Raiders owner to Vegas: Thanks for $750m, how about I keep all revenues, pay $1 in rent?

If there’s one key point I’ve tried to hammer home about how elected officials should approach stadium deals, it’s: Don’t just focus on the headline number for construction costs! It’s the lease details, stupid! Otherwise you can end up giving up hundreds of millions of dollars on the back end, via lost parking fees or future maintenance expenses or what have you.

The Nevada legislature clearly hasn’t been listening to me, because Oakland Raiders owner Mark Davis just revealed details of his lease demands for his new Las Vegas stadium, and they are, shall we say, the kinds of things you might have wanted to talk about before approving $750 million in subsidies:

  • The Raiders would pay $1 a year in rent.
  • The team would receive 100% of naming rights from the stadium.
  • The team would receive 100% of advertising sales at the stadium.

How much of an additional subsidy would this be? While there’s no established baseline for fair-market rent, let alone a fair-market split of naming rights, I’m told the state was expecting to get an $8.2 million cut of those revenue streams to help defray its own costs. Giving that up is worth about $130 million in present value, so if we consider that to be a new ask, then the Raiders’ total subsidy would now stand at $880 million.

Of course, if the state was really counting on that money, it might have wanted to ask for it, you know, before approving the first $750 million. The Nevada Stadium Authority is scheduled to begin discussing Davis’s lease demands next month; if they end up rejecting them and telling him to take his team and go play in the street — not likely, but could happen — that might be the best outcome for all concerned, except for Davis, obviously.

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23 comments on “Raiders owner to Vegas: Thanks for $750m, how about I keep all revenues, pay $1 in rent?

  1. I don’t think that math is right. If the state gets the naming rights and rent they expected, that offsets part of their up front subsidy. So 750 million minus 130 million, the total subsidy is 620 million.

    Unless those items were meant to offset operational expenses, in which case you’re right.

    1. Well, either way it’s a question of what you think the state “should” be getting. (One could reasonably argue they’re putting up like 40% of the construction cost, so getting anything less than 40% of the revenues is a subsidy.) But in any event, yes, the revenues were intended to offset state operating costs.

  2. You don’t take into consideration that the state will recoup that money via the hotel tax. So actually tourists are paying that $750 million. Plus Davis is adding 500 million of his own cash and he only occupies the place for 10 days or so days out of the year. Who keeps the revenue for the other times the place is leased out. I could go on and on but you get my point. Too many variables your article fails to account for.

    1. Tax money is tax money. Unless those are all tourists coming just to see the Raiders (extremely dubious), you can’t attribute the hotel tax money to the stadium.

    2. Mark Davis doesn’t have his own cash, because he is broke. The 500 million you must be speaking of is the money he will get from the NFL contingent upon building in Oakland.

    3. We’ve been through this so many times over it doesn’t need repeating but just in case you need a refresher: the revenue generated from the raising of the hotel tax could go to I don’t know the critically underfunded public school system, or the woe-fully understaffed police department, or the embarrassing lack of funding for social programs.

      Oh and if you think Davis is putting up any of his own money I got some oceanfront property in Las Vegas to sell you. Davis isn’t spending a dime on this stadium. What he is doing is this: the NFL is giving him $200 million (which is no guarantee since the players have to approve it – the G-4 fund is broke), $100 million to be raised via PSL sales (yeah, right), and the rest via small equity position in the team. And the revenue you speak of: Davis is going to attempt to construct the lease as a management agreement, which in turns would guarantee he keeps all the revenue the stadium generates. This is what NFL owners do: they keep it all while defraying all the costs.

      The real question that should be asked to Davis and Spanos is this: apparently they can’t afford how to build a stadium in their soon-to-be former markets yet can somehow afford the $650 million relocation fee? To be fair I can’t blame Davis for taking three-quarters of a billion dollars. He’ll be a fool not to. Spanos is an entirely different matter.

