(C) Tennessee Lookout
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How to pay for a football team – Tennessee Lookout [1]
['Jamie Mcgee', 'More From Author', '- November']
Date: 2022-11-16
To economists, a $2 billion deal for a new Titans stadium is another egregious example of subsidizing privately-owned teams at taxpayer expense. But to Nashville officials, it’s the way out of an eye-popping renovation bill and the contract that caused it.
In spring of 1996, then-Mayor Phil Bredesen closed a $292 million deal bringing the Houston Oilers to Nashville, ushering in a new era of professional sports in Nashville, but also what has become an escalating tab. Twenty-six years later, with 17 years left on its lease, the city owes $30 million on Nissan Stadium debt payments, $32 million to the team for unpaid repairs, and it faces a renovation bill estimated at $2 billion.
Or, under a new proposal, the city, state and the Tennessee Titans can start anew and pay for a new and enclosed $2 billion stadium, relieving the city of its burdensome improvement and repair duties. The public investment would be at least $1.3 billion, the largest in NFL history.
For economists who long have been warning that expensive public subsidies for sports venues fall short on returns for taxpayers, each of the numbers is staggering.
“This is a gigantic giveaway,” Victor Matheson, College of the Holy Cross economist, said. “Whatever is driving it to be necessary is kind of just a series of people making bad decisions again and again.”
But to Nashville officials pushing for a new stadium, what matters more than the usual return on investment analysis is that the city is responsible for a massive renovation bill without a method to pay it. Rather than just promoting the deal as an economic opportunity, proponents have framed it as the logical escape hatch from the existing balance sheet.
“We are going to be on the hook for nearly $2 billion,” TJ Ducklo, spokesman for Nashville Mayor John Cooper, said of the current lease agreement. “It’s a big moment for the city to get us out of this looming dark cloud.”
The cost of renovation
The issue centers on the 1996 lease agreement, in which the city committed to foot the bill for maintaining “first class” stadium conditions in line with “comparable facilities.” In 2017, the price estimate to repair the stadium was nearly $300 million. In early 2022, the renovation estimate used was $600 million and the number has since climbed to $2.1 billion in a recently released report from Venue Solutions Group, hired by the city. The estimate includes $1.9 billion to redevelop the stadium and another $235 million for maintenance through 2039.
The cost estimates have puzzled many observers, both the increases and the amounts themselves. The latest renovation estimate is seven times the original cost to build. It exceeds the cost of other stadium renovations projects, including $550 million for Miami’s Hard Rock Stadium in 2015 and $500 million forecast for the Bengals’ stadium this year, as well as the projected costs to build a new $1.4 billion stadium in Buffalo.
“That’s not credible,” Kennesaw State University economist J.C. Bradbury said of recent renovation estimates. “If you go and look at past stadium refurbishment of other stadiums, no stadium spends more than a few hundred million at the high-end of refurbishments.”
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