Davis finds bank to lend him Vegas stadium cash, still needs okay for Raiders’ sweetheart lease

Looks like Oakland Raiders owner Mark Davis may have finally found someone to lend him a pile of money so he can take advantage of an even bigger pile of public money and build a football stadium in Las Vegas:

Bank of America will back the $1.9 billion Las Vegas football stadium sought by Oakland Raiders owner Mark Davis, paving the way for the team’s move to Southern Nevada, he told NFL owners Monday…

Bank of America’s $650 million stake will be a loan and will not include an equity stake in the team or the stadium.

So, advantage Davis in his ongoing battle with former partner Sheldon Adelson over the stadium they once dreamed of together. (I mean, not literally dreamed the same dreams while asleep, that would be freaky.) It was never entirely clear why Goldman Sachs backed out of lending Davis the money, unless it was out of solidarity with Adelson (which seems awfully non-profiteering of the vampire squid, but maybe), but having a bank that’ll let him borrow $650 million so that he can access $750 million in Nevada tax money is an important step for Davis.

It’s not the final hurdle, though, as he still has to get the Nevada legislature to approve a lease, and his initial proposal is terrible for taxpayers in that he’d keep all stadium revenues and pay only $1 a year in rent, (something that the stadium authority blames on needing to keep the stadium bonds tax-exempt, ha ha ha ow) and also terrible for them in that it has an open-ended “top-tier” state of the art clause that could end up costing the state hundreds of millions of dollars more. Not that either of these are likely to be the main stumbling block with the legislature — they’re more likely to get pissy that their pal Adelson is no longer involved — but it’s something Davis needs to work out before he can take advantage of his new Bank of America card, and it ain’t over till it’s over.

 

 


28 comments on “Davis finds bank to lend him Vegas stadium cash, still needs okay for Raiders’ sweetheart lease

  1. Mark Purdy of the SJ Merc had some interesting thoughts on this. Basically, how much do other owners trust that Davis has the ability to see the stadium project through and Vegas viable in the long run? Especially given the size of debt and the nature of the Vegas market.

    http://www.mercurynews.com/2017/03/06/purdy-its-now-high-stakes-drama-with-raiders-and-las-vegas-so-buckle-up-for-a-showdown-nfl-vote-in-three-weeks/

    Agreed, that it ain’t over until it’s over.

    • Yep. And I don’t get the feeling that the other 31 owners would miss Davis if, you know, something were to happen to him.

  2. None of us know whether Davis and Adelson shared the same exact dream, nor in what proximity they might have been physically during this shared experience.

    You remember the 1980s Dennis Quaid movie “Dreamscape”, right?

    What, we’re saying that can’t happen?

  3. Well Bank of America field has a nice ring to it.But if I’m B of A i’m looking to get a little equity in brand raiders as well. Mark Davis is still going to need a little cash to pay the relocation fee.

  4. Neil

    It is being widely reported in Las Vegas that the Stadium Authority can only charge $1 a year rent or the bonds lose their tax free status. Is there an easy way to refute this.

    • Sure, follow the link above for the explanation of how tax-exempt bonds and the private activity cap work.

      The short answer: There are ways around it, whether it’s keeping the rent payments to less than 10% of the bond payments, splitting the bond issue into one taxable bond and one tax-free one, or using a dodge where some of the rent payments are considered payments in lieu of taxes. Or you could just say screw it, let the bonds be taxable. There’s no reason Nevada has to give up millions of dollars a year in rent just so Davis can save on his interest payments.

  5. NV legislature does not approve the lease, that is done by the Stadium Authority.

    Also, the NV leg will not meet again until 2019, after the 2018 elections; they meet normally for a few weeks early in each half-term, and then adjourn. They can only be brought back in for a Special Session by the specific request of the Governor (Sandoval, who called for the SNTIC to be created to get a join NFL/UNLV stadium in the first place).

  6. The “only $1 a year in rent” is fake news. A typical tenant-landlord agreement would see the landlord pay for property expenses. In this case, the Raiders (the tenant) will pay for stadium maintenance and operating expenses.

    • And in this case, the landlord is the Stadium Events Company, which will be an LLC owned by Davis/Raiders. The stadium rent paid by the team is basically just Mark Davis taking a dollar bill out of his left pocket and putting it in the right.

