How Tennessee pays for Neyland Entertainment District, G10 garage

The University of Tennessee will rake in revenue from the Neyland Entertainment District while bearing no financial risk in the $280 million project, UT Chief Financial Officer David Miller says.

“Importantly, the developer is fully responsible for financing, construction and operating the entertainment district. So the university is putting no money into this,” Miller said when the UT Systems Board of Trustees approved the project on May 4.

“We have no financial risk, and we’re not operating it.”

It’s a critical selling point for UT to a portion of the fan base that has questioned the feasibility of the ambitious on-campus project, which includes a mixed-use sports entertainment district, hybrid condo-hotel and a rebuilt G10 parking garage.

Losing the premier parking spaces in the G10 garage for a year during construction is a drawback, beginning with demolition in July. Others are concerned that the hotel overlooking Neyland Stadium will ruin the view of the Tennessee River and recognizable skyline.

Time will tell if those concerns are valid. Chancellor Donde Plowman believes the long-term benefits outweigh the temporary inconvenience.

But Miller said UT has no financial concerns in the public-private partnership. In fact, there are only monetary gains for the university in the Neyland Entertainment District.

What Tennessee gets from Neyland Entertainment District

The $280 million Neyland Entertainment District includes $215 million for the construction of the condo hotel and $65 million for the entertainment district.

UT will put no money into those properties.

Instead, the university will enter into a 99-year lease with 865 Neyland, a team of investors and real estate developers specializing in sports entertainment properties. The developer will finance, own, manage and maintain the entertainment district.

The developer will pay UT an annual base rent of $1.5 million plus between 3-5% of gross revenue above $25 million annually from the condo-hotel and entertainment space in separate payments.

“So there’s a permanent ongoing revenue stream to the university through sales in the entertainment district and the hotel,” Miller said. “… But it’s very important to note that the university has no money in the hotel or entertainment district.”

Plowman said constant visitors to campus will drive that revenue, which will put more money into UT’s pocket. That begins with football games at Neyland Stadium and basketball games at Food City Center. Those two facilities will booked the entertainment district.

But student traffic, concerts, conventions and other events will keep the district busy throughout the year.

“This is an asset for 365 days a year and not just 39 days (for football and basketball home games),” Plowman said during the Board of Trustees meeting. “We are going to be pursuing public-private partnerships in almost everything we try to do going forward to move the university to the next level. This is one very bold and dramatic opportunity.”

And despite the developer operating the district, UT controls the future of the project. If the owner-developer seeks to sell the district, the university has the right of refusal.

Plus, UT will have the option to purchase the entertainment district after 40 years and the hotel after 50 years.

How Tennessee pays for new G10 parking garage

Two-thirds of the G10 garage must be torn down and rebuilt to ensure the structural integrity for the hotel on top. And the entertainment district will be built on the remainder of G10.

The new garage will be a separate expense from the $280 million project. UT will finance and own the new G10 parking garage, as well as collect revenue. However, a parking developer will construct the garage.

The university will finance an estimated $83 million to build the new G10 through Tennessee State School Bonds, which is typical for parking garages on campus.

“That debt is paid solely from parking revenue,” Miller said. “So there’s no university tuition, taxpayer dollars or other campus funds supporting the parking (garage). Like parking is run today, (the new G10) will be supported by parking revenue.”

UT also will pay a one-time fee of $700,000 to the parking developer to manage the garage.

The project will not begin until after state approvals and financing has closed. UT plans to break ground in late summer 2026.

According to project documents presented to the UT Board of Trustees, the new G10 garage must be completed by August 2027. Athletics director Danny White said UT is on track to open the entertainment district in early 2028 and the condo-hotel in 2029.

Adam Sparks is the Tennessee football beat reporter. Email [email protected]. X, formerly known as Twitter@AdamSparks. Support strong local journalism by subscribing at knoxnews.com/subscribe.

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This article originally appeared on Knoxville News Sentinel: Neyland Entertainment District cost, parking revenue for Tennessee