Metro Council approves incentives for Warner Music's Nashville expansion

Warner Music Group has landed cash incentives from Metro government that will pay the company for each new job it adds as part of an upcoming company expansion in Nashville after action by the Metro Council on Tuesday night.

In all, the deal could give the New York-based music and entertainment company between $1 million and $2 million in city incentives, depending on how many jobs are created in Nashville.

The council voted unanimously Tuesday to approve an economic and community development grant proposed by Mayor Megan Barry that will give the music recording company $500 per new job added in Nashville each year over the next seven years.

Warner Music, which employs about 100 people on Music Row as part of its country music label, is planning to open a “center of excellence” inside a new 30,000-square-foot space at the downtown Nashville City Center, commonly known as First Tennessee Tower.

The center, set to open next summer, will initially employ 175 people in financial, legal and administrative functions and is expected to expand to 500 employees by 2020. Future staff is expected to either join the company or relocate from existing offices in New York and Los Angeles.

If the company generates 500 new jobs from the outset, Warner Music would net $1.75 million from Metro over the seven-year period. Conversely, if the company does not reach 500 jobs by the end of 2020, the agreement would be terminated and all future payments would be canceled.

Warner Music adds 175 finance jobs in Nashville

Though the proposal yielded no discussion Tuesday, some council members, including at-large Councilwoman Erica Gilmore, asked during a committee meeting Monday why a “clawback” provision wasn’t included in the agreement that would require the company to return all incentives received from Metro if the 500-job threshold is not met.

Matt Wiltshire, director of the mayor’s Office of Economic and Community Development, said the mayor’s office did not favor that approach because they don’t want to punish Warner Music for not delivering something four years from now after it did deliver initial jobs promised.

“That has not been the philosophy of the administration from the deals we have constructed in the past and similarly on this one,” Wiltshire said.

In justifying the incentives, he argued that the sales tax revenue created by spending from the new employees would exceed the $500 per job paid to the company.

He also said this particular deal assists a “core industry of the city” and a company that has invested in Nashville. He pointed to the company’s involvement at a recording studio in Nashville’s Pearl-Cohn High School.

“This is a company that’s been an investor in Nashville that’s now expanding its investment in the city by adding these jobs,” he said. “We think these are great jobs, great paying jobs and really is a strong industry for Nashville to support.”

Under the jobs agreement, each employee can work as little as 32 hours a week and 26 weeks a year. There is no requirement on how much the jobs must pay.

Metro has two similar job grants in effect, one for Dell, which was orchestrated in 1999, and one involving UBS, which came more recently under former Mayor Karl Dean. Dean also led job grant deals for HCA, Bridgestone Americas and Asurion that were approved but have not yet kicked in.

Though voting for the agreement, Metro Councilman Steve Glover expressed frustration that the council receives details of ECD proposals after they are already finalized and therefore “really don’t have a say-so in it.”

Councilman Russ Pulley, during a Budget and Finance Committee meeting Monday, pressed company executives on whether they would still expand in Nashville if the incentives  weren't approved.

He didn’t get a clear answer.

Ken Williams, senior vice president of chief financial officer of shared services at Warner Music, said the company looked at “multiple locations” in Tennessee, but did not reveal which other cities.

“It clearly was a factor in us making a decision to locate in Nashville,” Williams said.

Despite the questioning, most council members praised the deal ahead of Tuesday's vote.

“Sound business strategies, for me, I look at return on investment,” Councilwoman Sheri Weiner said. “And what I see from a jobs grant is it offers us two primary opportunities — one in job growth and one stimulating our tax coffers.”

Councilman Jeff Syracuse, who manages the licensing company at music company BMI, said the deal would bring high-quality music industry jobs to Nashville.

“Having been in this industry for almost 20 years, no label has ever sent these kinds of quality jobs from L.A. and New York City to Nashville,” he said. “These are incredible opportunities for people, and this will support this industry for years to come, and I believe it will pay off strong dividends for years to come.”

Reach Joey Garrison at 615-259-8236 and on Twitter @joeygarrison.