More Bang for a Billion Bucks: Can Nashville Make a Better Sports Stadium Deal?
Why this matters
Nashville has tried many of the ideas experts agree help stadiums provide benefit for a community, but despite community benefit agreements, ballot referendums, and a very public negotiation process, locals are disgruntled as the Tennessee Titans try to get a billion-dollar check from the city.
This summer, the city of Nashville will almost certainly begin working toward a historic commitment of at least $1 billion in public funding for a new Tennessee Titans stadium and surrounding mixed-use neighborhood – money that will come on the heels of state officials authorizing $500 million of additional stadium funding. Titans CEO Burke Nihill said in April on 104.5 The Zone that the site of the proposed development, desirable and underused land directly across from downtown, “is really precious real estate … a real opportunity for the city and citizens to come together and do something really special … generational if we get this right.”
With promises of generational gains and an enormous amount of public funding at stake, it’s reasonable to ask a question: How can Nashville maximize its return on investment for a new football stadium?
Historically, government subsidies for professional sports facilities have benefited wealthy team owners far more than the public. Since 1960, governments have spent nearly $38 billion on pro sports stadiums in the United States – yet research consistently has found that such spending has little impact on local economic well-being via job creation and increased tax revenue.
That said, there are ways for Nashville to get a bigger bang for its taxpayers’ bucks, both by boosting the amount of event-related revenue flowing back into city coffers and by striking a deal between team and community that helps ensure that at least some of the economic activity generated by venue construction and operation produces gains for locals.
But whether local leaders and voters have the political will to seek the best possible deal once all details are made public remains to be seen.
Dollars and Sense
From a purely financial standpoint, perhaps the most effective way for Nashville to maximize its return on investment is to have the new stadium host non-football events – the more, the better.
According to Dennis Coates, an economics professor at the University of Maryland, Baltimore County, the details of any agreement between a city and a team for how a new venue will be operated over time are just as important as provisions around construction. If “part of the funding to pay [stadium] bonds comes from an increase in ticketed events at the new stadium,” he says, “then Nashville should want to be the ones in charge of scheduling as many events as possible.”
Too often, Coates adds, stadium agreements allow teams to control event scheduling. “That [would give] the Titans complete veto power over whether Nashville can host a concert there,” he says, an outcome local politicians should look to avoid.
How many big events can Nashville realistically hope to host? Currently, the $500 million in funding for a new stadium promised by the state of Tennessee is contingent on the building having a roof. Why? The state’s financial impact estimates rely on the building’s “ability to attract 28 non-football events” per year – an unlikely prospect for an outdoor facility in a city that gets around 120 days of precipitation per year.
The Titans are more conservative, estimating that a domed stadium would attract “about 15 additional ticketed events” annually. That assumption is closer to what has happened in Las Vegas, where taxpayers heavily contributed to the $1.9 billion construction of Allegiant Stadium. Home of the National Football League’s Raiders, that building is scheduled to host 31 combined concerts and professional and college football games this year – far short of the 46 annual events drawing 1.9 million people previously projected by city officials.
Another way Nashville can recoup dollars is to share stadium naming fees with the Titans. Denver recently did just that, splitting naming rights to “Empower Field at Mile High” between the Broncos and the city’s Metropolitan Football Stadium District. As a result, the local government will have to pay about $60 million less in stadium upkeep and repair costs over the next two decades.
Getting it in Writing
Maximizing return on investment does not exclusively mean revenues for the city. It also can come in the form of local jobs, workforce housing, pay standards, worker protections, and – in the case of the community around Nashville’s new soccer stadium – affordable childcare.
One way to achieve these kinds of goals is through a community benefits agreement (CBA), in which a private entity that represents local interests negotiates with a sports team to produce a stadium financing deal that includes measures designed to benefit the community directly.
Across the United States, CBAs have been a part of some stadium and surrounding development projects. In San Diego, a CBA was negotiated in 2005 for a development called Ballpark Village around a new stadium for Major League Baseball’s Padres. When the project finally broke ground in 2016, some benefits – including $20 million for 134 low-income apartments – already had been realized. And once construction was underway, the CBA guaranteed local hiring and made $750,000 available for pre-apprenticeship job training for disconnected youth and veterans.
