Las Vegas approves Raiders lease that will pay taxpayers $0 in rent for next 30 years

The Las Vegas Stadium Authority unanimously approved a lease with the Oakland Raiders yesterday, and it’s online and everything so we can look at it! Good news first:

  • The Raiders owners have to pay all maintenance and operating costs, as well as putting $2.5 million a year into a Stadium Authority Capital Projects Fund that they can then spend on themselves.
  • There doesn’t appear to be any kind of “state of the art” clause that would allow the team to break its lease if the county doesn’t provide stadium upgrades.

And the not-so-good news:

  • In exchange for its $750 million in construction subsidies, the public gets absolutely zero revenues from anything: ticket sales, naming rights, concessions, ad boards, you name it. The Raiders’ rumored $1 a year rent turns out not to be true; they will actually pay $0 a year.
  • The stadium, despite all of its revenues for the next 30 years being controlled by its private tenant, will pay no property taxes.

This isn’t quite as bad a lease as I’d feared — a state-of-the-art clause would have been a real disaster, since it would have allowed the Raiders owners to demand future upgrades in a decade or two under threat of moving again — but it’s still not very good for taxpayers. It was apparently finalized in a hurry because of the team’s threat to stay in Oakland for another year if a lease wasn’t worked out this week; Mark Davis may be bad at a lot of things, but he seems to have this whole gamesmanship thing worked out pretty well.

Raiders threaten to delay own stadium in order to get lease concessions from Nevada

It’s two-minute warning time for the Las Vegas Raiders stadium lease, according to Raiders execs:

Raiders President Marc Badain on Thursday said the lease agreement is on the agenda of the NFL league owners’ meetings scheduled to begin later this month. If one is not presented, there is a “distinct possibility” that team’s move to Sin City could be pushed until the 2021 season, Badain said.

“In order to approve a lease, you need full membership, and the league has four meetings a year: one in March, one in May, one in October and one in December,” Badain said after a public meeting of the Las Vegas Stadium Authority board. “So, if you miss the May deadline, you push to October, we would lose a year, and everybody wants to get this project going everybody wants to get these guys to work. So we didn’t want to miss that deadline.”

This is clearly meant to pressure the Nevada Stadium Authority into approving all their lease demands like only paying $1 a year in rent, out of fear the team would otherwise stay in Oakland for another year. Though really, you’d think it’d be the Raiders management that would be feeling pressure, given that they’re facing possible eviction from the Oakland Coliseum in 2019, and presumably wouldn’t want to have to go play in the street for a year. One wouldn’t think that too hard, though, because stadium leverage seldom has to make sense to work.

Public cost of Las Vegas Raiders stadium could rise, thanks to transportation projects

Okay, one more quick one: The bills are starting to come in for the Raiders stadium project in Las Vegas, and they could end up adding to the $750 million in public subsidies the stadium is getting for construction costs. First up: $200 million to rebuild a highway interchange near the stadium site, to be financed with state bonds and repaid with gas taxes.

This highway project has been in the works for a while, so you can’t really say that it’s the result of the stadium project, though the stadium will certainly benefit from it. But there could be more to come: Clark County still needs to study transportation, parking, utility, and other needs, and given that construction is set to be on a tight 30-month timetable — “of the last four domed NFL stadiums built, none have been completed within 30 months,” notes the Las Vegas Review-Journal — one has to be concerned that the studies will be rushed, or even put off until after construction has started, as we saw happen with Cobb County’s Atlanta Braves stadium, to ill effect. This looked like a bad idea at the time the state voted to approve the stadium before doing transportation studies, and it’s not looking any better after the fact.

Raiders buy stadium land, spark imaginary increase in value of surrounding property

Oakland/Las Vegas Raiders owner Mark Davis has closed on the purchase of 62 acres of Las Vegas land, spending $77.5 million for property on which to put a new football stadium, plus a bunch of giant parking lots where Raiders fans will presumably want to tailgate briefly before dying in the desert heat. And boy, are local property owners excited!

