Thursday, May 19, 2022

Titans CEO says Nashville would owe nearly $2B toward Nissan Stadium renovations under current lease

By Jon Styf | The Center Square, May 19, 2022 — Tennessee Titans Chief Executive Officer Burke Nihill estimated that Nashville would owe $1.839 billion under the terms of the team's current lease if Nissan Stadium in Nashville was renovated instead of having a new stadium built.

The estimate is based upon maintenance and a lease stipulation saying the city must pay for capital projects to keep the stadium in "first-class condition to keep pace with comparable facilities."

The Titans, state and Nashville are preparing to fund a new estimated $2.2 billion stadium next to the current stadium with plans to build a mixed-use development on 130 acres next to the new stadium.

Nihill also confirmed that Titans ownership was preparing to be able to pay $700 million in private investment toward a new stadium between ownership, an NFL loan and other private investments. That would leave an estimated $1.5 billion of a new stadium to be paid with public funds, including a $500 million appropriation from the state and $1 billion in sales taxes from the city and state.

Nihill said that he prepared the Nashville-paid renovation estimate "in as objective a way as possible" figuring in $945 million for near-term stadium renovations and $894 million for maintenance and upgrades between 2026 and 2039 if the Titans were to use their option to renew the Nissan Stadium lease. A new lease would leave the Titans in charge of paying for stadium maintenance after the initial costs.

"What we have been trying to do is take the taxpayers in Nashville out of that risk position," Nihill said at Thursday morning's Metro Nashville Sports Authority Finance Committee meeting.

"This is something that our ownership and our leadership just doesn't accept. And so, we're kind of like ducks swimming out of water like crazy trying to find an elegant solution to find a result where there's a long-term lease where, whatever the risk is, it's on the Titans and not the taxpayers."

Nashville councilmember at-large Bob Mendes, however, believes that Nashville should do its own analysis of city obligations for renovations under the current stadium lease before making a funding decision. A 2017 city-funded analysis estimated that Nissan Stadium required $293.2 million in capital improvements over 20 years.

"Listen, we can all love the Titans & still understand they are a counterparty in a 10 figure negotiation," Mendes tweeted. "If Metro doesn't have its own analysis of the lease obligation, then the only salient point is that Metro doesn't have its own analysis. There's really no excuse for that.

"A core concept in a negotiation is to know your walk away point. If Metro has no independent thoughts about the lease obligations, then it doesn't know when it should walk away. It's hard to have confidence in a negotiator who relies on the other side for the walk away point."

TJ Ducklo, the Chief Communications Officer and advisor to Nashville Mayor John Cooper, said in a statement that the mayor's priority is to remove the tax burden on Nashville residents under the current stadium lease and that the terms of the lease would require the Metro government to spend hundreds of millions of dollars to renovate the existing stadium and maintain it over the remainder of the lease.

"We have no plans to commission another study to tell us what we already know: Renovating the stadium would cost Nashvillians hundreds of millions of dollars," Ducklo said. 

Nihill said that the 2017 assessment was a different scope than what the team believes is required of Nashville under the Titans' current lease. Nihill said the city must keep the stadium comparable to other NFL stadiums built between 1989 and 2009, including Miami's renovated Hard Rock Stadium, FedEx Field in Maryland, Bank of America Stadium in Charlotte and Paul Brown Stadium in Cincinnati.

Nihill said the last three will likely be renovated or replaced before 2039. He said that 30 stadiums in the U.S. fit the comparable facility definition.

Economist J.C. Bradbury of Kennesaw State University in Georgia believes the city could challenge the first-class stipulation.

"The notion that first class is some objective standard that Nissan can't come close to meeting with more modest changes is an important aspect here," Bradbury tweeted. "Municipal leaders could clearly push back on this and win in court."

Nihill said Thursday that the team estimated a new stadium would cost between $1.9 billion and $2.2 billion, though Cooper's capital estimate for the facility was recently $2.2 billion.

Taxes that will contribute to the estimated final $1 billion in stadium funding including state and city sales taxes from spending within the stadium and 50% of the state and city sales taxes for spending in the new development district the Titans plan to build around the stadium.

The funding will also include a new 1% hotel tax on all Davidson County hotels and motels.

Bradbury has explained that sending funds that Nashville and Tennessee normally would take in to pay for city and state funded work and giving $1.5 billion in public funds for a new Titans stadium is the same as committing general fund dollars, because those same taxes are the current source of plenty of general fund dollars.

"It's a misnomer to say that it's not raising taxes on locals because what you're doing is transferring commerce that was already taking place in Nashville that was generating sales tax revenue for the city and state and then diverting that to the Titans," Bradbury said. "So that's revenue that was previously going to funding other priorities for government that now has to be made up through other means."

Nihill confirmed that Titans ownership, the Adams family, is currently collecting assets in order to pay for the team portion of funding for a new stadium.

"The Adams family is quite literally just putting all of the Adams' assets in the mix," Nihill said. "Things that the family has owned for 50-60 years. They're being sold, they're being liquidated to be able to help pay for this contribution." 

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