Fairgrounds Speedway Racetrack expansion to 30,000 seats

[Melrose]

On 3/17/2023 at 3:38 PM, Bos2Nash said:

Just gonna go ahead and leave this right here...

As far as I know, this is what happened at the last referendum in which the fairgrounds were voted on.  The racetrack is a charter protected entity, hence my argument that it was the dumbest thing possible to exclude it from the MLS stadium discussion.

You have just posted a diagram of the revenue waterfall,  which does not contradict the fact (and actually confirms)  that Metro is backstopping the debt if there is a shortfall. 

IF, and only if, there are excess funds after debt service and reserves in subsequent years, there is a possibility of reimbursement for past outlays,  but that is a different matter.  Also,  note that such a reimbursement then comes at the expense of the capital reserve fund deposits  (which is going to be the Titans lease issue all over again down the road-  with inadequate capital repair funds and a "first class stadium" requirement)  and also at the expense of a contingent direct payment to the Fairgrounds budget.  The  Fairgrounds budget is subsidizing this deal year after year in this deal,  since the  guaranteed annual payment to the Fairgrounds (around $100k)   is a fraction of the actual value of the lost rental revenue the Fairgrounds will lose every year by giving up control of the campus for 4 weeks per year.

 

[samsonh]

4 minutes ago, Melrose said:

You have just posted a diagram of the revenue waterfall,  which does not contradict the fact (and actually confirms)  that Metro is backstopping the debt if there is a shortfall. 

IF, and only if, there are excess funds after debt service and reserves in subsequent years, there is a possibility of reimbursement for past outlays,  but that is a different matter.  Also,  note that such a reimbursement then comes at the expense of the capital reserve fund deposits  (which is going to be the Titans lease issue all over again down the road-  with inadequate capital repair funds and a "first class stadium" requirement)  and also at the expense of a contingent direct payment to the Fairgrounds budget.  The  Fairgrounds budget is subsidizing this deal year after year in this deal,  since the  guaranteed annual payment to the Fairgrounds (around $100k)   is a fraction of the actual value of the lost rental revenue the Fairgrounds will lose every year by giving up control of the campus for 4 weeks per year.

 

Yeah I thought the same thing. This diagram backs up exactly what you were saying.  I was unsure why he posted it. 

[Bos2Nash]

2 hours ago, Melrose said:

You have just posted a diagram of the revenue waterfall,  which does not contradict the fact (and actually confirms)  that Metro is backstopping the debt if there is a shortfall. 

IF, and only if, there are excess funds after debt service and reserves in subsequent years, there is a possibility of reimbursement for past outlays,  but that is a different matter.  Also,  note that such a reimbursement then comes at the expense of the capital reserve fund deposits  (which is going to be the Titans lease issue all over again down the road-  with inadequate capital repair funds and a "first class stadium" requirement)  and also at the expense of a contingent direct payment to the Fairgrounds budget.  The  Fairgrounds budget is subsidizing this deal year after year in this deal,  since the  guaranteed annual payment to the Fairgrounds (around $100k)   is a fraction of the actual value of the lost rental revenue the Fairgrounds will lose every year by giving up control of the campus for 4 weeks per year.

 

Glad you think so little of folks on this board that you had to explain what I posted back to me. I posted it for a very good reason. It shows that actually the profits of BMS and the success of the Fairgrounds backstop things. The profits of BMS are predicated on each of those waterfall items being met. This is how this deal gets done to get BMS to activate the track. Because Metro has failed in maintaining the track and not utilizing it properly through its Charter protections, the city put itself in a corner. By having these reimbursements come before larger profits, I would say this is a pretty big win.

So let's go through this step-by-step shall we. The four revenue streams provided would go into debt service first. In the event (IF) that the revenues of that year don't cover the debt service, then they go to a reserve fund that has 20% MORE monies in it to cover debt service. The debt factor is built back up to 1.2 (presumably more plugged into it if used?). The third factor is then the Non-tax Revenues (which by the standards of Metro does not include Sales tax, Property tax, etc as it is Non-Tax Revenue). Then money goes toward the Capital Projects fund, which if there is a shortfall in BMS covers. So again, BMS is responsible for all maintenance, operating and capital repairs, so they are putting themselves at risk by not getting enough funds into this area. Then the Fair Board would have access to its technically third rent payment. The Fair Board is getting $1,000,000/year (escalating 1% each year) PLUS $4 or $5 per ticket (depending on lease year - this total is going into the debt service payment) PLUS $103,125 guaranteed rent (again escalating 1% each year), so this point in the waterfall would trigger another payment of guaranteed rent (whatever it is for that year).  Then there is a big IF on things not funded by those three items. Then finally we get into profits of the speedway.

