Last week I picked on Nevada officials for focusing on relative trivialities in Oakland Raiders stadium negotiations instead of the bigger question of whether spending $950 million in tax money on an NFL stadium makes a damn bit of sense. But I didn’t realize just how trivial they were thinking — check out this latest report from the Las Vegas Review-Journal (a fully owned subsidiary of would-be stadium builder Sheldon Adelson):
One of the financing options before the committee includes that 39 percent cap and would set the developers’ “preferred return” at 10 percent on up to $650 million.
That option also calls for a 50-50 split of the cash flow after the 10 percent return between the developers and a capital improvement fund for the stadium project. It would not allow operating shortfalls or overruns in construction costs to be added to the preferred return calculation.
The 39% cap I discussed last week: Basically it would cut the public’s costs if the stadium came in under budget, but that never happens anyway, so it’s not worth worrying about. Getting taxpayers a share of the stadium cash flow sounds like a great idea — we’re spending a lot of the money, we should get some of the proceeds! — until you think about the details of how this would work: The first $65 million a year in profit would go to the developers (that’s a 10% return on $650 million), after which the public would get half of the remaining profits — but only to use on future stadium improvements. Hands up, anyone who thinks that 1) an NFL stadium is really going to throw off more than $65 million a year in profits after paying off construction costs, and 2) if it somehow does, the owners of the Raiders and Adelson’s casino company won’t find some way of hiding the money in one of their other pockets to avoid sharing any of it with the public?
So far Adelson and Raiders owner Mark Davis have rejected both these proposals, but to be honest, Nevada lawmakers shouldn’t sweat over either of them, because they’re next to worthless for the public. If public officials want to get a slice of money set aside for future stadium improvements, they should just put it in the damn lease that Adelson and Davis have to pay for future stadium improvements since they’ll be running the place, and not worry about slicing off slivers of future mythical profits. And if they’re concerned about the cost of construction, don’t worry about what happens if it comes in too low — rather, start by not opening your bidding at the $950 million that was the opening ask of the guys across the table. Especially when the starting bid of the city you’re competing with is zero.
Sure, “That sounds too rich for our blood, would you take, say, $250 million?” is going to get a huffy reaction from Davis and Adelson, but then, asking for anything is getting a huffy reaction from those guys, so might as well ask for something that’s actually worthwhile. As usual, elected officials are proving that they’re really terrible at this stuff.