(The Center Square) – Construction costs have been divided up clearly to fund up to $2.2 billion of construction expenses on a new Tennessee Titans stadium in Nashville, expected to open in 2027.
Tennessee has committed $500 million in funds it will bond, Nashville’s Metropolitan Sports Authority will take out $760 million in revenue bonds backed by Metro Nashville’s general fund set to be paid off with state and local tax captures and the Titans have committed at least $840 million including an estimated $200 million from a National Football League G-4 loan and $270 million from new personal seat license sales at the stadium.
One large question, however, is how costs will be paid for ongoing maintenance and stadium improvements during the Titans’ 30-year lease at the new stadium and how the tax capture fund – estimated to raise $2.9 billion over 30 years – will be spent.
Another question is how much public funding will go into developing the area around the stadium, 130 acres of which will see 50% of its state and local sales taxes sent back to the tax fund.
Economists who have studies stadiums extensively, including Kennesaw State’s J.C. Bradbury, have documented that new stadiums and surrounding developments do not create new spending in a market but instead lead to diverted spending from elsewhere in a city or region. So most of the taxes captured for the new stadium fund will be lost taxes from elsewhere in Nashville or other Nashville tax capture zones, such as the Music City Center’s fund.
Metro Nashville Mayor’s Office staff, along with paid consultants from Houston’s Greenberg Traurig, gave presentations Monday to both the sports authority and Metro Nashville Budget and Finance Committee on the new stadium documents, which the mayor’s office hopes will be approved by the sports authority on April 4 and the council on April 18.
On Monday, those presentations will continue with a detailed financial presentation to the Budget and Finance Committee followed by a Tuesday session with the sports authority.
A key element of the plan that was already discussed, however, is the new stadium’s Capital Asset Management Plan, which will be created every three years to give a thorough look at what improvements and maintenance would need to be done at the new stadium to keep it maintained to lease standards.
Projects approved in that plan would then be eligible for funds from the sales tax capture fund, with the Titans responsible for a backstop on any expenses beyond the fund.
The fund is comprised of state and local sales taxes at the stadium and Titans team stories, a 50% capture on 130 acres surrounding a new stadium, a 1% year-round hotel/motel tax for all of Davidson County as well as a $3 ticket tax for all events at the new stadium.
The first priority of the tax fund will be paying off the $760 million in sports authority revenue bonds, which East Bank Stadium Committee Chair Bob Mendes estimated would take less than half of the fund over the 30 years of bond payments.
From there, Metro Nashville Bond Counsel Jeff Oldham explained that the fund is like a highway with a few exits for particular funds. One example is that sales tax funds captured by the new development can be used for stadium-related projects such as parking or $42 million to be re-paid to the Titans for projects to maintain Nissan Stadium until the new stadium would open.
Mendes broke down his understanding of the tax fund “waterfall” on TikTok, explaining that after bond payments the money goes to an Excess Authority Receipts Account.
The ticket taxes, projected to be $182.5 million over 30 years, can be spent on facility maintenance by the Titans, who are responsible for paying to insure a new stadium.
Then, the excess funds can be spent up to $25 million a year on eligible projects with the remainder going to a bond prepayment account and a Capital Repairs Reserve Fund.