So yes, Metro funds are part of the process, but I would hardly say they are backstopping the deal. I would argue that the profits of BMS are backstopping it seeing as they are responsible for funding things behind their reimbursement of Metro. Another thing to consider is this is unique from the other stadiums arenas in that this is a Metro owned facility that has its use protected by the Charter of Metro Nashville. Racing has been occurring on this speedway since the early 1900's. People complain about the historical preservation of Nashville and then turn around and say lets demolish something that has held meaning in the city for over a century. Of course Metro is going to have to have a stake in this project - even more so than the MLS or NFL stadiums - but that is because they don't have a marquee tenant like the SC or Titans or even stewards like the Preds. The city had to make things attractive to get those marquee folks, this deal is quite good and holds BMS responsible for the Charter protected use.

Try to belittle my posts and opinion all you want, but in my opinion this deal works for Metro and works quite well. I may not be a developer who understands every aspect of these deals, but I am able to line these grains of sand up pretty well to understand things better than most average joes.

Metro has balked at maintaining the racetrack. The citizens told Metro that they wanted racing and wanted the racetrack protected. Metro screwed the pooch by gifting 10 acres of Metro owned land to a billionaire for soccer while completely ignoring the element that citizens voted to protect. Metro was ALWAYS going to need skin in the game to get the racetrack back to a useable level, thinking otherwise is not rooted in reality and plain naïve. This deal - yes the Waterfall diagram that I knowingly posted - along with the other aspects that I laid out shows Metro is indeed having to put skin in the game, but I will still argue that BMS profits are the backstop of the deal. Metro funds are just part of the sequence.

[Melrose]

Incorrect,  sir.  And all of your bluster is pretty unnecessary,  there is no need to be a  jerk.  I was just pointing out the fact that Metro is absolutely backstopping the debt here.  It is plain and simple and stated in the documents and that was all I was pointing out before your tantrum that a great fraud was being comitted.    It is a simple fact,  Metro is backstopping the debt.  This is thus unlike the Nashville SC stadium, where Nashville SC is on the hook for debt all service shortfalls. 

  So  where we go from there is your interpretation of the "reality of the deal" and agree to disagree there, but again, no reason to have a fit.  I think that the financial analysis of the deal being skeptical of revenue projections cuts against your optimism, but again, agree to disagree.  

But with  all due respect,  BMS' "larger" profits are absolutely NOT predicated on the waterfall items being met. Full stop.     The final, residual waterfall category with a Metro/BMS  25/75 split of profits of any leftover revenue waterfall is absolutely not essential to Bristol.    See this comment from Metro Legal on that category where Metro Legal thinks it is very unlikely there will be ever any money in that category (See at 1:39:10):

 

So your entire governing premise that this whole thing is being driven by needing to reach that final "Waterfall 8" category  for Bristol to really profit just fundamentally misunderstands this very one-sided deal.  

Quite to the contrary,   BMS' has several substantial profit sources, from several upfront sources in this deal,  totally separate from the revenue feeding debt service,  which is the whole problem here.  

Bristol will profit from:

1.  100% Event ticket sales revenue, outside of the ticket tax.

2.  100% of food and beverage sales during the 4 Major Event Weeks is kept by Bristol

3.   95%  of revenue for corporate event rentals kept by Bristol

4.  Any spread between what CVC has to pay for their event rent and what Bristol works out to make on top of that.  

5.  100%  of revenue above the first $600,000 of facility sponsorships.  

6.  Even 85% of revenue from food and beverage sales outside of the 4 Major Event Weeks is kept by Bristol.

7.  All on campus parking revenue for the 4 Major Event Weeks is kept by Bristol.

8.  And then of course, everything else,  all of the other revenue streams for cross promotions and what not.  

Bristol  is doing just fine and has engineered this deal  to profit all up front.   Besides all this,  Bristol being able to reimburse itself first for the money they have to kick in for cost overruns ("Waterfall 6")  should be a further tell that this deal is not about making it to the "Waterfall 8" for Bristol to profit.   In fact this shows how little skin Bristol has in the game as to the cost of this facility,  since they have this fallback to reimburse themselves.  