As of Monday, the Review-Journal reported the property’s valuation at $40 million, but it was sold for $77.5 million, nearly doubling its price.  The overnight spike is expected to bring the surrounding property values up along with it, and this is before any dirt is ever turned.

Okay, really it’s just Las Vegas Now (the website of the local CBS affiliate) that’s excited, since they don’t actually quote any property owners as saying that they expect their property values to go up as well. As well they shouldn’t, since everyone is expected to drive to the game and park in those parking lots (or maybe take the monorail, if it’s extended to Mandalay Bay, and then walk across a highway to get to the stadium), so it’s not like there’ll be a ton of football fans eager for other places to eat and shop nearby — and even if there are, it’ll only be for eight days a year, so, really, no, don’t count on a ton of new development surrounding the stadium.

Anyway, here’s what the future home of the Las Vegas Raiders looks like today:

I can’t find any coverage of why this plot of land remains vacant when everything around it has been built on, beyond a mention that the banks that sold it to Davis foreclosed on it back in 2008. Any Vegas natives with a sense of local history, please speak up!

Nevada stadium authority chair: Raiders paying no rent in exchange for $750m sounds about right

Hey, remember how Oakland Raiders owner Mark Davis proposed paying $1 a year rent to the state of Nevada in exchange for $750 million in stadium subsidies, and we all thought, “Okay, sure he’s going to ask for that, but there’s no reason the state stadium authority needs to take him seriously”? Well, the stadium authority board chair now says $1 a year rent sounds just fine to him:

“It’s based on the fact that the Raiders are going to be investing up to $1.15 billion and certainly taking the risk for any overruns,” board chairman Steve Hill said after the meeting. “So, in order to make that agreement make financial sense, the revenue from the stadium needed to flow to those investors.”

Yes, Davis and his private investors are putting up a lot of money. You know who else is putting up a lot of money? The people of Nevada. And where Davis’s side will have lots of revenue streams like all of the naming rights and ad sales from the stadium to help pay off their share, the state will only have whatever new tax money flows from tourists who weren’t going to go to Las Vegas just because it’s Las Vegas, but now will because it’s Las Vegas with the Raiders, about which sports economist Roger Noll has already said don’t hold your breath. But hey, the main concern of state officials is to cut deals to ensure the profitability of private corporations, right? I’m pretty sure I read that somewhere.

It’s up to the stadium authority to determine and sign the lease, with no further input from the state legislature, so Nevada taxpayers are probably doomed. One hopes that at least they’ll manage to get an ironclad non-relocation clause without any “state of the art” loopholes, but with bright lights like Hill in charge, one shouldn’t hope too hard. Too bad Las Vegas doesn’t have anyone living there who has experience negotiating exactly these sorts of clauses and could be brought on to consult on this.

Oakland to Raiders: Can you move to Vegas sooner than later, please?

Punchline to that story about Oakland coming out ahead once the Raiders leave for Las Vegas because the Coliseum Authority loses money hosting football games: Oakland has figured it out, and would like the Raiders gone as soon as possible, please:

“I would say to you with the highest level of confidence, my opinion and recommendation and that of my board members — I don’t believe there is any appetite for a third season (in Oakland),” Oakland-Alameda County Coliseum Authority executive director Scott McKibben told USA TODAY Sports on Tuesday…

“It’s actually financially to our benefit if they didn’t exercise the options and play here even in the two years they’ve got (in 2017 and 2018),” McKibben added.

That third year is actually up to the Coliseum Authority: The Raiders have lease options in Oakland for 2017 and 2018, but for 2019 — the last year before their new Las Vegas dome is expected to be ready — they can only remain in Oakland if the authority okays it. This raises the possibility of the team actually being evicted and forced to play in UNLV’s Sam Boyd Stadium for a year. Though a lease extension that sees Raiders owner Mark Davis pay more in rent for 2019 is probably more likely — unless Raiders attendance the next two seasons plummets and makes Davis figure it’s best to get out ASAP, of course, which is entirely possible.

