Bridgestone Arena entered 2020 as one of the preeminent sports and entertainment venues in the nation, routinely nominated for the prestigious Pollstar Award for best arena in North America and generating in excess of $500 million in economic impact.
Nissan Stadium was poised for its biggest year ever in 2020, thanks to a growing concert lineup and a full slate of Nashville SC matches in addition to Tennessee Titans home games.
The COVID-19 pandemic wiped all of that away, of course, leaving Bridgestone Arena sitting empty and Nissan Stadium with a miniscule fraction of fans at Titans games.
The buildings symbolized Nashville’s leap in the 1990s to a major league market and served as economic engines for an entertainment industry that compares favorably to much larger cities.
The inability to host fans has somewhat complicated the lease deals at Bridgestone Arena, Nissan Stadium and the Nashville Sounds’ First Horizon Park. Metro pays the debt service and funds upgrades at those buildings thanks largely to the revenue generated by the fans who attend games and concerts there.
In the case of Bridgestone Arena, the city lucked out when its new lease agreement with the Predators’ ownership group shifted much of the financial responsibility away from Metro and onto the hockey franchise. The Predators agreed to forfeit an operating subsidy that amounted to about $3.5 million annually. In exchange, the Predators committed to invest around $350 million in Bridgestone Arena over the next two decades and fund those improvements in part with ticket surcharges, which are obviously generating no revenue since the facility hasn’t hosted fans since March.
“The new lease, you have to look at it as an agreement for 30 years,” Predators CEO Sean Henry said. “It is beneficial to the city under these circumstances. In the short term it’s a pretty good hit to us. In the long run, we still think obviously it will be good for both sides.”
Henry said earlier this month that the Predators are in discussions with the Metro Public Health Department over how to accommodate some fans at the stadium when NHL resumes play. Like music venues of all sizes, the business model at Bridgestone Arena is to sit people close together for an extended period of time – the exact conditions for spreading COVID-19 that public health officials have warned against. The live music industry was the first to shut down and it will be the last to come back.
Bridgestone Arena is as much a music venue as a hockey facility. In 2007 when the current ownership group, then led by David Freeman, purchased the franchise and saved the Predators from leaving town, they negotiated a new deal with Metro that incentivized more concerts and non-hockey events. Under the agreement struck with then-Mayor Karl Dean, the Predators got to keep sales tax generated at those events. As 16 Pollstar Award nominations show, that strategy has been working. It worked so well, that the Predators were able to wean themselves off an operating subsidy that had been in the lease agreement since 2007. In the coming years, funded with the ticket surcharge, the Predators planned to keep investing money into the arena so that Metro would never have to ponder building a new facility.
“We’ve certainly had executives from teams in all the leagues, across other sports, ask what our secret is, how we have been able to do what we’ve done,” Henry said.
Sports Authority Executive Director Monica Fawknotson said it’s been a challenging year since the venues, for which her agency serves as the landlord, have been unable to host fans.
“You think of what those buildings mean, not just to the teams that play there and to their fans, but to the businesses that are nearby that benefit from them as well,” Fawknotson said.
The good news for Metro in the short term is that there is enough money in reserves to pay for the debt service at Nissan Stadium.
“The debt service requirement for Nissan Stadium for fiscal year 21 is nearly $6 million,” Metro Finance deputy director Mary Jo Wiggins said. “These debt service payments are typically covered by rent, parking fees, water and sewer PILOT and ticket revenues.
“While projections for fiscal year 21 indicate all those revenue sources will not cover the debt service for FY21, there are reserves from previous years’ excess revenues that will adequately cover debt services payments through the end of FY 21.”
Gil Beverly, chief marketing and revenue officer, told the Tennessee Lookout that while the franchise’s business operations are fortified by multiple revenue streams, like media contracts and merchandise sales, the pandemic has taken away what was poised to be a record year at Nissan Stadium. Concerts by bands like the Rolling Stones, in addition to the annual CMA Fest shows, were cancelled or postponed.
In the short term, Beverly said that the pandemic has no direct impact on the team’s lease agreement with the city. In the long term, the Titans view the stadium as an asset that can continue to evolve for hosting concerts and non-football events.
“The Titans consider Nissan Stadium the ‘Biggest Stage in Nashville,’ a venue capable of hosting the greatest events in the world,” Beverly said. “As Nashville continues to evolve as a world-class entertainment destination, our feeling is that Nissan Stadium’s prominence as a music/entertainment platform will only grow.
“Our ambition is to continue to diversify the types of events that we can host there to include the big stadium shows we are known for, to smaller more intimate writers rounds/singer-songwriter performances, and everything in between.”
The Sounds’ season could not have been timed worse with the arrival of the pandemic just weeks before the baseball season was scheduled to begin.
Wiggins, the finance department official, said the city relies on revenue generated at the ballpark to pay the debt service. Anticipating a shortened season with less fans, the city budgeted $700,000 to help pay the debt. But, the reality was even worse, since the minor league baseball season was cancelled.
“That original estimate was based on a delayed start to the 2020 baseball season, but did not account for the season to be fully cancelled,” Wiggins said. “As such, additional funds are likely needed to meet fiscal year 21 debt service payments.”
Fawknotson said she believes the return of Nashville’s sports venues will be a long-awaited sign that the pandemic has been beaten.
“I think that’s what we’re all looking forward to, to be in the stands and rooting for our teams,” Fawknotson said.