Mayor Proposes $275 Million Soccer Stadium Deal
Potential MLS team would be responsible for all but $25 million of fairgrounds stadium cost
Sounds pretty good, right? What’s that? What do you mean, “You’re just setting us up with a rosy headline so you can undermine it with the actual horrible facts, aren’t you?” Do you think you know me that well?
The actual horrible facts:
- Of the $275 million in construction, land, and infrastructure costs, the Nashville Metro Council, a joint city-county governing body, would put up $250 million by selling bonds. The other $25 million would come from John Ingram, owner of Nashville S.C., a USL expansion club slated to begin play in 2018.
- Ingram and his fellow owners would pay off the bonds via “a mixture of rent, captured taxes from revenue generated at the stadium and private investment,” according to the Scene. The Tennessean breaks that down: It’s actually $9 million a year in rent payments, plus $4 million a year from kicked-back state sales taxes from anything bought at the stadium and from a $1.75 surcharge per ticket.
- If sales taxes and the ticket surcharge fall short of $4 million, Metro would be on the hook for the shortfall.
Let’s be clear about this: Counting money siphoned off from sales taxes collected at a sports venue as a “private” contribution is completely insane. Even aside from the substitution effect — where increased money spent at, say, soccer matches invariably turns out to mostly be counterbalanced by decreased money spent at, say, local movie theaters and restaurants — this is money that for a normal business would flow directly into the state treasury. For Ingram to insist that this is really “his” money because he touched it with his hands (or his concessions workers did, anyway) is just the Casino Night Principle.
Exactly how much in public money this would actually cost Tennessee taxpayers is a little tricky to determine, since those sales taxes are lumped together with a ticket surcharge, something that economists universally agree ends up mostly coming out of the team owner’s pocket. But let’s try to back into it: If a typical MLS team sells 20,000 tickets per game (I’m assuming here that tickets given away for free still have to pay the surcharge), and there are 19 home games in a year, that’s 380,000 tickets per year. Multiply by $1.75, and the ticket surcharge should generate about $665,000 a year.
That leaves $3.335 million a year to be covered by sales taxes, which comes to about $50 million in present value. Add in the $25 million that won’t get repaid, and we’re at $75 million in public cost — at minimum, because if tickets don’t sell well, then Nashville would have to make up the shortfall out of its own pocket.
This is not the worst stadium proposal in history, but it’s also not the “private-public” (emphasis on the first word) deal that Mayor Barry promised. And if things break the wrong way, it’s not that far off from the $100 million subsidy demand that is raising eyebrows in Cincinnati. MLS stadiums are still generally lighter on the public purse than those in other U.S. pro sports, but that’s only because MLS team owners and wannabes know they can’t get away with demanding as much — and that doesn’t make the cash that taxpayers would be out any better of a deal.
(Rest in peace, Tom.)