      1. @jay…I’m with you here, but where did you get the data on the G-4 being “broke”?

        And I believe Spanos is on for the $650M but Davis only $550M. See below..but the info could be old.

        1. The G-4 is broke. The NFL owners are trying to renegotiate the CBA with the players union because they want the players to take a 1.5% pay cut in order to replenish it. The G-4 has been out of money after the Minnesota and Atlanta stadium deals. Funny how the owners are pressuring the players because they don’t want to come out-of-pocket to pay for their shiny new play-pens.

          If I was the players, I’ll tell the owners to kick rocks unless they are willing to make some serious concessions like health care for life instead of 5 years after retirement, pensions for life after you accrue one full season (currently you have to play 3), eliminating Goddell as the sole decision-maker on disciplinary matters, and a soft salary cap structure allowing teams to go over by 5% (they can impose a luxury tax apron similar to the NBA).

      2. A new stadium in Oakland is not happening. It is 99.9% unlikely to ever happen. It’s like trying to squeeze water out of a rock. Also the expansion fee (be it $650M, $550M, or whatever it really is since nobody knows) supposedly is to be paid out over 10 years, not upfront – if even that is true.
        Judging by the number of NFL teams that have relocated, the fee really isn’t that much of a hindrance. I don’t believe a single thing about how much money the NFL claims it has or doesn’t have.

  3. Nevada should use this as their chance to bail on this deal. With LA out of the picture, Davis has lost some leverage. That 750 million might be better spent on a water project.

    1. There aren’t any free luxury seats for friends and family with the water project so nobody is going to be interested in that.

  4. In theory one could argue that the hotels are paying the tax since they set the rates for their customers. Since they basically control the state legislature, they apparently thought it was in their best interest to bear the burden of this tax in exchange for whatever benefit they get from having the Raiders play in Las Vegas.

    While this is not right (especially considering the public service funding issues in Nevada), it doesn’t reach the despicable levels we’ve seen in other cities where the locals are directly soaked with sales and/or property taxes to fund a playground for millionaires and their billionaire bosses.

  5. Neil, this is one of your all-time greats. I mean, screw it, let’s call it a $11.2 billion subsidy. I say that the Raiders SHOULD be paying Nevada 100% of their revenues, plus $10 million from each other NFL team, per year. So, that’s $301 million (Forbes number) from the Raiders plus another $310 million from the other 31 teams. $611 million/year over a 30 year lease would be $11.2 billion in present value using the Trump growth rate of 3.5% per year.

    Think about this, Nevadaians. Your politicians, which their incredibly shoddy negotiating skills, are giving away one-sixth of the GDP of Burma just to keep get the Raiders. Let’s keep that $11.2 billion instead and give each of Nevada’s 11,000 homeless people a million bucks to get them back on their feet. Plus it’ll stimulate the economy once those homeless people invest in Nevada-based mutual funds and other common homeless investments. It’s an outrage.

  6. Sheldon Adelson pulls out of Raiders stadium deal; project in jeopardy

  7. And here is the full 117-page DRAFT proposal from the Raiders to the Las Vegas Stadium Authority.

  8. I generally agree with your arguments that tax dollars are fungible. Many of the hotels in Las Vegas supported the hotel tax. The support of MGM, which controls over 30,000 rooms was crucial to the tax passing. Presumably MGM was acting in their economic best interest. May 2016 Las Vegas Strip gaming revenues were down 11.68%, which was a year after the Pacqiou-Mayweather fight.

    Big events draw a lot of people to Vegas. So I think that a stadium in Las Vegas cold make sense as an infrastructure investment. I do not think the same logic applies to other cites that do not have the tourist attractions and rooms that Las Vegas has.

    1. This is a very slick and profound comment that I’m sure is going to go over many peoples’ head. By implying a franchise like the Patriots is worth the money and hassle, you pretty much informed folks the Raiders are indeed the opposite. You sir are brilliant.

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