In Pittsburgh, the CBA for a new arena for the National Hockey League’s Penguins also brought funding for neighborhood projects, including $2 million for a new grocery store. (That store ended up closing in 2019 after being open for five years, but a new grocery store is opening this summer at the same location.) In Milwaukee, the 2016 CBA for a new building for the National Basketball Association’s Bucks required the team’s owners to commit to higher wages for full-time jobs in a surrounding development – and just last month, Bucks owners promised to honor that commitment at new concert venues they are building adjacent to the arena.
New stadiums sometimes can have detrimental effects on local communities, largely because of gentrification and gameday inconveniences. In Inglewood, California, for example, a new stadium for the NFL’s Rams has led to sharply increased nearby rents and restaurants that lose money on Sundays because the places their customers used to park are now filled up by game attendees.
Pat Garofalo, director of State and Local Policy at the American Economic Liberties Project and author of “The Billionaire Boondoggle: How Our Politicians Let Corporations and Bigwigs Steal Our Money and Jobs,” says that CBAs can be a partial antidote to these sorts of negative outcomes. “Stadium builds are sold as generating economic benefits for the metro area, but what gets left out is the local folks who are priced out, displaced, or just forgotten,” he says. “You need that binding agreement to have any hope of helping these folks.”
“When building a CBA,” he says, “you make contact with folks on the ground, include them in the process, make them realize there is a policy they can affect, and activate folks on issues that they can be influential on.”
‘A Template for Every Community’
That’s exactly what happened in 2018 when Stand Up Nashville, an organization consisting of “community and union organizers, churches, and neighborhood leaders,” signed a CBA with the ownership of Major League Soccer club Nashville S.C. prior to the construction of GEODIS Park.
Including provisions for wage floors, affordable housing and childcare, workforce development, minority contractor guarantees, and reduced-rent retail space for local small businesses, the agreement is seen by Garafolo as “a template for every community looking into crafting one, as it takes into account what happens in the neighborhoods and the issues that they focus on with them.”
The agreement also was instrumental in getting a deal done in the first place, as some Nashville metro council members needed a more concrete return in order to vote “Yes.” Among those members was Anthony Davis, who helped lead efforts to guarantee that investing in a soccer stadium would be good for the surrounding community.
“People in the neighborhood I represented felt better about my vote when the CBA was enacted,” says Davis, now the owner and president of East Nashville Beer Works. “When I could tell the communities we are getting a pretty good deal, good jobs, and money going right to the community, all those things helped gain the communities’ approval.”
Last month, Nashville S.C. hosted its first game – and leading up to that, the team hosted five job fairs to hire local workers with the wage floors established by the CBA. In March, Councilman Colby Sledge, whose district includes the stadium and surrounding neighborhoods, told the Nashville Post that “so far it sounds like everyone is living up to their end of the bargain. … As far as the team goes, I can say within and outside the CBA, they have done what they’ve told me they’re going to do.”
Making a Deal
Four years later, Nashville is on the precipice of the largest public investment in city history for a new NFL stadium. Will local leaders strike a deal similar to that made for the city’s MLS stadium?
The answer is complicated – and largely remains to be seen.
Many local politicians insist that they want a strong return. Councilman Freddie O’Connell, who recently announced his run for mayor, says that any stadium financing must be viewed through a specific lens: “Does this match our values and principles as a city; are we getting a monetary return; and can that return pay for certain initiatives like Vision Zero?” O’Connell also says that “we have $500 million allocated towards the surrounding neighborhood development. … Will this new stadium and neighborhood bring in enough return where we can use that kind of money elsewhere in Nashville? That type of investment would go a long way towards sidewalks throughout the rest of the city.”
At-Large Councilman Bob Mendes wants the stadium and neighborhood to reflect the city. “Number one is it has to work financially,” he says. “The mixed-use neighborhood being built has to have a character that’s more like the Nashville a lot of us are accustomed to, as opposed to just an extended party district. … I want it to be walkable and insist it’s bikeable.”
Similarly, Councilman Brett Withers wants a good return for the residents of his district, where the Titans currently reside. Specifically, he wants to see “current public housing residents, who live near the stadium already, to have first dibs on everything, such as high-paying jobs.”
“These are the Titans’ literal neighbors,” Withers adds. “Let’s really solve problems for them to give them employment and job skills to get them out of poverty.”
