Davis pledges $500m toward Vegas stadium, could actually ask taxpayers to pay entire $1.4B cost

Here it is, the big Oakland Raiders Las Vegas announcement you were waiting for since it was first leaked at the beginning of the week:

[Raiders owner Mark] Davis told an influential tourism committee gathered at UNLV that the Raiders would put up $500 million toward the stadium if Nevada legislators approve public funding for the project and other NFL owners allow the team to relocate…

“We do want to be your partners. We’re not coming in looking for a free handout,” Davis said. “I want to tell you what I told Gov. Sandoval a few weeks ago: Together, we can turn the Silver State into the Silver and Black State.”

That’s not exactly the catchiest slogan, but never you mind about that. Let’s take a closer look at exactly what Davis (and billionaire would-be Vegas stadium builder) Sheldon Adelson) are offering, and what they’re asking for:

  • The stadium would now cost $1.4 billion, up from $1.2 billion just a couple of months ago, presumably because if it’s hosting an NFL team it’s going to need a snazzier eternal flame.
  • Davis’s $500 million pledge would include $200 million in NFL G-4 money, plus $300 million out of his own pocket.
  • As for the other $900 million, $750 million of it would be from hotel and rental-car taxes (down slightly from $780 million in the last proposal), and the other $150 million would be in mystery “private funds.” Since we haven’t mentioned Adelson yet, and he has $150 million in loose change in a jar in his kitchen, maybe he could bring that.

That’s the deal as presented in the headlines today. What’s being largely overlooked is this, which appeared way down in the 18th paragraph of the Las Vegas Sun’s story:

The companies would also want a tax increment district in the area around the stadium. Details would still need to be ironed out, but Majestic executive Craig Cavileer said the district would help the stadium’s private backers get a return on their investment.

This is potentially huge: “tax increment financing,” for those who need a reminder, involves kicking back increased property and/or sales taxes from an area around a development project, to help pay the project’s costs. We obviously have no idea how much money it could provide — depending on how big you draw the district, it can generate an almost unlimited amount of tax revenue — but if Adelson and Davis are looking at this as a way to provide a “return on investment,” that means it’s going to go to reimburse their $650 million in costs, not state taxpayers’ $750 million. In other words, if enough TIF money can be agreed on, the private costs could be as low as zero, with the entire $1.4 billion nut either provided by tourist taxes or by TIFs.

It’s an incredible bit of media legerdemain to turn a request for potentially the largest NFL stadium subsidy in history into headlines about a promise to put up half a billion dollars in private funds — props to Davis’s (or more likely Adelson’s) PR strategist for coming up with this one. And that’s before even getting to Davis’s “commitment” to Las Vegas, which as I predicted Wednesday comes with a whopping out clause, in that if he gets an offer he likes better, he can always have the NFL vote against the move, and say, “Hey, sorry, they wouldn’t let me go to Vegas, I tried.”

Not that I expect Davis or the NFL to turn down this deal if it really includes both $750 million in cash plus additional TIF subsidies, because who would turn down a new $1.4 billion stadium essentially for free, regardless of what market it’s in? We still have to see if the Nevada legislature is crazy enough to approve it, but this is no longer merely a leverage deal: It’s an attempt at the biggest public cash grab in NFL history, which if Davis can pull it off despite currently having zero other legitimate bidders for his team’s presence would seriously move him up the rankings of evil supergeniuses with questionable haircuts.


46 comments on “Davis pledges $500m toward Vegas stadium, could actually ask taxpayers to pay entire $1.4B cost

  1. Does Davis have $300M? I’d be surprised if he had $30M. Are we sure that his ‘private’ share isn’t some combination of PSLs and naming rights?

  2. Could definitely be PSLs and naming rights — no details yet on who gets which revenues. Though if Davis gets future TIF money, he can just go to a bank and borrow against that.

  3. I would think hotel and casino owners would be against a tax that makes their products more expensive, in order to finance a stadium that will remove 60,000 bettors from their casinos for four valuable hours.