Meanwhile,  other than the guaranteed $103,000 annually to the Fairgrounds (less than the value of lost rental revenue),  and the contingent $103,000 (which the Fair Board thinks there is very small chance they will ever see),  the "Metro side" revenue for this deal goes entirely to debt service and reserve,  i.e. hopefully paying for itself.  

 

[Bos2Nash]

My “tantrum” was because you just repeated a title of a document that is shared like I couldn’t read (at least that is how I read it). I knew what the diagram laid out. I just didn’t appreciate that and I viewed that diagram differently  

As you have always been the financial watch dog on the board, I’ll yield to your side that it is a financially one sided deal. I have always said that the racetrack should get the same deal as soccer. There is the caveat though that metro can’t offer as much to the racetrack as it did to soccer.
From a business perspective I just viewed the waterfall as profits that BMS would not want to give up. And seeing as they are in fact on the hook for things beyond the Metro reimbursement in the waterfall, I view that as incentive for them to get past that point.
That being said though, I still come back to my point about Metro needs to have more skin in the game than they would have on the other arenas/sport venues in the city. They don’t have the economic leverage like they did for the other arenas/sport venues. Soccer received 10-acres of mixed use land that they will profit tremendously off of. Bridgestone is an anchor for downtown and luckily the Preds have been great stewards. The NFL is trying to do what they do in every city with the promise of economic boom. What leverage does metro have with the racetrack? The city can’t do anything to get a marquee event with the current configuration. From a logic standpoint, it makes sense. What is the Fair Board making currently on the events at the racetrack? Are they surpassing $103,000 annually?
We have seen how successful the marquee events are. The SRX race brought in the largest crowd in decades! Unfortunately, they are not coming back this year, so it is only local races this year with more of the stats quo  

Lastly, what’s the alternative? Continue with the status quo? The results sadly speak for themselves. 

My apologies for coming across as a jerk, not my intent. I just see the racetrack differently than many folks and am quite defensive about it. 

[markhollin]

Mayor John Cooper will try to pass a new city deal with Speedway Motorsports, the regional track operator that runs Bristol Motor Speedway, to bring NASCAR to The Fairgrounds Nashville before he leaves office. Cooper’s agreement with Speedway — hammered out over the past few years — appeared to stop and start several times over the course of his term.

In March, the deal narrowly passed the Fair Commission over vocal opposition from neighbors. For the deal to pass this term, it will have to pass on three required readings over the span of four Metro Council meetings in July and August. Neighborhood groups have fought track expansion, relaying fears about noise and the track's event schedule. A final cost for the track expansion has not been made public, but the city budgeted $164 million for debt service over the 30-year life of the lease in March. The mayor's office and Speedway Motorsports tout new sound-mitigation measures and have described the deal as a strong investment for Nashville.

"Mayor Cooper is optimistic that later this summer council will review and approve this unique opportunity to bring private investment to a part of the fairgrounds that has been neglected and forgotten for years," said TJ Ducklo, a communications adviser for Cooper, in a written statement. "The proposed agreement, which has already been approved by the Fair Board, shifts facility improvement and ongoing maintenance costs from Metro to Bristol, while not increasing racing at the fairgrounds." 

The mayor’s office filed its proposed lease and associated documents for council consideration Friday afternoon. At the same time, Metro Legal Director Wally Dietz is litigating against a new state law that seeks to lower the bar for council approval for the project from 27 votes to 21 votes. The city plans to recoup its money via sales taxes collected on site, advertising and sponsorship revenue, ticket taxes, gross revenue sharing and yearly payments from Speedway and the Nashville Convention & Visitors Corp. Metro will receive $17 million from the state of Tennessee and $17 million from NCVC for the racetrack buildout.

