by Steven Hale
After unveiling the financing plan for the proposed Nashville Sounds stadium earlier this week, Mayor Karl Dean made his way to The Tennessean Tuesday to give his sales pitch to the daily's editorial board.
He outlined plans for the new ballpark — it's very important, apparently, that we call this a 'ballpark," not a stadium — which he says will connect the Germantown and Salemtown neighborhoods to the downtown core. On the financial side, the administration has been saying that the
stadium ballpark will almost "pay for itself," detailing a plan that would use the Sounds' annual lease payment ($700,000) and tax revenues generated by the stadium and two private development projects to pay for the $4.3 million annual debt obligation. (Here's where that "almost" comes in — the plan also calls for Metro to chip in $345,000 annually to pay off the debt.)
Dean tells The Tennessean that the plan meets his criteria for the project — the Sounds have "skin in the game," he says.
But the Sounds do not have skin in the game.
There's no reason, yet, to doubt that the Sounds have been, and will continue to be, good-faith partners in this project. They certainly have an incentive to fill the ballpark once it's built, and make it a success. But putting skin in the game means you have something to lose. By that measure, the skin in this game is all Metro's — in other words, the taxpayer's.
Metro will own the $37 million ballpark. The Sounds will pay $700,000 per year to play baseball there. That money will help pay off the $65 million in debt incurred by the city in buying the state-owned land and building the stadium. It's good that the Sounds won't be using a Metro-owned facility for free, but it counts no more as "skin in the game" than my rent payments to two previous landlords (who, I'm quite sure, did not see me as someone with "major skin in the game").
When something breaks, or needs to be upgraded, Metro will pay for it. (A clarification: The Sounds will be responsible for routine maintenance at the ballpark. Metro will take on any major capital improvements.)
The plan also includes a $50 million investment by the Sounds in a multi-family and retail development along Third Avenue (the tax revenue from which is slated to go toward paying off the debt on the stadium). But the team is not contractually obligated to come through on this investment. The mayor has said he has a "high degree of confidence" that they will, and Metro Finance Director Rich Riebeling tells the board at 1100 that there's only a "remote" chance that this, and another planned development project, won't come to fruition. If the Sounds don't end up coming through, Dean and Riebeling say someone will.
They may be right on both fronts. The Sounds may have every intention of building a $50 million development that will generate needed revenues and benefit the surrounding area. If they don't, indeed someone else might jump at the chance.
But if the Sounds decided, for whatever reason, not to go through with the development, they will lose nothing. Because they don't have skin in the game. They're playing with house money.