  4. Eh. They’ll place slot machines throughout the concourse. No one actually sits and watches games anymore; that pulls potential revenue streams out of the owners pocket. They’d much rather have you roaming the concessions stands as if you’re at a state fair spending money on what they so carefully crafted as the “fan experience.”

  5. Pathetic. Utterly pathetic what is going on. Las Vegas is the worst city in terms of cronyism I have ever seen. The sooner I leave this place (early next year) the better. Here you have a professional sporting franchise owner, Adelson, and Majestic (who are complete jokes) not only being satisfied with extracting three-fourths of a billion dollars, but they want a guarantee ROI? No private small business can ever come close to winning those kinds of concessions. Since when did it come the responsibility of the public to ensure a for-profit business is profitable?

    What’s even more shameful is you have local media cheerleading this fraud because it is the NFL. Vegas is so desperate to be known as a city outside of gaming they fail to realise it will never happen without an educated populace and a diversified economy. The city is trying to morph itself into a sports mecca, similar to Indianapolis. The problem is Indianapolis has a much higher educational workforce and an economy to match. Vegas has none of that.

    The one question I have asked every single stadium supporter is this: who’s going to pay for it? Their response is the tourists; but when I explain to them that the tax revenue from that source will not be sufficient enough to cover the bond payments AND will be taking away from public services, crickets. No one has yet been able to answer it. And to boot, Vegas has a serious crime problem sweeping the city, the lowest cop-to-citizen ratio of a major U.S. city, an antiquated transportation network (the worse in the country imo), and stagnant wages for the past 20 years. People are still coming here (visitation is up 3%), but are spending less (revenue down 4%). All these downward trends and yet the public is expected to fork over $1.4 billion (multiplied by about 3 after all the bond payments are made).

  6. To the question “Does Davis have $300M?” that’s a tricky question.

    The short answer is “probably”. Estimates are he and his mother have a net worth of $500M, lowest in the NFL. Still enough to put together $300M.

    However, more to the point, if he’s getting a TIF kickback as a revenue stream, he can simply borrow the money and pay back the debt with the TIF money. As the proposed stadium is near the Las Vegas strip if the TIF district was drawn correctly he could tap into the endless supply of douchebags trying to prove they are “baller.”

    • That’s what I said! Only with fewer (or more implicit) douchebags:

      http://www.fieldofschemes.com/2016/04/29/11020/davis-pledges-500m-toward-vegas-stadium-could-actually-ask-taxpayers-to-pay-entire-1-4b-cost/#comment-34430

      • Sorry missed it. Got distracted by the PSLs. It could be argued Las Vegas is the worst city in the US to get PSL revenues (few rich people) but one of the best to get TIF kickbacks (a ton of money transacting nearby). If this happens it will be the anti-Levi’s/MetLife in almost every way.

        • True but tourists are starting to get hip to the game. They know they’re subsidising wages through their “generosity”. As I stated earlier, visitation is up but revenue is down. Per visitor revenue has been trending downward for awhile now. There will not be enough revenue to cover the bond payments AND a TIF.

          • Well, there may well be enough revenue to cover the bond payments and a TIF, if only because those just require scraping a bunch of money off of tax revenues and handing it over to Davis and Adelson. There’s no way there will be enough *new* revenue to do that, though, which is where you start “eating the lunch of the general fund,” as someone once said of TIFs.

            (Meanwhile, anyone else not liking how these new threaded comments are working? I may need to find another solution, because this one is a bit clunky.)

          • Agree on the threading and the general fund. Nevada has given a lot of tax handouts but ranks near the bottom on school spending. But who needs schools when you have bread and circuses!

            Plus, Nevada is a real innovator when it comes to social services spending. For example their solution to mentally ill homeless people: Dropping them at a bus station with a one-way ticket to San Francisco or San Diego (SF sued them over that one).

