Time running out, Metro and Powers Management look to strike arena deal

Monday, March 19, 2012 at 10:05pm

Last week, for the second time in a month, Bridgestone Arena changed from ice to hardwood.

The second and third rounds of the NCAA Men’s Basketball Tournament sent the Predators packing for the West Coast, just as the SEC women’s championship sent the team on the road in late February.

In the meantime, squeezed between Predators’ games and hoops championships, were live performances by Nickelodeon heartthrobs Big Time Rush, country superstar Jason Aldean and Canadian rap sensation Drake.

It’s been a busy building at Fifth and Broadway and looks to be busier still in upcoming weeks, with the NHL playoffs and summer concert season looming.

After the local ownership group bought the Predators in 2007, Metro and the group’s arena management arm — Powers Management — inked an incentive-laden deal, tying subsidies from the city to certain attendance benchmarks for both hockey games and other events.

Under the current lease and incentive structure, Powers is paid $7.8 million from the city’s general fund. Since the local owners bought the team, and thus took over arena management duties, Metro has paid more than $38 million to Powers.

That subsidy was designed to be paid through tourism taxes and fees — originally put in place to pay for the original convention center before going to the arena coffers — but now that money goes to pay for the Music City Center, and the arena dollars come out of the general fund.

The agreement was set to automatically renew June 30 if the Metropolitan Sports Authority did not take action before the end of 2011.

The authority — with the Predators’ blessing — extended the deadline to the end of April. The board is scheduled to meet in its regular March session Thursday, and nothing on the agenda hints a new deal is ready for approval. It’s the last scheduled meeting before the deadline — and without action by then, the existing $7.8 million deal simply renews. Special meetings are fairly common for the authority, and should a new deal be ready for a vote, calling such a meeting is simple enough.

The Predators have used the extra 120 days to put on a strong forecheck, selling the city and its citizens on the benefits of a vibrant downtown arena.

At least once a week, a glowing tribute to the economic, cultural or emotional impact of the team and building hits reporters’ inboxes. During the recent road trip, Predators TV team Pete Weber and Terry Crisp waxed about the benefits the basketball tournaments yield downtown — their banter about economic impact a bit jarring in its departure from their usual shtick.

Thus far, little public has been said about the state of those negotiations, though Mayor Karl Dean has said repeatedly the city’s goal is to reduce that subsidy.

In a December interview, Dean said city leaders made a choice in 2007 and 2008 that having professional sports was significant enough for the city to subsidize, and in the meantime, the Preds and Powers have “more than lived up to their end” of the agreement. Dean also asserted the incentive package has been positive for the city.

Few, if any, other cities directly pay a tenant team out of the general fund to operate a facility, as is done here.

For example, in Tampa, the Tampa Bay Times Forum — home of the NHL’s Lightning — benefits from a $2 million capital fund — a combined city and county effort — with money coming from arena-generated sources.

The Predators have indicated a willingness toward a similar deal here. At December’s Sports Authority meeting, Predators COO Sean Henry — who formerly worked for the Lightning — said raising the seat-user fee at Bridgestone Arena could be used as a new revenue source.

“We have to come up with a revenue stream,” he said. “We are open to talking about that fee. I think we need to address it.”

That would mirror the deal between Titans and the authority, in which the seat-user fee at LP Field pays for the $26 million upgrade project on the East Bank.

Some members of the Sports Authority were reticent to tap into the user-fee dollars to pay for renovations for the football field, and may bristle at a similar plan at the arena.

Powers has commissioned an economic-impact study to demonstrate the worth of an active arena to the city, the results of which should be published soon. It will be the first such study since before construction began.

What’s clear already is that more people are clicking through the turnstiles at Bridgestone than ever before: Announced attendance for Predators games is at levels unseen since the honeymoon period of the team’s first seasons in Nashville. Through 33 home games, paid attendance averages 15,992, a best-ever figure. Ticket revenues are up nearly 6 percent. The team will break the record of 20 sellouts set in the 1999-2000 season.

Meanwhile, non-hockey events are up, as well. The arena benefits through a 2009 state law that shifts the non-school, state portion of sales taxes generated at non-hockey events to the Convention and Visitors Bureau for use by Powers and the Predators. The team also collects funds from the so-called “jock tax,” a flat fee paid by visiting players. Those state tax deals are unlikely to disappear, no matter what happens with the lease negotiations.

In the meantime, the structure of any new deal remains a mystery. 

