When Nashville Sounds general manager Glenn Yaeger talks about the team’s evolving proposal for a new $38.5 million downtown ballpark, he’s excited and insistent, like a little kid begging to play ball on a school night. It’s easy to imagine any parent relenting. Even the relevant authority figure here, Mayor Bill Purcell, seems to be warming up to the young executive’s innovative pitch, though it’s far from a done deal.
“We started out with very vague and loose ideas over a series of meetings,” says Deputy Mayor Bill Phillips. “But the details began to firm up from our standpoint; they recognized what was required and made an effort to meet all of those requirements.”
On Tuesday, Yaeger held a press conference offering more details about the Sounds’ proposal to build an 11,000-seat baseball stadium on the old Thermal Plant site along the Cumberland River. The minor league baseball franchise first broached this idea several years ago. Purcell, however, said that he was adamantly opposed to using more public dollars to build yet another sports facility.
So Yaeger came back with something more than just a baseball stadium. His proposal is an $80 million mixed-use bonanza. First, the Sounds are asking the city to guarantee bonds to pay for the $38.5 million stadium portion of the project. Meanwhile, to generate sales tax revenue and additional funds, the Sounds would enlist private development on the same site. Along the left field walls of the park would be a pair of residential apartment buildings or condos, totaling about 225 units. The first floors of those buildings would house retail establishments, which could include anything from a Banana Republic to a locally owned bakery.
Not only does this urban development plan play to the mayor’s interest in a more vibrant, livable downtown, it also offers several different ways to generate revenues, which would finance the ballpark. The franchise, which has been nobody’s poster child of financial stability, has pledged to pay $1.5 million of the annual debt payment on the project. Meanwhile, the development of the residential component would generate nearly $900,000, and a third revenue source, an estimated $800,000, would come from sales taxes generated at the park. This would more than account for the $2.7 million needed to finance the project on an annual basis.
While the city isn’t offering—and the team isn’t asking for—any cash from the city, Metro officials, should they accept the deal, would be pledging the city’s good credit. In other words, if the whole thing goes to hell, and the money doesn’t flow, Metro would be on the hook.
And there’s the rub.
While the Purcell administration is far more receptive to this latest proposal than it has ever been about a new Sounds ballpark, Metro finance director David Manning is asking for one additional puzzle piece: He wants the Sounds to secure a third-party guarantor to help pay off the bonds if the development circles the drain.
Held at the Sluggers Sports Bar at Greer Stadium, Tuesday’s press conference was a kind of answer to Manning’s latest request. But rather than announce a third-party guarantor, which Yaeger hasn’t been able to find, he pledged revenue from suite sales, for example, as yet another revenue source to pay off the development’s debt. Here’s what he’s talking about: The new stadium calls for about 20 suites that would be rented for $40,000 annually for 10 to 15 years. That’s $800,000 each year. If the park doesn’t otherwise generate enough revenue to pay off the debt service, the Sounds would simply allocate the money from their suite sales to pay off the bonds.
That’s not quite the guarantee Manning was looking for. While he reserves judgment until after he reads the proposal, Manning says cryptically, “A guarantor is very important.”
Still, the team goals on the suite sales front seem reasonable enough. At the aging Greer Stadium, in an industrial neighborhood in South Nashville, the team has 15 suites that have been rented for as long as 15 to 20 years. The suite holders include Bank of America, DET Distributing, AmSouth Bank and The Tennessean. According to Yaeger, the suite deal at the time many of the leases were inked was $70,000 up front and $10,000 a year—not an insignificant chunk of change.
“It won’t take long at all to sell all those suites, given the interest and enthusiasm I’ve received for a downtown park,” Yaeger says. “It will be no problem.”
Another possible revenue stream that could guarantee the bonds would come from stadium naming rights. The Sounds are shopping naming rights to their new park in return for $250,000 annually for 25 years. Yaeger says that the team’s proposal would give the city the authority to take that money if the other revenue streams aren’t covering the annual debt service.
“Think about that economics class about how you should never own one stock,” Yaeger says, on why it’s actually better that the Sounds haven’t enlisted an ironclad guarantor. “If I can create revenue streams representing the companies of Middle Tennessee and the patrons of downtown, I’ve gone a long way toward eliminating any risks.”
Then there’s the additional assurance that the proposal is, in a way, backed by major league baseball. Yaeger says that at the end of each year, minor league franchises have to present their financial statements. If any of them have any outstanding debts, especially to local governments, the league will ask them to settle them quickly. If they don’t, the league will bring in a solvent operator who would be bound by the previous team’s prior obligations. In other words, even if the Sounds pulled an Enron, all wouldn’t be lost.
The plan now is for the Nashville Sports Authority to consider the Sounds proposal. Hopefully, the group will do a better job examining that plan than it has monitoring the Predator’s inept management of the Gaylord Entertainment Center. Meanwhile, the mayor’s office will commission an independent financial analysis of the deal. From there, the plan will go before the Metro Council. That may be the ultimate wild card. During a recent council meeting, the body spent nearly 20 minutes debating an amendment on a good government resolution that had no teeth. During that debate, at least two members, Brenda Gilmore and Carolyn Baldwin Tucker, seemed to have little understanding of the Internet. How they’re all going to digest the Sounds plan is anyone’s guess. But if anyone can help them, it’s Yaeger.
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