  7. I try not to be shocked every time a new way of setting up a stadium scam comes along, but they still find new ways to make me sick to my stomach.

    • I need to put that on a t-shirt. Or rather, since this is 2016, a photo of a kitten coughing up a hairball.

  8. Great article and comments. I dream of a world where a situation like this is answered rationally with the Raiders moving in with the he 49’ers. There is a new stadium that could probably use more events.

  9. Come on Neil “request for potentially the largest NFL stadium subsidy in history” really?? $750M is the largest request? what happen to Santa Clara giving the 49ers $850M? We are now laying off teachers, police men, and firemen. Santa Clara is going bankrupt cause of this handout!

  10. Santa Clara didn’t give the 49ers $850m. It combined $450m in loans *to* the 49ers (which were repaid with PSL revenue, mostly) and $400m in loans *from* the 49ers (which were repaid with money that the 49ers pay Santa Clara in rent, which is crazy, but it works better for the bookkeeping/tax man that way):

    http://www.fieldofschemes.com/2012/03/15/3348/santa-clara-49ers-stadium-hits-1-2b-but-who-pays/

    Also $1.4B is more than $850m regardless.

  11. I’ve changed my mind on this Vegas stadium deal now that I’ve read David Beckham, a much better looking millionaire, with a far better hair cut, is out stumping for the stadium. This changes everything… except for the money.

    http://www.si.com/planet-futbol/2016/04/28/beckham-leiweke-las-vegas-mls-expansion-raiders

  12. I thought it was interesting when Davis was asked about what could be a timeline for him to move the team if this deal is approved. He started talking about the yearly options he still has at the Coliseum after this upcoming season and that he would maybe try to bring a preseason game to Sam Boyd Stadium. He has no intention of moving the team to Vegas until a new stadium is completely ready. This is not good news for A’s baseball fans.

    • Well, I’m not an A’s fan but I don’t think that matters.

      Realistically, the site is large enough that if the city and Wolff wanted to start redeveloping it they could do so. Plus, unless the A’s were to play somewhere else for a few seasons, they’d have to leave the Coliseum standing while building the new stadium which would take multiple years. Plus, there’s always the question of what to do with Oracle arena and the Warriors aren’t leaving until 2019.

      This all assumes the A’s want a new stadium on the Coliseum site rather than somewhere closer to Downtown Oakland.

      I’m not sure this changes the calculus much.

  13. I believe the calamities of Levi’s Stadium (Mayor’s resignation, City Manager quits, grand jury investigating the Stadium Authority, 49ers wanting to decrease rent payments) after just two years of operations is something that Nevada taxpayers should really consider when this proposal comes before their legislature.

    • Of all the disastrous stadium deals I’m not sure Levi’s Stadium would make the top 100.

      Cincinnati, which almost went bankrupt because of their stadiums, had to sell their public hospital and are still on the hook for things that haven’t been invented yet (e.g. holographic replay) would be far and away the winner.

      St Louis which paid through the nose to get the Rams, kept them for a couple decades, were extorted again and then lost them certainly gets an honorable mention.

      By the standards of stadium deals, Levi’s is not as bad as most.

      …on the positive side, you can argue if they weren’t spending their money on stadiums, Las Vegas would be spending it on stuff that was equally idiotic (convention centers, casino kickbacks, tourist ads, etc.).

      • After only two years of operations, its a little premature to ascertain the success/failure of Levi’s Stadium. However, the factbnumerous issues are beginning to surface after such a short period is alarming. The reality is that Santa Clara city officials, who stated the new stadium for the 49ers wasn’t going to have a negative impact, have done their city a disservice. Then again, it was the voters of that community who elected to have the stadium built. Whatever the case, simply because the financing plan for Levi’s Stadium was the lesser of two evils, that doesn’t mean it was a good deal.

        • I know you like to make everything about your dislike of Levi’s (or Oakland) but this stadium is the anti-Levi’s.

