Infrastructure Spending and Municipal Bonds: Opportunities in U.S. Stadium Renovations

The U.S. is undergoing a stadium renaissance. From Nashville to Buffalo to Jacksonville, cities are investing heavily in new and renovated sports facilities, not just as entertainment hubs but as catalysts for broader economic development. At the heart of these projects lies a financial tool that's often overlooked by casual investors: municipal bonds. These debt instruments, tied to public-private partnerships (PPPs), are financing infrastructure upgrades, transportation systems, and mixed-use developments around stadiums. For those willing to dig into the details, they offer a compelling mix of yield, credit quality, and tax advantages. Let's break down the risks, rewards, and opportunities.

The Building Blocks of Stadium-Funded Municipal Bonds

Stadium-related PPPs are no longer just about the game. They're about transforming urban landscapes. Take the Tennessee Titans' $2.1 billion stadium in Nashville. The project is split into two parts: $500 million in state-issued general obligation (GO) bonds and $760 million in special revenue bonds backed by hotel taxes, sales taxes, and PILOTs (payments in lieu of taxes). The structure ensures that even if the Titans struggle at the box office, the bonds are secured by broader tax revenues.

Similarly, Buffalo's Highmark Stadium is being funded by $600 million in state contributions and $250 million in Erie County GO bonds, backed by the county's full faith and credit. These bonds are less exposed to the whims of sports economics and more to the stability of property taxes and public pledges.

The key takeaway? These bonds are often investment-grade, with diversified revenue streams that include hotel, sales, and infrastructure fees. They're not just betting on a team—they're betting on a city's ability to grow.

Risk Assessment: Are These Bonds Bulletproof?

No investment is risk-free, but the risks here are well-managed. Critics often argue that public funds are wasted on stadiums, but the financial structures of these bonds mitigate many of those concerns. For example, during the pandemic, when travel and tourism collapsed, cities like Clark County, Nevada, and Atlanta tapped into debt service reserve (DSR) funds to cover Allegiant Stadium and Mercedes-Benz Stadium bond payments. These reserves act as a safety net, ensuring debt service continues even during downturns.

Another risk is team relocation. However, most agreements include non-relocation covenants and long-term leases. The St. Louis Rams' Edward Jones Dome, for instance, remained fully funded by the city, county, and state even after the team moved. This shows that the bonds are secured by public infrastructure, not just the team's performance.

Yield and Tax Advantages: Why These Bonds Shine

Municipal bonds tied to stadiums are yielding well. As of June 30, 2025, the taxable-equivalent yield of the 3-Year Municipal Index was 5.02%, offering a 112-basis-point advantage over taxable money market funds. For investors in higher tax brackets, this is a goldmine.

Moreover, the tax-exempt status of these bonds amplifies their appeal. For example, a $1 million investment in a 5.02% municipal bond would generate $50,200 in pre-tax income. In a 35% tax bracket, that's equivalent to a $77,230 return on a taxable bond—a staggering difference.

The Bigger Picture: Infrastructure as a Long-Term Play

Stadium projects are more than entertainment. They're infrastructure plays. The Nashville and Buffalo projects include roads, public transit, and utilities—assets that generate long-term value. These bonds are structured to align with the 30-year lifespan of a typical stadium, ensuring that debt service is matched with revenue streams that outlive any single team's contract.

Compare this to the volatility of equities like Tesla, and the case for municipal bonds becomes clearer. While stocks can swing wildly, these bonds offer predictable income and downside protection.

Investment Advice: Where to Look

For investors, the focus should be on bonds with strong covenants, diversified revenue streams, and reserve funds. The Tennessee Titans' and Buffalo Bills' projects are textbook examples. Avoid bonds overly reliant on narrow revenue sources like hotel taxes unless there's a robust DSR fund in place.

Also, keep an eye on the broader municipal bond market. With $4.2 trillion in outstanding municipal debt as of early 2025, there's ample opportunity to find high-quality, low-volatility investments.

Conclusion: A Win-Win for Cities and Investors

Stadium renovations are reshaping American cities, and the municipal bonds funding them are reshaping investment portfolios. By leveraging public-private partnerships, these bonds combine the stability of infrastructure with the growth potential of urban development. For investors, they offer a rare blend of yield, credit quality, and tax efficiency.

If you're looking for a way to ride the infrastructure boom without the volatility of equities, these bonds are worth a closer look. Just remember: the real game here isn't in the stadium—it's in the long-term value of the city around it.