Stadium Deal: 3 important numbers, not 2
This is the next installment in my series of posts about stadium negotiations. The previous ones were on February 21 and March 1.
Everyone wants to know what the final proposal will be. I have no idea. While we’re waiting, I have noticed that over the last few months, there’s been a shift in how media coverage talks about the cost to improve or replace the stadium.
There are 3 important numbers to keep your eye as negotiations move forward — (1) what is the minimum amount Metro owes under the current 1999 lease to provide a stadium in “first class condition”, (2) what’s the cost of the Titans’ preferred renovation, and (3) what’s the cost of a new stadium.
Before there was talk of a new stadium, media coverage was comparing the minimum due under the lease and the cost of the Titan’s preferred renovation.
One example of this is in the Tennessean’s reporting on January 6, 2022. They reported:
Metro officials are obligated to deliver the team a "first-class" stadium, according to the original 22-year-old lease agreement.
But a budget deficit and pandemic continued to delay major deferred maintenance projects in recent years.
* * *
Metro Sports Authority, the stadium's landlord, could issue $300 million in bonds to be repaid with local and state taxes from the district. The Titans will finance another $300 million along with other private investors developing in the district.
The article explained that if the team and the Mayor’s Office wanted to do the minimum under the existing 1999 lease, the deal would be easy. But that spending $600 million would give the Titans their preferred renovation — an “exceptional” stadium:
"I think if either the city or the Titans were pushing for something more basic we would’ve been done with this a long time ago. But we’re pushing for something that’s exceptional," [Titans President Burke] Nihill said. "Our highest priority is to win the Super Bowl, but this is the top priority behind that."
When the news broke in February about the possibility of a new stadium, the argument was that the $600 million number (aka the preferred/exceptional renovation) had doubled to as much as $1.2 billion. I have not seen any coverage suggesting that the minimum to satisfy the existing lease has changed.
The Tennessean’s reporting on February 17, 2022, reminded us that the cost of an exceptional renovation had been estimated at $600 million: “Initial estimates that the stadium needed $600 million to be upgraded to a ‘world-class’ facility on par with cities like Miami were farther off than expected.'“ The news that day was that, “Instead of a $600 million renovation, they are now discussing a pricetag of at least $1.2 billion.”
Again, starting with this announcement in mid-February, talk about the cost of minimally complying with the 1999 lease has dropped off the radar.
More recently, the media coverage is talking only about the cost of a preferred/exceptional renovation versus the cost of a new stadium. You can check all the coverage yourself. I’ll share one example from late yesterday in the Tennessean:
Initially, Metro Nashville planned to spend about $600 million to renovate the 23-year-old stadium. But city officials said a recent inspection revealed the need for extensive repairs that would cost $1.2 billion.
Despite the Tennessean’s January reporting that Metro was going to issue $300 million in bonds, coverage has shifted to saying Metro had planned to spend $600 million.
You can see where this is going. As recently as January 7, the talk was about $300 million in revenue bonds being issued by Metro. But that number is recast now as Metro was always going to spend $600 million. And since the actual cost is $1.2 billion, then… The implication is that Metro supposedly would be on the hook for more than a billion dollars no matter what?!?!
Let me give a few disclaimers —
I could be wrong on some points. The only source of information about this is the team and the Mayor’s office. We know the Mayor’s office is confusing and inconsistent in their talking points. And by all accounts, the team is trying to figure out a billion plus dollar deal, which is never easy. I also don’t blame the reporters. They also can only get information from those two sources.
I believe I am correct that there are 3 numbers that matter. Maybe the Mayor’s office and the team will argue that the minimum amount needed to comply with the 1999 lease and the preferred renovation cost really are now the same and that Metro would owe $1+ billion to honor the 1999 lease. That would be hard to believe given where this conversation was a few months ago, but maybe they’ll tell us that?
THIS PARAGRAPH IS NEW BASED ON A READER COMMENT (3/18/22, 10:45 AM) - When we talk about the “minimum due under the 1999 lease”, this has to include not only the cost TODAY, but also the cost through the rest of the term of the lease. There’s no public or nonpublic information I know about on this topic.
The bottom line is that there are 3 numbers that matter — the minimum to comply with the 1999 lease, the cost of a preferred or exceptional renovation, and the cost of a new stadium. Metro taxpayers likely should expect to have their tax revenue used to pay the minimum necessary to comply with the 1999 lease. Anything more than that is a different conversation completely.