          Levi’s was mostly privately-funded with PSL sales, naming rights, etc. in a large market. Levi’s is similar to MetLife or Stanland. This stadium is a straight-up public financing deal paid by a sales tax, in this case on hotels. It is taking place in a small market. In this way, it is absolutely nothing like Levi’s beyond the fact it’s round and people play football in it. It’s like Cincinnati or St Louis.

          Levi’s was a bad deal not because of financing but because of land use. There were more valuable things that could have been built on that parcel–offices that could have provided tens of thousands of jobs or perhaps a decent place to have lunch (it’s amazing how few there are around there). Land use is a non-issue in Vegas because land is as plentiful there as it scarce here.

          • To the contrary, Levi’s Stadium is partially being repaid with increased hotel taxes .

          • That’s 2.6% of the funding vs. 54% of the funding in Las Vegas. Kind of dissimilar don’t you think?

  14. Too bad there’s no more voices of reason/dissent left within the media and local government.Seems like they’re ”all-in” on this deal.

  15. If the Raiders move to Las Vegas, will they have to pay the $550 million relcation fee as did the Rams?

  16. No, the $550m relocation fee was just something the NFL made up for the L.A. market. There could well be a relocation fee for Vegas, but how much will depend on what the other owners think they can reasonably shake down Davis for.

    • Shaking down Mark Davis for $550m is the equivalent of shaking down a homeless guy for his last dollar.

  17. You should at least mention that the $750M in tourist taxes is happening no matter what happens. If a stadium
    Doesn’t get built, the $750M goes to the convention center. Revitalizing that convention center is a pipe dream IMO because Sands already has a modern space in a better location.

    If you’re truly concerned about Las Vegas residents & businesses, then the real question is, “Would a stadium be the best use of the property on Tropicana?” Seems to me that it’s a no-brainer “Yes”. And if you answer “Yes”, then TIF’ing a small area to the east/northeast of the stadium site makes sense as well. If that area’s property values shoot up, it probably would be due to the stadium, so a TIF would be fair.

    Now, if you don’t think that a stadium on Tropicana is a good idea, that’s fine. It’s a legitimate argument. But these comments are mostly incoherent rambling against public stadium financing, rather than a cold look at what’s being proposed.

  18. No, Ben, the tax hike is not “happening no matter what happens.” It still needs to be approved by the Nevada legislature, which would require a special session:

    http://www.reviewjournal.com/business/economic-development/tourism-committee-backs-room-tax-increase-convention-center-upgrades

    If your argument is “Nevada is going to raise taxes and waste it on something stupid regardless, so they might as well give it to Sheldon Adelson so that Vegas can get an NFL team,” then that’s … I wouldn’t call it “incoherent rambling,” but maybe “new depths of cynical justification for any waste of public funds on the grounds that there’s always a bigger waste possible.”

    • The tax increase may not be approved yet, but an existing budget supported by previously approved taxes and bonds does exist, and the LVCVA (and others) currently receives the proceeds.

      Make no mistake, Adelson’s involvement in all this is to kill, or put a damper on, the LVCVA’s grandiose vision of a new convention center adjacent to Adelson’s already existing convention center.

      That’s a huge piece of this story, and likely the MAIN reason their asking for so much publice money. I mean, if Adelson bought a majority of the Raiders, he’d be the wealthiest NFL owner, by quite a bit. He doesn’t NEED public financing, he WANTS it because the LVCVA has grown out of control. The tax rates WILL hike, bonds will be issued, that’s a foregone conclusion Neil. MGM supports convention space because, it will benefit their properties some, but the stadium is proposed to be a 5 minute walk to two of their flagship casinos (MGM & Mandalay Bay), still the convention center would be more centralized and benefit their other properties….BUT one can not help to think that this also is a ploy to hurt a competitor, as much as gain benefit.