12 Comments on this post:

By: Kosh III on 3/20/12 at 6:31

A surcharge on tickets would be the best way, let those who use it pay for it.
But I'd guess we will continue to shell out millions in welfare checks; funny how all these avowed "capitalists" can't make their business thrive without a handout from the "socialists" they pretend to hate.

By: Nashvillesanity on 3/20/12 at 7:06

Almost 60 million more for schools that are already failing, 60% tax cuts for HCA AND Dollywood, and more corporate handouts forthcoming. All this on the backdrop of higher taxes for Nashville residents.

At a certain point we should realize Dean is creating a city for others, for tourists, concert/festival goers, and wayward panhandling corporations looking for their next big government handout.

By: BigPapa on 3/20/12 at 8:48

"At a certain point we should realize Dean is creating a city for others, for tourists, concert/festival goers, and wayward panhandling corporations looking for their next big government handout."

You are SOOO right. I've been saying this for years. Every since Bredesen the Mayor's have written off the Nashville citizen and catered to down town and businesses.

Our new motto should be "Nashville A Great Place to Visit!... but you Don't want to Live Here."

By: Shadow63 on 3/20/12 at 9:22

How about subsidizing my property tax Dean.

By: slzy on 3/20/12 at 11:38

I emailed all the council members ,asking what has Dean done for the long time residents. I did not get a single reply.Nothing.Nada.

You would have thought his closest sycophants could have thought of something.

Guess they were too busy whore mongering and sneak thieving.

By: sharko20 on 3/20/12 at 12:54

The Preds are a better investment than green energy companies that got federal tax dollars. Can you say Solyndra?

By: fair_minded on 3/20/12 at 3:17

or how about this deal-- let Powers pay *us* (Metro) rent on the place??

This used to be the way ALL governments leased out public facilities-- by taking bids and giving it to the *highest* bidder! Things such as concession stands in local/state/federal parks are done that way as are many campgrounds, gift shops, etc.

Let them pay a flat-fee to lease the building, and then after a certain level is reached, a percentage of the sales of other events!

WE built the building, let's make some cash off the deal! and none of this "tourist dollars" crap! Tourist dollars should be icing on the cake, not the main course!

there is also no need to pay Powers a fee to "manage" the place-- they take all the money from the events (and naming of our arena!) -- WHY should we pay *them* for that service?? we've given them a first-class facility for them to rent to others between games.... that should be a sufficient profit motive!

let's let the public make some profit for a change instead of just passing out corporate welfare!

and don';t even ask me about Dolly Parton and Gaylord! They announced they were coming here before any tax deal was mentioned... let them now come and pay taxes like anyone else!

By: Moonglow1 on 3/21/12 at 6:40

Moonglow1: How did the Sommet Group fit into the picture. Are we paying for the arena because Sommet siphoned money? Are they in prison yet?

By: joe41 on 3/21/12 at 8:46

I think Powers has lived up to their end of the agreement. They have filled the arena with people and that has spread all over downtown.
Joe

By: MusicCity615 on 3/22/12 at 8:26

Joe, I completely agree. Here's why-

http://nashvillepost.com/news/2012/3/22/arena_officials_claim_410m_impact

By: wadesworld on 3/22/12 at 8:59

Those of you arguing against this subsidy must not have been around long enough to remember downtown before the arena.

Shuttered stores, adult bookstores, homeless and sketchy people roaming the streets. Downtown was NOT a place to be walking around. I'm not saying it was Beruit, but it was FAR different than what we have today.

Without the Preds and the arena, the Country Music Hall of Fame would never have moved downtown. The Schmerhorn Symphony Center would not have been built downtown. The new businesses would not have opened. The new convention center would not have been built downtown. The gulch wouldn't exist. The new condos wouldn't exist.

In terms of impact, the Preds mean FAR more to the city of Nashville than the Titans, and we need to treat them like the first-class component they are.

As the Preds' bottom line gets better and better, I'm all for reducing any subsidies, as it makes sense. However, let's not pretend they're just a sports team and don't matter.

By: localboy on 3/23/12 at 2:32

Here's a cautionary update to another tale of government involvement with sports entities:
http://www.commercialappeal.com/news/2012/mar/23/stadium-for-sale/?partner=popular
A portent of things to come??
However, wadesworld would seem to make a good point - without the Preds and the follow-on businesses there would be a very different look to Nashville and Lower Broad.