More than two years after the fact, the Internal Revenue Service is investigating whether Nashville’s use of $150 million in government bonds to finance most of Adelphia Coliseum complied with federal tax law.
More particularly, Metro officials confirm that the federal agency is looking into whether giving lucrative naming rights of a publicly financed stadium to the Titans, a private enterprise, was appropriate, given that the bonds were tax-exempt.
“I have no doubt that if there is a contingency plan that needs to be in place that [city officials] are on top of it,” says Paul Ney, a Metro Sports Authority member who chairs the board’s facilities and operations committee.
The Bond Buyer—a bond industry periodical—reported last month that the IRS is examining public financing of sports stadiums in three cities, including Nashville. The publication quoted Charles Anderson, the manager of tax-exempt field operations for the IRS, as saying the agency “has an interest in looking at naming rights” because they “are so lucrative [that] one is challenged not to believe that a multi-million naming-rights fee doesn’t have anything to do with how the deal is structured.”
The Memphis Commercial Appeal reported the investigation this week because the Bluff City is contemplating a similar financing structure for an arena to house an NBA team there. According to the newspaper, the IRS inquiry also focuses on “whether the facility’s benefits accrue more to private interests than the public’s.”
As ominous as an IRS investigation sounds, Nashville officials aren’t hot under the collar. “These audits appear to be routine,” says Dick Lodge, a Sports Authority member who was the board’s chairman in 1996 when the stadium deal was struck.
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