      So what is Las Vegas better served with? A stadium or a mega-convention center? One or the other IS GOING TO HAPPEN, and since that’s the case, it’s high time the city (or state, since the stadium wont be in the actual city limits) did something to benefit the community as well as the tourists. The stadium is a no-brainer considering the alternative. It will be on public land, so at least partial ownership will be the universities…I believe that is a requirement.

      • By the way, this site ought to add the proposed convention center here. Sure it’s not a stadium, but it does currently, and will hold sporting events. That report would make some of your stadium reports look like great deals in comparison.

      • “I mean, if Adelson bought a majority of the Raiders, he’d be the wealthiest NFL owner, by quite a bit. He doesn’t NEED public financing”

        Well, true enough. However, Adelson didn’t get rich by building money-losing things like football stadiums in small, poor cities like Las Vegas. He has the poor sap taxpayers to pawn that off on.

        “A stadium or a mega-convention center? One or the other IS GOING TO HAPPEN”

        That’s probably true. As I previously wrote: “on the positive side, you can argue if they weren’t spending their money on stadiums, Las Vegas would be spending it on stuff that was equally idiotic (convention centers, casino kickbacks, tourist ads, etc.).” I didn’t actually imagine someone would actually argue that, merely that they could. Oy veh!

        You know, Nevada could use the money instead for schools, which are some of the most underfunded in the country, or health and social services which are so bad they were sued for simply dumping patients on California, or programs to deal with Nevada’s chronically high unemployment. But sadly, we’ve all built in the corruption and myopia of Las Vegas and Nevada politicos. It will be used for something useless. That’s just how it is.

      • “I didn’t actually imagine someone would actually argue that, merely that they could. Oy veh!”

        That’s not my argument, those are the facts. Go to the LVCVA website, see for yourself… they weren’t only budgeting for $2 Billion, they expected before Adelson & Co. fought them on it, going to extreme lengths.

        I see this as choosing the lesser of two evils, because one will benefit the community and the strip. The stadium will be used by UNLV and their PAC 12 upper tier aspirations, and the community will have an NFL team to rally around…not to mention the revenue a stadium can generate in a city like LV….the T&M is one of the batiin’s leaders in generating revenue for an arena…a stadium will open the door for even more events that Sam Boyd, located far from the strip in the Vegas wash, just can’t do.

        I personally view Adelson and the LVCVA similarly….I’m not fond of either, but it’s IS high time something was done for our community. UNLV was/is already going to build a stadium on/near campus, and they should, this just merges two projects into one.

        I would be extatic if the lawmakers stopped funding the LVCVA, and casinos voluntarily chipped in to fund it. WOULD Adelson still build a stadium? Maybe, but at this point it’s a dog fight for public funding that is happening now, and will be increased soon. That’s just reality.

        • “I see this as choosing the lesser of two evils” because using tax money for something not evil is impossible.

          “The stadium will be used by UNLV and their PAC 12 upper tier aspirations” as opposed to their lack of aspirations to be a resource for educating the people of Nevada.

          “The community will have an NFL team to rally around” which is great because they sure don’t have schools to rally around.

          “Not to mention the revenue a stadium can generate in a city like LV” which the city will then give to Mark Davis in the form of TIF revenue.

          “I would be extatic if the lawmakers stopped funding the LVCVA” but am powerless to do anything about it because it’s not like the legislature is elected by the people or anything.

          “That’s just reality.” Las Vegas has no public pressure, no civil society, no priorities that benefit the people who live there and no pressure to counteract public corruption. It’s just how it is.

          And that’s why you were the perfect victims for the NFL. Oakland has all of those so they had to find a sad excuse for a city where the people are so whipped and demoralized that they don’t demand better.

          • “That’s 2.6% of the funding vs. 54% of the funding in Las Vegas. Kind of dissimilar don’t you think?”

            Santa Clara isn’t heavily reliant on the tourism industry. Proporitionally, there are far more hotel rooms to tax in Las Vegas than there are in Santa Clara. The funding percentages my have a disparity, but its likely the overall burder to taxpayers is similar.

