The Washington Times had a big article yesterday on the Oakland Raiders‘ lease for their new stadium in Las Vegas, and how it contains a provision that would prevent the state from trying to recoup its $750 million in stadium costs by levying new taxes on the team down the road:
An unusual provision in the Raiders agreement with the state allows the team, currently playing its final seasons in Oakland, to break the lease and look for another home if Nevada attempts to impose new taxes over the next three decades on the team, stadium, fans or players. That includes visiting teams and fans as well.
The provision applies to any “targeted tax” aimed at collecting revenue specifically from players or fans. It would not protect the team or its fans from any new taxes applied generally on businesses or individuals across Nevada, however.
I’m quote in this article, calling the lease clause “adding insult to injury” since it “makes sure Nevada taxpayers never see a penny from the stadium.” Which is true, but what the Times left out was that I mentioned this isn’t unheard of — other teams have leases that prohibit local governments from levying team-specific taxes as well. This is probably because I didn’t actually cite any examples to the Times reporter — I was busy and couldn’t look any up — but a quick search through the FoS archives reveals two examples right off the bat:
- The Cincinnati Bengals and Reds owners have lease clauses that allow them to block ticket tax surcharges during the course of their leases, and did so in 2010.
- The owners of Minnesota United asked for limits on that state’s ability to impose future taxes on the team, though I’m having a hard time confirming whether that provision made it into the final lease agreement. (The world really needs a database of stadium leases. Get right on that, world, okay?)
I realize this isn’t overwhelming evidence, but it is a sign that the Raiders clause isn’t entirely unprecedented, even if the Times reports that Temple economist Michael Leeds said, in the paper’s words, that this provision “goes beyond anything he has ever seen.” And it makes sense that team owners would try to forestall ticket surcharges: As we’ve covered before, targeted ticket taxes tend to mostly come out of team owners’ pockets because, unlike other taxes, they reduce the amount of money an owner can get away with charging for tickets. So if you sign a 30-year lease and then the state turns around and says, “Hey, $10 surcharge on all your tickets, we get the money!” and you can’t get out of the lease, that’s a huge chunk of change that is suddenly going out of your pocket and into the public’s.
Which, of course, is exactly why it’s so disappointing that the Raiders lease contains this clause — with the state already on the hook for $750 million, a ticket tax would have been one of the only ways for taxpayers to get some of that money back. But the Raiders had smart contract lawyers, so that’s not going to be happening. Evidence really is accumulating that Mark Davis may be smarter than he looks.