The mayor needs council approval to issue a new round of bonds to finance the project. The council will have its first chance to publicly debate the legislation in July. Current Metro law requires the councilmember in whose district the property is located to convene a public meeting ahead of the body’s vote. The mayor’s legislation seeks to amend that provision, allowing Vice Mayor Jim Shulman to choose a councilmember to convene the required public meeting if District 17’s Colby Sledge is “unable or unwilling to do so within the time required” by law. Sledge did not respond to a request for comment.

Shulman said that, last he heard, Sledge and the mayor’s office were trying to nail down a time. The council can’t consider the legislation until that community meeting has occurred. 

More behind the Nashville Post paywall here:

https://www.nashvillepost.com/politics/metro/mayor-s-office-moves-on-nascar-deal/article_cbbfd30c-70d9-54f7-8818-5946936e39b6.html

[MidTenn1]

I just noticed this on the above post of a you tube video of the Fairgrounds Committee meeting in March. In the background is a picture on the ROKU screensaver of an angry robot attacking the city of Nashville. I wonder if it is a subliminal message from the State Legislature to get this speedway built or else. Hmmm!

[nashvylle]

Why would metro sue the state over state legislation reducing  the votes required for demolition of the existing racetrack from 27 to 21?  

[smeagolsfree]

10 hours ago, nashvylle said:

Why would metro sue the state over state legislation reducing  the votes required for demolition of the existing racetrack from 27 to 21?  

It is called home rule. Metro is allowed to make its own rules in its own backyard without the state coming in and reversing everything. The same thing goes for reducing the number of council seats. The state is micromanaging Nashville. It is a slippery slope. If they do this to one city, then they should do it to all. There is a provision in the state constitution regarding home rule and the state seems to violate it at every turn.

[Melrose]

2 hours ago, smeagolsfree said:

It is called home rule. Metro is allowed to make its own rules in its own backyard without the state coming in and reversing everything. The same thing goes for reducing the number of council seats. The state is micromanaging Nashville. It is a slippery slope. If they do this to one city, then they should do it to all. There is a provision in the state constitution regarding home rule and the state seems to violate it at every turn.

The 2011 Charter Amendment about the Fairgrounds, including the demolition vote requirement, was approved by referendum (for better or worse).  If you believe the con artists that put that referendum forward,  this was the most important and sacred expression of the will voters that has ever occurred in Nashville.  So it is pretty funny that Bristol Speedway and the very same people from 2011 were all too happy to go around the voters here and instead to have the Senator and Representative from Bristol, TN and the rest of the State Legislature overrule the Metro Charter.   Bristol will keep going around Metro again and again if this thing moves forward.

[markhollin]

John Ingram has 'significant concerns' about racetrack upgrades.

From today's Nashville Post:

Nashville Soccer Club owner John Ingram wrote to members of the Metro Council Wednesday to express “significant concerns” about Mayor John Cooper’s plan to help fund major upgrades at the Nashville Fairgrounds Speedway.

Cooper, who seeks to lure top-level NASCAR races back to the city, filed his legislation related to the plan last week, and the Metro Council will consider it in the coming months. As part of the proposal, Speedway Motorsports (a track operator that runs Bristol Motor Speedway), would operate the facility, located adjacent to Nashville SC’s Geodis Park.

The state of Tennessee and the Nashville Convention & Visitors Corp. would both chip in $17 million, though debt service over the life of the project is estimated to top $160 million. Under the proposal, Metro plans to pay off the debt via sales taxes collected on site, advertising and sponsorship revenue, ticket taxes, gross revenue sharing and yearly payments from Speedway and the Nashville Convention & Visitors Corp.

In his letter, Ingram emphasized that he and the Major League Soccer franchise are “not against racing.” He also cited the team’s work with neighborhood groups that “are worried about the campus and the effect of further expansion.”

Specifically, Ingram said he is concerned about the financial implications of having two similarly sized stadiums adjacent to one another and competing for the non-soccer and non-racing events both could host. (Geodis will host its first concerts this summer.)

From the letter:

“We are also concerned about having two 30,000-seat facilities literally side-by-side, which seems to be a recipe for disaster that could threaten the economic integrity of both projects, and not to mention the significant negative effect on the surrounding neighborhood and fan experiences. We have guaranteed our investment at the Fairgrounds, but if the expanded racetrack isn’t able to provide the revenue necessary to pay for the entire debt service, we will all pay the price.

