Podcast - How the New Tennessee Titans Stadium Development Came to Fruition

Jon Cooper: Welcome to another episode of Holland & Knight's "Real Estate Law Unlocked" podcast. I'm Jon Cooper, a partner at Holland & Knight. My practice focuses on local government and land development matters. With me today are my partners Bo Campbell and James Weaver. The three of us are fortunate to get to work on many complicated development projects together, including the new Tennessee Titans football stadium. Bo, why don't you and James get us started by introducing yourselves?

Bo Campbell: Thank you, Jon. I'm Bo Campbell. I'm a partner in the real estate group at Holland & Knight and have been practicing in the development finance and property acquisition area in Middle Tennessee and around the country for over 40 years, and pleased to be involved and provide hopefully some insights into the new stadium project on today's podcast.

James Weaver: Thanks, Jon. James Weaver. I'm a partner in the PP&R Group at Holland & Knight. I'm a lawyer/lobbyist and have been doing this almost 40 years and was also a lucky privilege to have worked on this project of the prior iteration of Nissan Stadium and this Nissan Stadium 2.0 that we're going to talk about today.

Jon Cooper: Great. Thank you both. Bo and James, can you give our listeners an overview of the Tennessee Titans stadium project and maybe walk us through how the overall scope of the development came about, especially if you can reference the surrounding mixed-use district property around the stadium and kind of how that came about?

James Weaver: Sure, I'll start, and then Bo can chime in a little bit of history. When the Oilers relocated to Nashville right before the '99-2000 NFL season, their new stadium was constructed on the east bank of the Cumberland, directly across the Cumberland River from the central business district, and it's been there ever since. The organization started looking at a major renovation of the stadium maybe five years ago or so. And that analysis eventually morphed into a desire and a need to construct a new stadium, still on the stadium campus, but between the stadium and the interstate loop around the downtown. So the franchise, the ownership group, the leadership of the organization, in conjunction with our local leaders, state and local elected officials, started talking about a new stadium. And that's been a multiyear process. Again, we've been about this – while we're on the final legs of construction now, it started obviously many, many years before that. The other thing that happened in that interim period between when we built the first stadium and this project was that you're not seeing major sporting venues anywhere, but certainly not in the United States, being built anymore where they're surrounded by a sea of parking. What you're seeing are stadiums that are part of a neighborhood or a development. And certainly that was in the client's minds from the very beginning. So one of the things that we did very early on was bring on Bo Campbell onto our team to help the client understand not only how do you integrate legally a large sports facility into a multi-use development, but just sort of the nuts and bolts of how you think about how to do something like this.

Bo Campbell: I think it's interesting, too, James. I think one of the things that's interesting about the process that probably would come as a surprise to a lot of folks is what we discovered and the client discovered was that renovating an old stadium and getting it up to the current status and capability and quality that is needed to compete with similar teams and stadiums around the country was a much, much more significant undertaking than might be appreciated. Stadiums have evolved significantly since then and since the original stadium was built. And so the idea of pursuing a new stadium became much more palatable once you realized the cost and the ongoing maintenance of an old stadium like that. So that led to the decision to try to pursue a new stadium. In terms of development around it, new development, it was not a thing 30 years ago really, not much of a thing. It takes a particular group that knows how to do that and knows how to capitalize on the interplay between stadium activities, which, by the way, are more than just football games. There's concerts and basketball tournaments and soccer games and any other activities that might go on in this building, which is an enclosed building, which facilitates a lot of activities. And so we scoured really the country and talked to I think about 12 different development groups to try to get a feel for how to do this integration, and coast-to-coast, large and small. And it became apparent that integrating the stadium with a mixed-use development on the campus around it and getting the right mix of uses around it was an extraordinary way to create a new neighborhood, which is what is being created around that stadium. It's a brand-new neighborhood for Nashville. And that was a fascinating process, and that's what sort of started us down the path of the current project.

Jon Cooper: So this new stadium, the cost is going to come in at about $2.2 billion, which I believe is the largest public-private sports project in Tennessee. The stadium, along with the future development that you mentioned around the stadium on the east bank of the Cumberland River, will include the new world-class Tennessee Performing Arts Center project. So all of this is very complicated from a development standpoint, with lots of moving parts. From a government, legal and real estate perspective, what makes a project of this scale particularly complex compared to more traditional development deals?

