Lee proposes $500M in bonds to help pay for portion of new Titans stadium

(The Center Square) – Tennessee Gov. Bill Lee is proposing the state authorize $500 million in bonds to help pay for a new Tennessee Titans domed stadium in his fiscal 2023 budget amendment, which was presented to lawmakers Tuesday morning.

The amendment proposal must be approved by the Legislature to part of next fiscal year’s budget.

Tennessee Department of Finance and Administration Commissioner Butch Eley told members of the Senate Finance, Ways and Means Committee on Tuesday new Titans stadium bonds are budgeted to cost the state $55 million annually, with $25 million in principal payments and a conservative 6% bond rate that could end up lower.

The bonds would be in addition to a tax deal the Legislature made last year that allows the Titans to retain all sales tax in the stadium and 50% of the potential sales tax for a development the Titans are proposing around the property on what is now Metro Nashville-owned stadium parking lots.

Eley confirmed about $2 billion is the price tag on a new Titans stadium.

Titans CEO Burke Nihill recently said a potential new stadium could be ready as soon as the 2026 Titans season if there is a funding agreement in place before this fall.

Sen. Jack Johnson, R-Franklin, questioned Eley on the reason to make the investment commitment before the Titans have revealed what will be built in a development surrounding the stadium and after the state already conceded sales tax dollars to the team.

“Should we not wait to get a better handle on it?” Johnson asked. “Why the urgency to put this in place now?”

Johnson said the fiscal note on last year’s sales tax deal was an estimated $10 million in benefit for the Titans when the development around the stadium was potentially completed. That would not leave a sales tax benefit high enough to cover a large portion of the annual bond payments, Johnson said.

Johnson viewed the bonds as “very possibly costing us money and, ultimately, subsidizing (a stadium).”

The proposal came a day after New York Governor Kathy Hochul proposed giving the Buffalo Bills $600 million in state funds toward a new stadium, something Eley referenced in justifying the price tag.

Sports economist J.C. Bradbury from Kennesaw State University has studied stadium projects and economic effect across the country.

“You’ve got money burning a hole in your pocket and spending it on a sports stadium is not a good investment when you look at the return on investment you’re going to get,” Bradbury said.

Eley said the majority of the funding for a new stadium would come from the Titans and Metro Nashville, but none of those figures has been determined. Both have said that funding toward a new stadium would not come from general fund payments from Metro Nashville but could come from sales tax funding similar to the state deal.

Bradbury said the “long-term economic impact” cited by Eley does not ultimately happen on stadium projects regardless of whether a Super Bowl, Final Four or concerts come along with the project.

“You already have the team there,” Bradbury said. “You’re not even bringing a new team to town. So there’s not going to be any significant increase in economic activity that’s going to happen because you have a football team there.”

Nihill recently said the development outside the stadium would not be an entertainment district but instead would be “one of the more celebrated neighborhoods in Nashville.”

“My understanding is there is going to be a cash district that’s going to devote money to funding the stadium and a new development,” Bradbury said. “If that’s the case, then you’re pulling money out of the community. Now we’ve created this brand-new district and people start shopping there. If they were previously spending that money in other districts where money wasn’t going to fund a new stadium, then that’s money taken out of the district that would have been spent on other things.”

Sen. Joey Hensley, R-Hohenwald, asked Eley whether the stadium would happen without this state funding and whether the state would get an ownership stake in the stadium after paying $500 million. Eley said it would be hard for the Titans to fund a stadium without this funding and the Metro Nashville Sports Authority owns Nissan Stadium and the property.

“Some frustration in this is that we could have had this discussion last year,” said Sen. Bo Watson, R-Hixson, referencing when the Legislature passed its tax deal while the Titans were discussing a stadium renovation.

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