          • Wait, what? $750m is many times $30m, regardless how many hotel rooms you have.

          • What Neil said. The numbers aren’t even close.

            And yes, you are right, Santa Clara doesn’t have a lot of hotels. Furthermore, what hotels they have were largely exempt. Levi’s hotel tax applied only to 8 specific hotels close to the stadium who basically volunteered to be taxed on the 2600 rooms at those hotels.

            Adelson’s Venetian and Palazzo combined have 7117 rooms. Perhaps he can simply choose to tax himself to pay for it. Of course, that leaves the remainder of the funding to be found as there are tens of thousands of other rooms subject to the tax here, and that’s the bulk of the funding.

      • No the stadium is the worse possible use of public funds considering how seldom it would be used. How does building a stadium benefits the community at-large? As a resident, I could care less about a $1.4 billion stadium that I will not frequent at any point. Similar to subsidising sports rights fees for channels I have no interest in ever viewing, the public shouldn’t have to pay for the enjoyment of a select few. This stadium will not come close to exceeding tax revenue generated from conventions.

        You said the money will be spent and taxes raised regardless if there is a stadium or not. I said that is a fallacy. How do you think the LVCVA receives their financing? Adelson wants to not only tap into an existing revenue source (which will require state intervention), but increase other taxes AND a TIF. This kind of financing is extremely rare (a Super-STIF) in which the public is responsible for the entire cost of the building. Couple that with all the revenue going to private interests and this is what one would call a boondoogle.

        The frustrating thing about the lack of understanding on how the financial breakdown of this stadium is that Adelson could easily pay for the stadium himself. I have said this a million times and no one have yet been able to refute: if this stadium is such a great idea and revenue generator, then build it yourself. Private industry will never invest in something that will not produce a ROI. Never.

        • Are there any watch dog groups or politicians making sure the tax payers in Nevada are protected?

  19. I’m curious where the facts are coming from? All I see is an excerpt from a Las Vegas Sun story. Where are they getting their facts from? Have these details been verified? The excerpt itself literally says “the details need to be ironed out.” This suggests that nothing you have mentioned is set in stone. You are drawing a lot of hearsay and conjecture from a few short sentences. Have you researched these conclusions any further than the LV Sun story? Have you contacted the Tourism Committee or NFL for clarification? You wrote a fairly scathing article about the NFL, Sheldon Adelson, and Mark Davis, even suggesting that Mark Davis is an evil supergenius. So, I have to assume that you did your do diligence in fully researching and vetting the information you are presenting as facts, much more than a few short sentences from another newspapers’ story.

    • I live in Las Vegas. The numbers are accurate. Adelson wants more than half to come from the public. In fact, his contribution has lessened since Davis has pledged $300 million with no guarantee the other $200 million coming from the NFL G-4 fund. G-4 is out of money and have to request additional financing from the NFLPA, which will reduce their financial take from half to 48%. The owners already have been caught trying to steal $120 million from the players via ticket revenue. So if the NFLPA says no, there goes G-4.

      Adelson is trying to play chess, but he is going against some extremely powerful power who are politically entrenched in this corrupt state. I do agree that the LVCVA needs to be reigned in.

  20. The financial numbers came from Adelson and Cavileer themselves, as should be clear if you actually click the links above. (They’re there for a reason.) I suppose it’s possible that they’re lying about how much money they’re asking for, but that’s a deeper epistemological question than I can really handle.

    As for Mark Davis being an evil supergenius, I tried to fact-check that, but the Evil League of Evil press office didn’t get back to me.

  21. Great Jeshosaphat! The 49ers and Santa Clara are going to arbitration over the rent payments………………………..http://bleacherreport.com/articles/2637752-49ers-file-arbitration-with-city-of-santa-clara-over-levis-stadium-rent-dispute

  22. Davis is only going to put $100million out of his own pocket. $200million from the $300million will be from Personal Seating License from Raiders season ticket holders.