James Weaver: Well, I'll take the easy part first, which is from a governmental standpoint, we had essentially three or four entities sitting around the table, all of whom have similar interests. Their interests are generally aligned, but not completely aligned. You had our state partners who were focused like a laser on the fact that this was going to be an enclosed facility and it was going to allow this sort of year-long use of the facility. Our current stadium is obviously open air. It was also going to position the team and the city and the state to host a whole plethora of events that we currently couldn't host anywhere in the state: these very large international-type events, sporting events, concerts, very large concerts in the winter. So our state partners were very focused on that. The local government was focused on obviously those issues, plus the fact that this is, as Bo pointed out, going to be a new neighborhood. It's essentially in the geographic center of Nashville. So they were very focused on sort of the built environment, what was going to be there. And then obviously from the client standpoint, you know, the client was focused on this [was] going to be their long-term home. And there is a certain amount of competition. There are a lot of new franchises that are looking at new buildings. And certainly our client wanted their home to really speak to the fact that we're in Nashville and hired a design team, parenthetically, that I think delivered on that in spades. But so again, the governmental interplay, we had two governments involved, various agencies of both governments and the client. Obviously this is an NFL facility ultimately, and so the league had obviously an interest in certain aspects of the building. So while their interests were aligned, the client spent a lot of time and effort and energy in making sure that everybody was comfortable with what we were doing.

Bo Campbell: From the on-the-ground sort of development side of this, several things make this much more challenging than a typical development, even a typical mixed-use development. One would be timing. There's an existing stadium there that has to host eight or 10 NFL games every year for three years, I guess, during this project, with the new stadium being built next to it. The new stadium was taking up a lot of parking. So you've got to work on the interplay between the new construction and maintaining the existing building and its functionality for all of its events. You've got to work on parking, traffic routing during construction and during these events, 65 or 70,000 people trying to get in and out of there. So that makes it quite complicated. Another thing is this site was a big field of parking lots for the most part. There's a few other things, but mostly parking lots. And the infrastructure was not there to support the kind of mixed-use development and stadium development. And so a lot of work had to be done to envision where the infrastructure needed to be – the roads, the sidewalks, the bike lanes, the greenways, the utilities, how they interplayed – because once you started on this, there was not much turning back, and where all that would go and who would be responsible for it. A lot of the utilities that went to the stadium were also going to benefit the mixed-use development. And so those costs and those benefits had to be allocated out among the parties. The uses that would go there were critically important. As we've said, we were trying to create a new neighborhood. And you've got to think about parking access and all the other things that you think about when you're building a neighborhood. And this is, as James can attest, from the government relations side, with all the government matters and parties and constituencies to be considered, there are sort of sub-constituencies on the Metropolitan Council, for example. People who have agendas from labor to housing to disadvantaged business enterprises (DBE) and other kinds of things that have to be accounted for, in one way or the other, in order to facilitate this development and this extraordinary expenditure of public funds for this project.

James Weaver: I think, Jon, also, we'd be remiss if we didn't mention that we have an extraordinary client on this matter. While they're obviously in the business day in and day out of professional football, it's a very diverse group of folks with a lot of background, not just in pro sports. And so that was a huge help to us, because these kinds of projects are extraordinarily complex. Some of the most complex development projects that one could envision. And we were really lucky both times. Again, we represented the team during the initial stadium development in the late '90s. And now we have worked with them on this one to have a really, really great client team to work with us.

Jon Cooper: So, as you worked through the stadium development agreement and lease and the various other project documents that go along with those, what were some of the biggest challenges you had to navigate, and how did you approach resolving those?

Bo Campbell: Well, we've touched on some of them, but the scope alone was a challenge, right? This is over $2 billion, funding coming from lots of different sources, two government sources plus the team. The execution of a project like this while maintaining the operations of the existing stadium, dealing with traffic and infrastructure consequences from a development like this, those were huge challenges. Timing was a challenge. It was critical just to be undertaken within a certain time frame, that it be completed within a time frame. It was critical that it be completed on budget. And it was critical that it comply with other requirements from the state, from the city, from the team itself [and] from the NFL. The NFL has its own sets of things that it's interested in, making sure that its teams' facilities comply with. So trying to juggle all of those and more made this really challenging. And as we've alluded to before, we were fortunate to have an extraordinary working team on this. Not only from our client, which was fantastic, but the state and the city and the league and others were very accommodating.

Jon Cooper: James, how about you working with the local government and negotiating the lease and development agreement? What were some of those challenges?