We are responsible for repaying 100% of the debt service on the stadium revenue bonds ($225 million) on top of our separate investment of over $150 million towards its construction. Simply put, if a competing 30,000-seat venue were built next door, it would directly affect our business and put Metro in a position of having to favor one venue over another. A racetrack expansion of this size was never imagined when we made our agreement with the city.

…

We would hope the city would not do anything that could cause harm to any of the parties currently operating there and would hope we would hold all parties to equitable expectations as they relate to protecting taxpayer resources."

Added Cooper via a spokesperson:

“Racing has been a proud part of the Nashville Fairgrounds for 118 years. The Metro charter requires Nashville honor that tradition, but also does not provide a mechanism to pay for it. This proposal brings private investment to a neglected part of the Fairgrounds, and would result in racing that is 1) safer for fans and drivers, and 2) less noisy for the neighborhood by building a much-needed sound wall. The proposal also adds hundreds of parking spaces for soccer games, which has been an ongoing point of frustration for soccer fans.

“As racetracks and other sports venues co-exist beautifully in many other cities, like Kansas Speedway and Sporting Kansas City (MLS) for example, surely that can happen here too. We’re looking forward to the conversations ahead, which we expect to include robust and meaningful community benefits, similar to the ones implemented by the soccer stadium proposal.”

[nashvylle]

14 hours ago, smeagolsfree said:

It is called home rule. Metro is allowed to make its own rules in its own backyard without the state coming in and reversing everything. The same thing goes for reducing the number of council seats. The state is micromanaging Nashville. It is a slippery slope. If they do this to one city, then they should do it to all. There is a provision in the state constitution regarding home rule and the state seems to violate it at every turn.

I understand that. What I don’t understand is why would metro sue state legislation that HELPS metro / Cooper administration get this deal approved? 

[markhollin]

Three Metro councilmembers filed a lawsuit of their own Wednesday challenging a new state law that could make it easier to approve renovations at the Fairgrounds Speedway.

Following a week after Metro itself filed suit challenging the law, Councilmembers Colby Sledge, Bob Mendes and Sandra Sepulveda submitted their complaint against Gov. Bill Lee and legislative leaders in Davidson County Chancery Court.

In their lawsuit, the councilmembers argue that the new law “applies and will only ever apply to Metro Nashville” and therefore violates the state constitution’s home rule amendment protecting local governments from targeted actions by the state. The state legislation changes language in the Metro Charter requiring 27 Metro Council votes for significant changes to the Fairgrounds; under the law, just 21 Metro Council votes would be required.

Metro’s own lawsuit came as a surprise to some in and around city government, as it seemingly would make Mayor John Cooper’s desired outcome, a renovated racetrack that could host NASCAR races, more difficult to achieve. Cooper filed his legislation related to a proposed renovation last week. In the suit, the three councilmembers say they are “against the proposed development … as proposed by the Nashville Mayor’s Office.”

More behind the Nashville Post paywall here:

https://www.nashvillepost.com/politics/courts/metro-councilmembers-file-their-own-racetrack-lawsuit/article_fc842022-00b0-11ee-a4cc-7bd0153fd7a3.html

 

[DMilner]

Edit, Mark just beat me to it!

Edited June 1, 2023 by DMilner

[Bos2Nash]

38 minutes ago, markhollin said:

In the suit, the three councilmembers say they are “against the proposed development … as proposed by the Nashville Mayor’s Office.”

Well at least we now have clarity that while Colby supported the soccer stadium within his district, he does not support the existing racetrack within his district.

[Melrose]

3 minutes ago, Bos2Nash said:

Well at least we now have clarity that while Colby supported the soccer stadium within his district, he does not support the existing racetrack within his district.

You mean he does not support Cooper's laughably bad deal  to completely demolish the existing historic racetrack and to construct of an all new 30,000 seat speedway in its place, where the debt for the project is not being backstopped and there are dozens of other problems, loopholes and question marks.... 

[Bos2Nash]

2 hours ago, Melrose said:

completely demolish the existing historic racetrack and to construct of an all new 30,000 seat speedway in its place

I have heard this a couple times. Can someone point out where this is actually stated? With recent renovations of tracks looking for revitalization, none of them have gone this far and knowing that the track surface has been used continuiously it shouldn't be in that bad of shape. So in what logical world does tearing the whole thing down make any form of sense.

