On Friday morning, after a 17-hour session the previous day followed by a morning of behind-the-scenes haggling, the Nevada state assembly voted 28-13 to approve a $750-million-plus package of subsidies for a new Oakland Raiders stadium in Las Vegas. The bill now goes to Gov. Brian Sandoval, who will sign it into law today.
If you can do math, you’ve already noted that that 28-13 margin is the barest margin needed for a two-thirds majority, which is what was required for the state legislature to raise hotel taxes 0.88% to fund the stadium. So what did those swing voters get in exchange for their flip-flop?
The amendment to the bill passed by the Assembly expanded the Stadium Authority Board to nine members from seven, adding another representative from Clark County and one from UNLV. The amendment also defines the rent to be charged to the university to use the stadium to “actual operational or pass-through costs” excluding any fixed costs on game or event days. UNLV also gets three additional event days, for graduations or other events.
So basically, legislators’ price for approving $750 million (at least — more on that in a moment) in taxpayer subsidies for Raiders owner Mark Davis and casino magnate Sheldon Adelson was to give UNLV a marginally better lease and another seat on the stadium board. We’ll likely never know exactly what went on in negotiations — as soon as the assembly session reopened on Friday morning, the question was called and a vote was held with no public debate at all — but it was clearly some of the worst haggling ever: Michelle Spence-Jones, the Miami county commissioner who got more than $100 million in community development money in exchange for approving the Marlins‘ stadium subsidy in 2009, has to be laughing and laughing at her pathetic Nevada counterparts.
The deal was immediately savaged by both the 13 “no” voters (“What you saw today is why people are so cynical about government because the big power players got their way and the real losers are the Nevada taxpayers,” said Republican Ira Hansen; “This deal as presented, SB1, is structured in ways that all other sports subsidies have been structured and they just have not come out in the wash,” added his Democratic colleague Teresa Benitez-Thompson) and sports economists, who universally shook their heads in dismay that Nevada was even considering this level of subsidy. Stanford economist Roger Noll called it the worst deal he’s ever seen, noting that Adelson and Davis are projecting 33% of tickets going to tourists when no other NFL team even manages 10%: “The idea that the thing is going to pay for itself based on a huge inflow of tourists is crazy.” And Smith College economist Andy Zimbalist, who I’ve criticized in the past for changing his opinions depending on who’s paying his fees but who at least knows how math works, gave a cogent explanation of why increased taxes on hotel visitors count as public money:
“The first thing that could happen is because hotel prices go up, individuals and businesses will decided it’s priced itself out of the market and they’ll do their conventions or meetings somewhere else,” he said. “In that case, you actually reduce tourism.”
“The other possibility is tourists don’t care,” Zimbalist continued. “If they’re going to pay $200, they’ll also pay $205 or $210 a night and they’ll come anyway. If that’s true, then you can raise your hotel taxes and raise revenue either to provide additional social services – put it into the schools, put it into the roads, put it into the police – or you could use it to lower taxes. Either way, the hotel tax is a real tax and it taxes people in Las Vegas.”
And, as we’ve been over before, the $750 million in bonds to be repaid out of hotel tax money are not the only public gift being provided to Davis and Adelson. They’ll also be getting the benefit of $899 million in highway improvements that will be fast-tracked because of the stadium — whether they’re all directly stadium-related and not just state transportation department wishlist material is questionable, but it’s been made clear that other Vegas highway projects will be delayed as a result, since the newly sped-up projects will drain the state’s fund of gas tax money — plus possibly future public money for maintenance and operating expenses on the stadium: From what I can tell from the text of the bill, who’ll pay ongoing costs is punted to a lease that hasn’t been written yet, and given that Adelson’s Las Vegas Review-Journal has reported (no source cited) that the public will be on the hook for those items, this could easily add hundreds of millions of dollars more to the final taxpayer bill.
The only people who can save Nevada from this expense now are the other 31 NFL owners, who need to decide whether to turn down the richest subsidy offer in league history, or whether to allow a franchise to move from the nation’s 6th largest TV market to its 40th largest. Or they also have the option of approving the move, but attaching an exorbitant relocation fee to try to get a cut of the boodle for themselves. There are many, many options, and given past evidence that NFL owners make these decisions exactly like you’d expect a bunch of cliquey billionaires to make them, anything is possible, really.
Nevadans shouldn’t get their hopes up too far, though, as even if they don’t end up afflicted with the presence of the Raiders and that $750-million-plus bill, the legislation passed on Friday allows the state to spend $380 million on a new stadium just for UNLV. Because you just know that once fans of rival Mountain West Conference teams hear that UNLV has a new stadium, they’ll decide that it’s finally time to give that Vegas place a try as a vacation spot. It’ll be a win-win!