James Weaver: Bo touched on this earlier, is that any time you're dealing with a political body that's part of the process and all of these agreements had to go through the approval process, not just at the executive branch level with our mayor at the time and his team, but eventually had to be approved by the Metropolitan Council. Which here in Nashville, we have a very large council, Jon, as you're aware, 40-member council, all of whom come to this work with different ideas, different hot-button issues, different things they want to accomplish, whether it's affordable housing or mass transit or minority business enterprise (MBE), DBE or all kinds of different issues, and then obviously we had three council members whose districts were essentially in and around the stadium. They brought all quality-of-life sort of issues to the table. And so it's a balancing act, right? You're trying to achieve your goal. You're trying to, again, keep the project on budget and on schedule, but yet get it approved and at the end of the day. You need to get 50 percent plus one of the votes in order to be successful. So again, a great client team who spent many, many, many hours, hundreds of hours meeting with individual members of both the state legislature, which had to approve this on two different occasions, and our Metropolitan Council, which had to approve of this on three different occasions. And Jon, I don't want to act like Nashville is the only place. These deals, these projects for these very large sports-centric developments are hard wherever you do them. Currently, Chicago and Washington and Charlotte, Jacksonville, Denver, all of those cities are going through this exact same process, literally right now as we speak. And it's a place where policy and politics and municipal finance and the business of pro sports, that little intersection where they all run into each other, typically, is around these developments.

Jon Cooper: You mentioned earlier creating a new neighborhood around the stadium, kind of a new community where it's just a sea of parking lots right now. Projects like this often have a significant impact on the surrounding community and the real estate market. The east bank has been a focus of both of your practices for many years now. From your perspective, what does this development mean, not just for Nashville's growth generally, but for the east bank specifically, and what lessons can other cities or developers take away from a large-scale stadium and mixed-use project like this?

Bo Campbell: Well, we hope they're positive lessons when it's all said and done. We'll see how it comes out, but the goal here and the hope is to take this property and not have it developed in onesies and twosies that aren't somewhat cohesive and not consistent with one another. And so one of the benefits here, is to truly start from almost scratch. To develop a new neighborhood that's not like any other neighborhood in town. And that fits in carefully with the vision for the full east bank development that the city's been working hard on for the last several years. This will be one part of it, a big part of it, an anchor part of it, but it also is a tone setter, and it will help support all these different uses. It will not be like downtown, it will not be like any of the suburban areas or any of the other in-town neighborhoods. It will be its own, and will be accessible – pedestrian bikes, cars – and should generate an enormous amount of value, business, housing and other benefits that will spread throughout that east bank and call others to come.

James Weaver: I think, Jon, if the listeners can envision what is essentially a 700-acre island that is surrounded on three sides, if you will, by the Cumberland River and on one side by a very large interstate loop. And that 700 acres has been sitting there for hundreds of years, well over 100 years, as an industrial area. In the late '90s, we decided to build a football stadium there and did, but didn't really do anything else other than build that football stadium, and I think the political leadership at the time all believed that that area, which we call the east bank, that that stadium would be the spark that would generate a redevelopment of that area, and to be honest with you it didn't. And so what we came into this particular project, we had other things going on the east bank. The Oracle world headquarters are being built down on the other end. We've got a lot of potential development, but obviously the stadium and you mentioned earlier the performing arts center will certainly be this time a catalyst for redevelopment of this entire area, which is literally in the geographic center of our city. And so I think everybody will be not only disappointed but shocked if 20 years from now this area of our city is not going to look anything like it looks today. This time, with the amount of investment and the amount of focus from our government partners. We should have mentioned earlier on that we developed an entire zoning code just for these 700 acres. It's modeled on some things that we've done in the city and other places, but essentially we created a zoning code as part of this process to help ensure that there were no legal impediments to this area redeveloping in a way that everybody wants it to.

Bo Campbell: And James, you made a good point about the Tennessee Performing Arts Center. That is an example of a project that is drawn to this site. It's a $600 million state-of-the-art iconic performing arts center that is going to be built on the river on the stadium campus that would never have been there without this stadium project. The site was not going to be available to do that. There are other items, Oracle headquarters and other things, that I think, that are there that are driven in large part by the stadium already.

Jon Cooper: Well, Bo and James, thanks to both of you for the conversation and thank you to the listeners. We hope you'll come visit us in Nashville and come to the new stadium when it opens next year.