*In an update from the Tennessean on April 15, only a day after publishing this blog post, we learned that the projected cost for the stadium is already on the rise. The report states that the estimated cost for the stadium could now be up to $2.2 billion.
Recently, the Tennessee Titans announced that instead of looking to make upgrades to Nissan Stadium, it was in talks with city and state leaders about replacing it with a brand new domed stadium. Since then, more details have emerged about the proposed plan to pay for the estimated $2 billion stadium*, with the Lee administration proposing that the state take on debt in the form of bonds up to $500 million. To his credit, so far Nashville Mayor John Cooper hasn’t committed to using Nashville general fund dollars to support the effort, saying, “We’re not in the stadium business, you know, we’re in the educating kids business, we’re in a safer street and road business.” There are many reasons Gov. Lee, the Tennessee General Assembly, Mayor Cooper, and Metro Nashville should stay out of the stadium business, but here are just five reasons:
1. The state hasn’t even paid off the debt from the first stadium.
Back in the late 1990s when the Titans were coming to Tennessee, the state took on $55 million in bond debt to help pay for the $290 million stadium. These bonds are slated to be paid off around 2029, three decades later, with the state still owing roughly $30 million. With team officials hoping that the new stadium will be finished by 2026, that means Tennessee taxpayers could be paying off two stadiums at the same time. This is unlike the fiscally conservative governance Tennessee is known for and sounds like something California or Illinois would do.
2. Economists agree that stadium subsidies do not “pay for themselves.”
From Stanford University, the left-leaning Brookings Institute, to the conservative Mercatus Center, virtually all economists agree stadium subsidies don’t create economic growth. In a recent interview with News Channel 5, Vanderbilt University Economics Professor John Siegfried pointed out, “Building anew is almost inevitably a loss for a city because the entire cost of the new stadium has to be outweighed by the incremental benefits of having that new stadium versus the old stadium,” explained Siegfried. “And most of the benefits that come from a [new] stadium are actually created by the old stadium.” One study by Temple University found that a professional baseball stadium (with 10 times the number of home games as an NFL stadium) “has about the same impact on a community as a midsize department store.”
3. The state isn’t obligated to help the Titans, and already allows them to keep sales tax revenue.
Much has been made about the lease agreement requiring the city of Nashville to “provide and maintain a first-class stadium.” While true, the state is not required to provide any tax dollars to the billionaire Adams family. In fact, the state already has provided assistance to the team, passing a law last year that allows the team to keep sales tax revenue from within the stadium and half of the sales tax from the land the team plans to develop around the stadium. So the claim that a new stadium will somehow fill government coffers with sales tax revenue is dubious, because the state now allows the team to keep that revenue. And that was before talks about taking on half a billion dollars in debt.
4. The $2 billion price tag is likely the floor.
The estimate for repairs to Nissan Stadium ballooning from $600 million to $1.2 billion is a major reason why the discussion has pivoted to building a new stadium in the first place. If the repairs estimate doubled so quickly, is there any reason to expect the $2 billion price tag for a new stadium to not do the same? Atlanta’s Mercedes-Benz Stadium started out with a $1 billion estimate and ended up costing $2 billion. Los Angeles’ SoFi Stadium’s cost started at $2.66 billion and ended up at nearly $5 billion (which was still fully privately funded by the way). Even here in Nashville, the Sounds’ Minor League Baseball stadium had massive overruns, raising the total cost from $60 to $90 million. More recently, the price tag for GEODIS Park, the stadium for Nashville Soccer Club quickly became $60 million over the initial estimate of $275 million. With record inflation, supply chain issues, and soaring construction costs, what are the odds the cost of a new Titans stadium stays anywhere close to $2 billion, and who will be on the hook for those increases in the likely event it does not? Taxpayers deserve protection from any overruns.
5. Focus on the fundamentals, not the razzle-dazzle.
Just like football, the government has fundamentals. For football, it’s blocking and tackling. For government, it’s the things Mayor Cooper touched on: things like education, roads, public safety, and other basic services. A city that is still coming out of a debt crisis and has even struggled to pick up trash lately should stay out of stadium business. And so too should the state with a track record that has led it to become the least indebted state in the nation. That would be a scoring play for all involved.