Stand Up Nashville already has surveyed the community about a new Titans stadium, just as it did with GEODIS Park. The organization found that over 90 percent of residents want to see “a walkable neighborhood with affordable housing and independent businesses” and that large majorities also want stadium-related jobs to “benefit locals first.”
Perhaps most importantly for the Titans – and for local politicians looking to build long-term goodwill – 89 percent of respondents said they did not believe public dollars should fund a new stadium. But that number dropped to 13 percent if new stadium funding included community benefits.
It’s unclear if the Titans are amenable to a CBA. James Weaver, a lawyer and lobbyist representing the Titans, points out that GEODIS Park and the proposed new NFL stadium should not be analyzed the same way in terms of community benefits, because while the soccer team needed land, the football team already has a long-term land lease. “A new arrangement (a new long-term lease) could allow Metro to avoid some of the less-than-favorable terms of the current lease and redevelop the parking lots in a way that fits their vision for a beautiful East Bank neighborhood,” he says. “Those are not insignificant ‘benefits’ in my eyes at least and a very important distinction.”
Weaver also says that the team has been a part of Nashville’s community fabric for over 25 years, and that its owners, the Strunk family, including team owner Amy Adams Strunk, are locally charitable, whether assisting a family in need or helping the community in times of crisis and tragedy and supporting numerous community organizations. The Titans, he adds, will soon unveil something they call a “community benefits platform” in which they partner with local organizations to “make sure the community understands what the Titans have been doing and what they will do in the future and why they are doing it. … The Titans will keep doing for the community what they’ve been doing for the past quarter-century, but with a focus on the areas and issues that are important to Nashville right now, such as workforce development and affordable housing.”
Ethan Link, a director at Southeast Laborers’ District Council and treasurer of the Central Labor Council, was one of the negotiators of the Nashville S.C. CBA. He believes that any agreement should be hammered out and signed with a community organization – not simply announced by Titans as part of an effort to “try to rebrand their ‘charity’ and what they were already planning on doing as a ‘community benefits agenda.’”
Four years ago, current Nashville Mayor John Cooper was Councilman John Cooper. Before the soccer stadium CBA was signed, he introduced a resolution calling for a public referendum on stadium funding. “We shouldn’t be doing something the people don’t approve of,” he said. “Daylight is always a good thing. It is appropriate for the public to be involved in the multi-hundred-million-dollar commitment of Metro resources with a private party as the beneficiary.”
Cooper’s move was bold – and somewhat uncommon. Like most government spending, stadium subsidies often are a product of lawmaker wrangling, not direct voting. Putting the question directly to voters can give local politicians powerful leverage, because as Garafolo says, referendums can be voted down. “Team owners know this, so even just the threat of a referendum can achieve concessions that wouldn’t have otherwise happened,” he says.
When Councilman Cooper became Mayor Cooper, he was able to negotiate better financial terms for the city with Nashville S.C. Today, O’Connell says that a referendum on the proposed Titans project isn’t inconceivable, based on the high level of proposed public investment. “Maybe we should do a referendum on a new stadium to confirm we’re wanting to double down on being an NFL city with a new stadium,” he says.
Could that happen? Nashville’s charter allows for the Metro Council to bring forth a referendum on general obligation bonds, not on revenue bonds. As such, a stadium referendum would have to come from a petition to be on the ballot, which in turn would mean a motivated group would have to lead a grassroots effort to get signatures from 10 percent of the number of registered voters who voted in the recent May election.
If that happened, the earliest a referendum could appear on ballots would be in November.
In the meantime, Nashville is in an interesting position. Stadium funding has clear political momentum. But for the first time in years, locals no longer have a favorable view of the future of their city – and spending a billion dollars on a new NFL venue likely is not high on the average resident’s list of priorities. There is an opportunity, Link believes, for local leaders to get more out of a stadium commitment. But, first, they have to demand it.
“People's expectations of what local government can do might be lower than in the past,” he says. “But it doesn't mean their expectation of what these deals can mean to them should be lower. It should be higher.”
The Return on Our Sports Investment
You can see it from the skyline: Sport is a dominant part of any community where it is played. The economic relationship between professional organizations and these communities has always been fundamental to understanding sport, but as the industry grows, so too does the sway sport holds over cities and states.
How do fans and residents see this relationship? Do these private businesses owe the public more than they are giving? And what is the ideal role sports organizations should play in a community?