Al Gordon is to the Sounds what Bud Adams is to the Titans. Only, unlike with Adams, we don’t know what kind of art Gordon likes, what kind of car he drives or what kind of ill-advised public comments he’d be likely to utter.
The Chicago-based businessman is largely a mysteryat least to those of us in Nashville. Yet, on behalf of his minor league baseball team, the Sounds’ owner is asking for the property that formerly housed the trash-burning thermal plant and for government-backed bonds to finance the construction of a new $38 million downtown baseball stadium. It’s nothing like the kind of golden apportionment that is the Titans’ coliseum, but the Sounds proposal nevertheless makes city officials and auditors a little nervous. A KPMG report, in fact, recently recommended that the city conduct further “due diligence” on the Sounds’ parent company before moving forward with the deal.
While Gordon has mostly delegated the negotiations for the proposed 11,000-seat stadium to the Sounds’ eager general manager, Glenn Yaeger, it’s Gordon who should probablypardon the phraseget in the game.
He’s done quite well for himself, and it’s a safe bet that he’s a formidable negotiator. Consider this recent transaction: Gordon was vice chairman of Artisan Entertainment, the company that brought us The Blair Witch Project and that owns a 6,700-title film library (It’s a Wonderful Life included), until Vancouver-based public company Lions Gate Entertainment recently bought it for $160 (!) million. Lions Gate also assumed Artisan’s approximate $60 million debt. According to published reports about the deal, Gordon’s Chicago investment firm, Richland Gordon & Co., owned 19 percent of Artisan. (Nineteen percent of $160 million is, yes, $30 million, debt excluded.) And Artisan management, which may well include Gordon, owned another 25 percent of the company.
In the meantime, city officials, backed by KPMG’s finding, and Sounds boosters are quibbling about revenue versus general obligation bonds and who should be assuming the risk for the development deal. City officials, who are well aware that Gordon’s no pauper, want a guarantor, and the Sounds want the city to trust their revenue projections, which would be earmarked to pay back the bonds.
“The way we’ve always approached the downtown development project is to come up with a project that would support the issuance of the bonds,” Yaeger says. “We’re not looking to the taxpayers to subsidize the construction of the facility. We’re purely focused on how we can create a project that generates enough revenue to repay those bonds.”
Yaeger says it’s clear that Gordon has been willing to assume risk on his Nashville investment. “Al Gordon has subsidized minor league baseball for the last four years,” he says. “He used his own money to keep the team here.”
Skeptics, such as local attorney Whiney Kemper who recently wrote a City Paper column opposing the proposed stadium deal, would ask for an instant replay of the Sounds’ less scrupulous moments in recent years. “Give me a break,” Kemper wrote. “The Sounds’ lease for Greer stadium runs to 2008. Out-of-towner Gordon has no choice but to play there for the next five years. Gordon should not be crowned with a halo for doing what he is legally obligated to do. For the last few years the Sounds have attempted to break this lease by not paying rent and threatening to go elsewhere.”
Of course, there’s more at stake than just a ballpark. To help generate sales taxes and pay for the project, the proposal calls for private development on the same site. Along the left field wall would be a pair of residential apartment buildings or condos, totaling about 200 units. The first floors of both buildings would house retail establishments, which could include anything from a Gap to a locally owned record store.
The Sounds are asking Metro to guarantee bonds to pay for the stadium portion of the project. The debt service for $36 million in bonds is $2.6 million a year over 25 years. Metro would own the park, but in its initial proposal the Sounds asked that the city cover the first $300,000 in annual maintenance costs. A subsequent letter from Metor finance director David Manning makes it clear that Metro wouldn’t pay to operate the park.
The Sounds, who have struggled financially in the past, have pledged to pay $1.5 million of the annual debt service. The developer of the residential component of the project would pay another half-million. The third source of revenue, $600,000, is the government allocation in the form of sales tax revenue.
Typically, sales tax revenue is divided between the state and Metro. But under legislation that has already been overwhelmingly approved in the state Senate and is expected to sail through the House, nearly all of the sales tax revenue from the park would go toward paying off the bonds.
The Sounds estimate that the new ballpark will mean $600,000 to $800,000 more in sales tax revenues from increased ticket, merchandise and concession sales, though that figure doesn’t include any sales tax revenue from the retail and residential components of the project.
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