      • cccfl, how does all of this pencil out? The Raiders will need to turn a profit, BofA will need to get repaid plus interest and the Bond holders will need to get repaid plus interest (hotel tax I assume). Not to mention the relocation fee rumored to be $200M – $300M…is there enough money to go around?

        • $200M NFL G4 loan payments will be taken out of NFL TV revenue distribution to Raiders.

          $300M personal loan from team will be repaid (to team) through PSL’s/naming/advertising/luxury suites/gameday revenue.

          Relocation fee (being discussed as $250M±) can be paid back over 10-11 years by team.

          Those are the costs the team itself will bear.

          The Stadium Event Company (owned by but legally separate from the Raiders financially) will repay the $650M to BofA over 30 years from the $120-130M/year non-gameday-event-revenue expected by all parties (BofA is fully aware of all the revenue and market projections).

          • Additional note: gameday revenue is expected to be on the same level as non-gameday-revenue.

            So, from the $120-130M to Raiders every year: $20M± to repay G4, $25M± to relocation fee payments. After those, the team pays itself back the $300M over a few years.

            The payments to BofA over 30 years should be around $1B, so the SEC will realize nearly $100M/ year profit.

  7. A fully amortized loan of $650M over thirty years, with an interest rate of 3.75%, has an annual repayment of approximately $36M. Does anyone believe that Mark Davis has the ability to repay the loan, relocation fee and team operating expenses every year?

    • If naming-rights fees cover the relocation fee, and he keeps 100% of PSLs and ad boards and such … maybe?

      But then, I still don’t understand how Stan Kroenke is going to pay off his stadium debt in L.A., so I’m clearly not the one to ask.

      • Kroenke has a huge ancillary development project to offset stadium losses. There is no way the Vegas market will provide enough PSL purchases. The suites and high end seat licenses may sell to the casinos. However, I have my doubts the Raiders will be able to sell every seat license in a Vegas stadium.

        • Clark County Commission chairman is asking the same questions.

          http://www.mercurynews.com/2017/03/09/raiders-mum-about-loan-while-las-vegas-officials-have-questions/

          “While board members cast a positive view of the situation, Clark County Commission chairman questioned the loan Thursday in an interview before the stadium authority met.

          Steve Sisolak isn’t sure the financial formula makes sense — at least until the Raiders explain it to him.

          “A regularly structured deal on $650 million amortized over 30 years, the principal is $20 million a year,” he said. With just a 4 percent interest rate it would cost an additional $26 million annually.

          “Where are they going to get $46 million a year?” Sisolak asked. “I don’t understand this.”

          “The Raiders must have shown some sort of projections that they feel comfortable making a loan of this magnitude,” Sisolak said, then added, “Why is a bank going to take a chance, without that? What if they can’t sell the season tickets? What if they can’t sell all these seats? Who repays the loan?”

          “Adelson said he couldn’t get a 2 percent return on his $650 million”

    • > Does anyone believe that Mark Davis has the ability to repay the loan, relocation fee and team operating expenses every year?

      Yes, actually. A whole bunch of people. They’re known as:
      the Raiders and Bank of America.

      BofA wouldn’t offer to loan $650M without assuring itself that it’d make money on the deal.

      • Well, no loan terms have been released. BOFA hasn’t confirmed anything. A Nevada official is questioning the Raiders ability to pay for things. I don’t see the Raiders generating enough income to repay their stadium related debts.

        • Bof A were *co-presenters* of the financing to the NFL with the Raiders. That they haven’t made a public statement is irrelevant.

          >I don’t see the Raiders generating enough income to repay their stadium related debts.

          Still irrelevant, because it seems BofA does.

          • No terms have been made public. Only a statement from the Raiders. Then again, they also said Goldman Sachs was going to step in when they knew that was not the truth.

  8. This has the makings of a HUGE disaster. Mark Davis is stupid to go through this, and so are the 31 other “idiots.” Vegas isn’t ready. NFL has to expand to fit the needs of Vegas and maybe cities like San Diego, St. Louis, San Antonio, and maybe tinbuktu.

    • My doubts are with the Vegas community’s ability to pay for PSL’s, to go along with season ticket prices. Those items won’t be cheap, and its a concept which has never been tried in the Vegas area.

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