Either way, the prospect of a city evicting a pro sports team because it would do better financially to have its stadium stand empty is a pretty damning indictment of the supposed economic benefits of sports teams, or at least of the sweetheart leases that cities usually hand out. Really, this is something for local elected officials to take notice of when their teams are arriving, not when they’re on their way out — yes, Nevada, I’m talking to you.

NFL votes 31-1 to move Raiders to Las Vegas in 2019, Oakland cries all the way to the bank

Well, the NFL went and did it: In a 31-1 vote (Miami Dolphins owner Stephen Ross was the one objector), the league owners yesterday approved the relocation of the Oakland Raiders to Las Vegas, to play in a proposed $1.9 billion stadium that will be funded with the help of $750 million in state subsidies.

This is the third NFL franchise relocation announced in the last year and change, all three involving teams that had relocation at least once before (following the Cleveland-to-Los Angeles-to-St. Louis-to-Los Angeles Rams and the Los Angeles-to-San Diego-to-Los Angeles Chargers). And reaction was fast and furious and in all directions at once:

  • The Raiders will remain in Oakland for at least the next two and possibly three seasons while their new Vegas stadium is being built, since UNLV’s Sam Boyd Stadium was deemed even more unacceptable for NFL purposes than a stadium in a city where fans will likely only show up to burn the owner in effigy. Or not show up at all: Famed Raider fan Dr. Death has already announced that he’s ditching both his Raiders gear and his Raiders season tickets, declaring, “That dysfunction, that ineptitude? That problem is no longer mine. Las Vegas, have fun with that.”
  • To have any hope of earning back that $750 million, Nevada will have to draw a stupendous number of new tourists who would come to Vegas just to see the Raiders and then stay for several days, which already looked awfully dubious. Stanford economist Roger Noll chimed in last week that there’s zero evidence for the Raiders’ economic projections, calling the stadium plan “a catenation of optimistic assumptions” for which “the probability that it could happen isn’t zero, but it is pretty close to zero. … Why would they believe a half a million who would never visit Vegas would suddenly show up because there is a football stadium?”
  • If fans don’t show up — and more to the point, if the hike in hotel taxes to pay for the stadium drives down the number of other visitors even slightly — “the money comes out of schools and buses,” notes Slate’s Henry Grabar, since part of the hotel tax currently goes to fund Nevada education and public transit programs.
  • The San Francisco Chronicle’s Matier & Ross write that the Raiders’ stay in Oakland was doomed by the city’s desire to keep the A’s, though really, more to the point is that Oakland officials didn’t want to cough up the hundreds of millions of dollars in stadium funds that Raiders owner Mark Davis was demanding (and so far A’s owner Lew Wolff has not).
  • The San Francisco Chronicle’s Kimberly Veklerov noted in an article before the vote that Oakland could end up coming out ahead financially from the Raiders’ departure, since the Coliseum Authority currently spends about $1 million more on stadium staffing and conversion of the seating bowl from baseball to football than it receives from Raiders parking, concessions, and rent.

If there’s any sense in any of this — aside from the allure of that $750 million — it’s that the Raiders will now be closer to the Southern California fan base that Davis’s father Al abandoned when he moved the team back to Oakland in 1995. Why, Las Vegas is only a four-hour drive from Los Angeles, so surely half a million people a year will make that trip, then spend the whole weekend gambling, and it won’t take away from any other trips they would have made to Vegas anyway, and oh just never mind, there is no sense in any of this other than that sweet, sweet stadium-subsidy lucre. Enjoy your Raiders (starting in 2019 or so), Las Vegas — they’re your problem now.

NFL expected to vote today to approve Raiders move to Vegas, because $750m talks real loud

The NFL is finally set to cast its vote on allowing Mark Davis to move the Oakland Raiders to Las Vegas, and at least one prominent observer is predicting it will pass:

On the eve of the NFL’s annual spring meeting in Phoenix, commissioner Roger Goodell told ESPN’s Sal Paolantonio that the voting outcome on the Oakland Raiders‘ proposed move to Las Vegas will be “positive.”

“I think we will have a vote, and I think we will have a positive vote. I think we are in pretty good shape,” Goodell said.