2 hours ago, Melrose said:

You mean he does not support Cooper's laughably bad deal

It is pretty clear that CM Sledge does not give a crap about the racetrack no matter the deal. If he did, he would be more vocal about getting the deal right rather then just willowing away and hoping the deal falls apart. It doesn't matter if the deal is laughably bad, slightly bad, or mediocre. Every deal this city has made can be improved. Mayor Cooper improved the soccer deal, so not quite sure why he is not striving for a similar deal here. I have always been vocal that the deal should be representative of the soccer stadium deal with the caveat of understanding that the city would have to shoulder more costs because we don't have a sweetheart land deal to give away 10 more acres.

IMO, Mayor Berry/Briley screwed this up by not incorporating the racetrack into the improvements deal when soccer wanted to be here. The Master Plan process should've worked harder to find a BMS promoter/leasee to bring the racetrack up to par along with the stadium. Short sightedness is causing alot more heart burn now.

[markhollin]

NBJ with a summary of the recent poll taken by area residents regarding the Fairgrounds Raceway expansion:

https://www.bizjournals.com/nashville/news/2023/06/09/survey-finds-majority-support-for-nashville-fairgr.html

[smeagolsfree]

Pretty sad stat here!

more than 50% of respondents in both camps had not heard of the deal before Hart Research provided a description.

It sounds like a lot of people are just not engaged with their community as many people had not even heard about the project. Since the TN is the main newspaper that has covered this, it shows that most people do not bother with print media or for that matter local TV news any longer. Does the local TV news even cover the issues any longer? My answer is no. Only if it is crime and sensationalism. It is not in their best interest because it does not sale ads for them. 

[markhollin]

Nashville's Metro Council on Tuesday narrowly rejected a measure that would have sent a proposed deal to renovate and expand the Nashville Fairgrounds Speedway back to the drawing board.

The council voted 13-15 with two abstentions against a budgetary change to one of the deal's primary funding sources: Metro-backed revenue bonds that rely on future revenue from the completed venue to pay off construction debt.

While Tuesday's vote doesn't concretely indicate how council members may vote when they consider the deal itself in July, it does show that 13 of the city's 39 sitting council members — a third of the governing body — supported hitting the brakes.

More at TheTennessean here:

https://www.tennessean.com/story/news/local/davidson/2023/06/14/nashville-speedway-deal-narrowly-survives-critical-metro-council-vote/70319630007/

[FrankNash]

^^^I lived in Green Hills near Lipscomb University in the early 2000s.  The noise from The Fairgrounds Racetrack is unbearable.  It can ruin an entire weekend for people living in here.  If it were up to me the racetrack should cease being a racetrack at this location.  Have a vote of the people that actually live within a 2 mile radius of the track.  

[Nash_12South]

I don't think efforts to derail racing will anywhere, but I agree that is is super annoying speaking as someone who lives 2 miles+/- away. You could easily hear the Geodis concert while walking in my hood last week. (it wasn't annoying, just noticeable) I don't think most folks in WH have any real clue as to what a regular racing season will look like. It's not just the noise of the main race day it's the multiple days of qualifying races as well. I think property values will take a hit. Forget trendy (outdoor) WH cafe's on race weekends. And keep in mind that you can't be attending a race and eating/shopping in greater WH at the same time.  I've heard countless Uber/Lyft drivers say they avoid the area on game days due to the traffic snarls.

I understand that racing is staying, I just think it's not a good idea in the long run. 

Edited June 15, 2023 by Nash_12South

[Luvemtall]

Let Nascar and racing take place at the SuperSpeedway in Lebanon, and build a parking garage in place of the fairgrounds track to help the parking situation out for Geodis. 

[nashvylle]

The renovation plan has sound attenuation "up to" 50%... which to me does not seem to be nearly enough. Yes the racetrack has been there forever, but neighborhoods change over 100 years, and while I do not watch racing, I don't want Nashville losing any of its history. I would be supportive of potentially MORE debt if it guaranteed ~80% sound reduction... 

[Nash_12South]

(cynically) I think the sound attenuation measures won't have any real affect. Do you thing a "sound wall" around a spot like Ascend would have any real affect? I know there are other measures, but have other areas had measurable success with them, with results from other than proponents of racing?