(The Center Square) — A tax fund scheduled to pay off revenue bonds from Nashville toward a new $2.1 billion Tennessee Titans stadium and available for future maintenance costs is estimated to generate up to $70 million annually during the Titans’ new 30-year proposed lease, which includes three additional five-year team options to extend.
The term sheet on the deal was discussed on Thursday morning at Nashville’s Sports Authority after the design of a new stadium was discussed Wednesday night at the East Bank Stadium Committee as Nashville’s leaders determine whether to sign off on Nashville Mayor John Cooper’s deal with the team.
The term sheet dictates that, along with $500 million in payment from the state of Tennessee and $840 million from the Titans, an NFL loan and personal seat license sales at the stadium, the city would seek $760 million in revenue bonds to pay for the stadium.
Those bonds would be paid for with stadium sales tax collections, a new 1 percentage point hotel/motel tax, a $3 ticket tax for all stadium events and 50% of the taxes collected from a new development on 130 acres of land outside of the stadium.
The $500 million state payment and hotel tax are dependent on a new covered stadium being built but the stadium and 130-acre tax outside the stadium that went into effect on July 1.
According to the mayor’s office, a 1% hotel-motel tax would have been worth $18.6 million last year. The in-stadium tax for 2023 is projected to generate $5.34 million in state sales tax and $3.3 million in local sales tax. Those totals would be expected to increase by 70% in a new stadium due to additional events, making it $9.1 million in state sales tax and $5.6 million in Nashville tax or $14.7 million in total stadium sales tax.
While there is no additional sales tax from the 130 acres now with only parking lots in the undetermined zone, consultants for Metro Nashville have estimated that the 50% zone on 130 acres could bring in an addition $15 million to $30 million annually. If the stadium hosts 30 events where it sells out its 60,000-seat football capacity, it would collect $5.4 million in ticket tax while that number would jump to $7.2 million if it was for 40 events.
The Titans are guaranteed eight or nine regular season home games in the NFL’s 17-game season, unless one home game takes place overseas in London or Germany. Capacity will be larger for concerts or events where seating can be added to the field area.
The tax fund must first be used to pay off the revenue bonds and then be diverted to a stadium capital improvements fund that the mayor’s office estimated is expected to be worth “hundreds of millions” of dollars.
The stadium project tax figures do not include expected public dollars and tax-increment financing zones that will be created for East Bank redevelopment and infrastructure outside of the stadium.
At Wednesday’s meeting, Titans CEO Burke Nihill noted that an artificial turf field allows for a new stadium to host concerts and other events in-season while an open grass field wouldn’t due to the potential for the field area to be ruined by on-field seating.
J.C. Bradbury, a sports economist from Kennesaw State University in Georgia, has noted that spending at a new sports stadium or development has consistently shown to be diverted spending instead of new spending for a region.
So a new stadium with more events and restaurants and a development outside would lead residents to divert where they spend their disposable income from other areas of Nashville or Tennessee, areas where the state and city currently collect sales tax or that funding goes into a different tax collection zone.
Because of that, using sales taxes to pay for a project or using general fund dollars have the same impact on the city’s budget.
“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 previously 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.”
Bradbury will give a presentation to the East Bank Stadium Committee at 4:30 p.m. next Thursday.