Goodell’s job is to do the bidding of the 32 NFL owners, so unless he’s reading the room very poorly, he probably knows of what he speaks. Which means the NFL will soon see its third franchise relocation in the two years since St. Louis Rams owner Stan Kroenke first laid plans to move to Los Angeles and jump-started the whole relocation merry-go-round. And also that the NFL is more excited about a public body writing Davis a $750 million check than worried about how Davis will repay the $650 million he’ll have to borrow, which it probably should be, given that there’s no way anyone else was going to offer the Raiders that much stadium cash, and playing in a relatively small Las Vegas market doesn’t matter too much so long as those national TV checks keep rolling in.

There is still every sign that the Las Vegas Raiders could be a disaster, given not just that $650 million debt load but the, shall we say, uncertainty around whether a team will be able to sell season tickets when its main customer base is expected to be fans of visiting teams who’d like to combine a trip to a road game with some gambling and hearing old guys play music. But they’ve pretty much been a disaster in Oakland, too, so I can certainly see 24 NFL owners saying, “Fine, Mark stumbled into a $750 million check, let him go ahead and try to make it work.”

As for what this means for the league as a whole: L.A. is now full up as a market, and Oakland and San Diego are both close enough to existing NFL cities — Santa Clara and Los Angeles, respectively — and disinterested enough in throwing money at new stadiums that’s it’s unlikely anyone will use them as a move threat anytime soon. Which means the next time an NFL team owner wants to saber-rattle in order to shake loose public funds, he’s going to need to resort to … St. Louis? San Antonio? London? I guess if Las Vegas is an acceptable target, there’s no reason Austin or Birmingham or Portland (either one) isn’t, so this doesn’t really hurt team owners’ leverage much. And it adds to the viability of the threat that teams could move anywhere, anytime, so don’t push us, or we’ll go ahead and do it, believe you me!

Pro football really is the worst of all sports for many, many reasons, and needs to meet a quick and unceremonious demise. Youth football participation seems to have reversed its precipitous decline, but where there’s the fear of death, there’s hope.

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.

 

 

Proposed Vegas Raiders lease includes “top-tier” clause, this really is the worst ever

I almost included this in the last post, but then I figured it really deserved its own item, because oh man, they’re not really considering this, are they?

The Authority or its designees shall have the obligation to, and shall, provide, perform and take, or cause to be provided, performed or taken, such actions, at the Authority’s expense, either directly or through the Manager, as may be necessary or reasonably advisable to operate and maintain the Stadium and Stadium Infrastructure in a safe, clean, attractive, and first-class manner similar to and consistent with other premier, top-tier NFL facilities (the “Expected Facility Standard”) and in compliance with all Applicable Laws.

That’s from Oakland Raiders owner Mark Davis’s proposed lease with Nevada for a Las Vegas stadium, and yes, it’s a state-of-the-art clause, requiring the state to maintain a stadium in “top-tier” condition on its own dime. I.e., the same kind of clause that let the St. Louis Rams escape their lease and move back to L.A. after 20 years.

Now, a couple of caveats. First off, unlike some other state-of-the-art clauses (cough Cincinnati Bengals cough), this one doesn’t spell out a wish list of items like “holographic replay systems” that the state would have to provide if other NFL teams got them. And it’s only about “operations and maintenance,” so doesn’t specifically talk about capital improvements (though it also doesn’t rule them out). And there’s no specified penalty for violating it that I can find, though being considered in breach of contract is never a good thing. And this is only Davis’s proposal, so there’s still room for Nevada’s lawyers to red-line through the worst bits.

That said, don’t ever sign open-ended state-of-the-art clauses, people! At best, this would be an invitation for Davis to, say, declare that he can’t possibly operate a top-tier stadium without a scoreboard that stretches to Utah, and threaten to sue to break his lease and move the team if taxpayers don’t build him a new one. One hopes that even if the local rich guy rejoins the deal, Nevada officials will still balk at agreeing to this — I mean, one doesn’t hope too hopefully, given how eager they were to approve $750 million in tax money for a stadium in the first place, but even that doesn’t justify a blank check for future upgrades, right? Right?