nashville. Sports teams do this all the time to get free stuff from cities. That’s why the Oilers came to Nashville from Houston. Perhaps Cooper thinks the Titans are too important to the East Bank vision, or simply too popular. Either way, he has already conceded the city’s most powerful negotiating tool.
Second, Cooper set a world-class facility as a minimum standard of the Titans deal. This further hints that he prefers a new stadium—Super Bowls need a dome or roof, which we don’t have. That comment only raises standards, boosting the sticker price for whatever gets decided.
Last, Cooper used the term “no burden on the general taxpayer.” The “general taxpayer” is a phrase without a technical definition used publicly by Cooper and Nihill that’s vague enough to deflect accusations of tax increases (one of a laundry list of ways to spend public money) but specific enough to pass as honest communication. Context is important—Cooper has had no problem misrepresenting financial situations to the public when politically beneficial. This oddly specific phrase helps obscure the architecture of a financing deal that will route public money to the Titans, any way you cut it.
While the deal’s financing architecture isn’t completely clear (that is the upshot of CM Mendes’ series of stadium explainers) the East Bank is set up to be its engine. The Titans and the NFL hired seven lobbyists in 2021—five from Waller, including the prolific James Weaver—and successfully quarterbacked a bill that could route half of all state tax revenue from the East Bank to the Metro Sports Authority. This money would be specifically earmarked to support Titans facilities for thirty years. The next step, which we haven’t heard yet, is how a new lease would link this potential revenue source to a financing obligation for the city.
Metro could issue two types of bonds, revenue or general obligation. Revenue bonds are riskier for buyers and therefore more expensive for the city. These bonds would be backed by promised revenue from the East Bank and make it financially critical for the city to get money flowing in the East Bank as quickly as possible.
General obligation bonds more directly borrow on the city’s credit and would be backed by the city. The general taxpayer would be very directly on the hook. Neither is a good option, especially for a mayor who billed himself as a public steward, trimming the fat of the city and shoring up its books with smart decision-making even when it is unpopular. The first seems the most likely, tying Nashville’s financial future to rapid and concentrated development on the East Bank, the kind laid out in planning’s slideshow in December.
Metro owns a bunch of real estate on the East Bank, valued somewhere in the billions. A real estate play that could somehow turn these assets into a financing mechanism doesn’t work without the city surrendering substantial control of these parcels, perhaps to the Titans, but will likely play a key role in the eventual lease.
Ironically, the deal’s architecture looks a lot like the Tax Increment Financing (TIF) deals that Cooper criticized as a candidate. In his campaign policy book, he offered one acceptable use of TIF incentives: bringing grocery stores to food deserts. But the principle, spending tomorrow’s taxes for today’s development, can be helpful when you’re trying to come up with a lot of money quickly.
The Tennessean has done little to find out essential information, like metro’s contractual obligations under the current lease, instead beating the drum for a new stadium, East Bank development, and a downtown riverfront.
There are a lot of unknowns and a few knowns. The ability for Metro to service whatever loans it takes out for the Titans will be tied to a single Tiger Mart on Shelby unless more money starts changing hands quickly around the stadium. If this deal gets through—Metro Council would have to approve a lot of it, including a local counterpart to the state legislation—Metro’s financial wellbeing will be hitched to the East Bank for a generation.
While this is confusing executive deal-making in a city struggling to provide basic services for its residents, the emerging stadium deal helps each party accomplish its goal. The Titans get a sick new home and Cooper gets both an ornament and a flywheel for the East Bank.