What to Expect When You're Expecting a Soccer Stadium

MLS2Nashville rendering

On Nov. 7, the Metro Council voted 31-6 to approve a $275 million plan to build a soccer stadium at The Fairgrounds Nashville. Here are our answers to some frequently asked questions in the wake of the vote.

So we’re getting a soccer team? 

Not yet. The vote was to build the stadium only if Nashville gets a Major League Soccer franchise. The MLS board of governors will vote on two new franchises in December, and two more in December 2018. This vote by the council was seemingly the last hurdle that MLS2Nashville, the group organizing a bid for a team, needed to clear to meet the league’s three stated preferences for a franchise: attractive market, solid ownership and a plan for a soccer-specific stadium.

OK, so what other cities are we competing with?

There were 12 other cities that expressed significant interest in a franchise. Of those, Sacramento, Calif., has been all but assured of a franchise and has already started moving dirt for a new stadium. That leaves 11 cities vying for the other 2017 slot, and of that group, there are only a few main contenders: Detroit, Cincinnati and Phoenix. Those three markets are closest to fulfilling the league’s stated criteria, while a number of other markets — San Diego, St. Louis, Charlotte, Tampa/St. Petersburg — have fallen away for a number of reasons, ranging from lack of political will to issues with ownership. Many league observers have labeled the Nashville bid the frontrunner, but that’s no guarantee. Detroit, for example, is a significantly larger market but has had to shift its stadium plans to Ford Field, the home of the NFL’s Lions, after the city could not get its own downtown stadium plans approved quickly enough for this round of bids. Cincinnati has the largest crowds in the United Soccer League (the second-tier league where Nashville will have a franchise next summer) but has been unable to come up with a viable stadium of its own. (Update: Sports Illustrated reports that Detroit has fallen behind and it's Nashville vs. Cincinnati for the second spot.)

How much is Metro putting up for the stadium?

The city will spend $25 million on infrastructure around the fairgrounds site (roads, sewer, sidewalks, etc.) and $25 million to fully fund the fairgrounds master plan, which includes all-new expo buildings for events like the monthly flea market. The city will issue $225 million in revenue bonds through the Metro Nashville Sports Authority for the stadium construction, and the team will cover them through a lease and the capture of tax revenues on events at the stadium. The city could end up paying some more if the taxes generated by the stadium total less than $4 million in the first few years of the lease, but that expires in the 10th year of the deal. Importantly, the team agrees to cover any cost overruns associated with the project. Both the Barry administration and the bid group say ownership will be responsible for repaying the debt even if the team is sold or the league folds, but councilmembers have asked for firmer language.

What’s with the 10 acres of land that were given to the team to develop?

This was easily the most controversial part of the plan. The team, whose ownership group includes the Turner family behind MarketStreet Enterprises, asked for 10 acres of fairgrounds land to develop into mixed-use retail and housing as a way to make the economics of the deal make sense on their side. Some in the council, in particular At-Large Councilmember John Cooper, were harshly critical of Mayor Megan Barry’s administration for giving the land away at what they perceived as below market rates. In the end, a few amendments were added to the deal, including one stating that the council will set the terms of the lease. This will likely mean added provisions for affordable and workforce housing units, as well as guarantees that minority contracting levels will be met. 

Is it a good deal?

It depends on how you look at it. Some will be opposed to the city spending any money on stadia for top-flight professional sports teams, particularly when those clubs are owned by billionaires. On its face, the terms are significantly better for the city than the ones that built the Titans stadium or the Sounds’ First Tennessee Park, a project that surprised Metro with millions in cost overruns. Depending on how much tax revenue is generated (and recaptured for the project), as much as 90 percent of the cost of the stadium will come from somewhere besides Metro. The team has significant skin in the game, having agreed to pay a $150 million expansion fee in addition to covering bond debt that, by the time all is said and done in 30 years, will total $390 million. Mayor Barry promised that any deal would fall squarely on the private side of any private-public partnership, and on its face, this deal appears to do that. Fears of a so-called substitution effect — sales tax spent at the stadium is money that would not be spent elsewhere, and therefore given to Metro for city needs — are largely overblown. The city collected more than $305 million in local option sales taxes in fiscal year 2015, and the $4 million or so redirected to fund the stadium is a drop in that bucket.

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