The Charlotte, North Carolina, City Council approved a $650 million tourism tax bond to support the renovation of the stadium that houses the NFL's Carolina Panthers.
The council voted 7-3 with one absence Monday to approve the bond for upgrades to Bank of America stadium, which is owned by Tepper Sports and Entertainment, which also owns the teams.
While there
"No professional sports franchise in the U.S. should ever 'need' public money for their stadia," said Joseph Krist, publisher of Muni Credit News. "The incredible appreciation of value of sports franchises continues as evidenced by recent team sales.
"We again are about to embark on a new cycle of stadium finance. We are already seeing the irrationality of the whole process …. One difference now as opposed to the last cycle is that the cost of sports attendance is out of control. Now, the public is being asked to pony up funds for facilities they will likely never attend due to cost," Krist said.
On Tuesday evening the Jacksonville, Florida, city council voted 14 in favor, one against, and two not voting for a $1.4 billion renovation of EverBank stadium, the home of the professional football team Jacksonville Jaguars. The city's mayor says it will
Earlier this month, Kansas lawmakers approved a bond plan to lure the NFL Kansas City Chiefs and baseball's Kansas City Royals
"So long as they're transparent about what they're doing, and with whose money, stadiums are totally a valid public expenditure for their residents' quality of life," said Municipal Market Analytics Partner Matt Fabian. "That being said, it does consume a little bit of Charlotte taxpayers' ability to pay taxes and fees to service other, maybe more important debt projects in the future. And with the very large amount of borrowing that's likely to come, the city will need to use every taxpayer dollar correctly. But that's the gamble to make."
Since David Tepper purchased the Panthers in 2018, they have had a losing record every year, compiling a 31-59 record.
He also bought a Major League Soccer expansion team, Charlotte FC, that plays in Bank of America Stadium.
Since its 2022 launch, Charlotte FC has compiled a record of 32 wins, 35 losses, and 21 ties in MLS. However, the team has a winning season so far this year, with a 9-6-5 record.
According to a presentation by the team owner's company Tepper Sports & Entertainment, the goal of the renovating the
The city will use money from the city's Convention Center Capital Projects Fund to pay off the $650 million bond. A 3% hotel occupancy tax and a 1% restaurant food and beverage tax provide money for the fund. These taxes are "required to be spent on projects to support the city's tourism economy, specifically funding and maintenance for the convention center, venues that seat 60,000 people or more, and amateur sports facilities," said Lawrence Corley III, media relations manager for Charlotte.
The city anticipates using multiple tranches, including construction period financing such as a direct placement bond anticipation note the city will make draws against as work is being completed, Corley said.
"The first tranche of construction period financing is not anticipated until the spring of 2025 and city council approval timing will depend on the full execution of all relevant agreements between the city and Tepper Sports and Entertainment," he said.
The city council will have to vote for the bond again once the bond's details are ironed out but could only vote against it if the city could argue Tepper was making unreasonable demands. North Carolina's
"Today's vote by the Charlotte City Council is the culmination of many thoughtful discussions with city officials, and our fans to create a shared vision for Bank of America Stadium," Tepper said in a statement.
The money is to be used for new scoreboard/video boards, sound equipment, new seating, a field house, a city view patio, new vertical transportation, and renovations to restrooms and locker rooms. These are expected to have an estimated cost of $677 million.
The team already received an $87 million
Tepper Sports is expected to put up an initial $150 million in the next four years that would be combined with the $650 million bond proceeds. From 2029 to 2039 Tepper Sports is expected to spend an additional $420 million on other improvements and renovations to the stadium.
In explaining her 'no' vote on the bond, City Councilwoman Dimple Ajmera said she had heard from three groups of residents about the bonds. A small portion, most of whom are to benefit financially from the stadium upgrade, were in favor. The "overwhelming majority" were opposed to it, feeling it was a transfer of wealth from the city's poorest to its wealthiest.
A third group, the second most numerous, had middling positions, seeking more information or more legal protections, Ajmera said.
Ajmera said she couldn't answer that group's criticisms because she was never given paper copies of the bond terms or economic impact report. She said she hasn't been given a copy of the payment schedule despite asking for it several times.
"As an elected councilor, I'm expected to cast my vote on the largest investment of public funds in Charlotte's history — a $650 million dollar proposal without all facts before me," Ajmera said. "I just can't do it."
In December while watching a 26-0 Panthers defeat in Jacksonville, David Tepper was caught on video throwing liquid and ice from his drink onto one or more fans. The National Football League
The money for the stadium sounds good "until we get Mr. Tepper at Tepper Sports angry again and then he might throw something at the city council," said Charlotte Councilwoman Tiawana Brown at Monday's council hearing. "The behavior of someone asking us for $650 million is ridiculous." Brown was one of the three 'no' votes.
Charlotte's stadium subsidy agreement comes less than two years after Tepper's plans to build a practice facility and headquarters for the franchise 25 miles to the south in Rock Hill, South Carolina, fell apart amid
Corley said the city expects the bonds to have level debt service payments through 2044. He also said the city had modeled the bond's finances assuming it will be taxable but that bond counsel will make a final determination.
The new stadium deal includes a 15-year non-relocation commitment for the NFL and MLS teams, according
Charlotte general obligation bonds carry triple-A ratings from Moody's Ratings, S&P Global Ratings and Fitch Ratings.
In the past, according
Alternatively, city officials said in their stadium presentation this month, the city can use special obligation bonds for the project.
That would entail pledging revenue from restaurant meal and hotel occupancy taxes, "along with additional revenue source(s) to be identified which would support a more marketable bond at a reasonable cost," the presentation said.
In April Moody's cited the city's status as a regional employment hub and economic center as it affirmed its Charlotte ratings. Moody's said the city had been seeing strong tax base growth and good real estate wealth levels on a per capita basis. Proactive and formal management policies have aided the city's financial strength. While long-term liabilities are "somewhat elevated," they "remain manageable given growing revenues and long-term planning."
S&P in March said the city had $6.2 billion in direct debt, of which $4.1 billion is revenue-secured or self-supported enterprise debt. If annual debt service is combined with pension costs, the carrying charges add up to nearly a quarter of the budget, the rating agency said.
