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?

Goldman pulls out of Vegas Raiders deal, Davis now faces Adelson’s way or the highway

Remember way back yesterday, when I noted that billionaire Sheldon Adelson pulling out of the deal to build a Las Vegas stadium for the Oakland Raiders didn’t necessarily kill those plans, because Raiders owner Mark Davis had Goldman Sachs lined up as a backup financial partner? Well, that didn’t even last a day:

Goldman Sachs, the banking giant the Raiders told NFL owners would finance part of the $1.9-billion proposal even without Adelson’s involvement, pulled away from the project Tuesday.

The arrangement with Goldman Sachs was contingent on Adelson’s partnership with the Raiders in the development, according to a person with direct knowledge of the situation. Without Adelson, the person said, there isn’t any deal.

It’s not entirely clear here whether Adelson leaned on Goldman not to do the deal without him (he says he didn’t), or Goldman decided that retaining the support of Nevada elected officials was too dicey without Adelson, or Goldman never wanted to do the deal without Adelson and Davis was just an idiot for assuming they would. (Actually, most of the scenarios here involve Davis being an idiot.) Either way, though, this presents a huge stumbling block in the way of Davis cashing in on Nevada’s promise of $750 million in public money toward a stadium, which at least one legislator is threatening to revoke if the Raiders owner can’t work something out ASAP:

The political fallout Tuesday included a suggestion by Aaron Ford, majority leader in Nevada’s Senate, that public money for the stadium could be diverted for other purposes if the situation isn’t quickly resolved.

“If progress is not made toward financing the stadium project in a timely fashion, we will introduce legislation to create the jobs that were promised and contemplated by stadium construction,” Ford said.

All the leverage is back in Adelson’s court, in other words, if he wants to resume his demands for a large cut of team revenues and possibly of ownership as well. You have to figure he’ll at least try, because he’d be stupid not to — though there’s enough stupid already floating around this deal already that a little more wouldn’t be all that surprising.

Adelson backs out of Raiders deal, jeopardizing Vegas move either lots or not at all

And speaking of “you can’t fire me, I quit” ultimatums, squintillionaire casino baron Sheldon Adelson responded yesterday to Oakland Raiders owner Mark Davis moving ahead with a Las Vegas stadium lease proposal without consulting him by saying fine, he doesn’t want to play Davis’s old reindeer games anyhow:

Billionaire casino magnate Sheldon Adelson has backed out of a deal to help construct a $1.9 billion stadium for the Oakland Raiders, throwing the team’s proposed move to Las Vegas into jeopardy…

“It’s clear the Raiders have decided their path for moving to Las Vegas does not include the Adelson family,” Sheldon Adelson said in the statement. “So, regrettably, we will no longer be involved in any facet of the stadium discussion.”

Adelson blamed conditions named in a 117-page proposed stadium draft agreement, which the team presented at a meeting of the nine-member Las Vegas Stadium Authority last week. He said the draft proposal, which called for terms including $1 annual rent, control over field scheduling and exclusive naming rights for the team, sent “shockwaves” through the community and was a surprise to his family.

“We were not only excluded from the proposed agreement; we weren’t even aware of its existence,” he said in the statement.

This is not entirely unexpected, given that Davis had already indicated he was preparing to pursue the deal without Adelson, even going so far as to line up Goldman Sachs as a financing partner if need be. (Sure, he’d have to repay Goldman Sachs on their loan, but Adelson wanted a cut of revenues or maybe part-ownership of the team to repay his own investment, so potato-potahto as far as Davis’s bottom line is concerned.) And that proposed lease, released last week amid headlines about how Davis only wants to pay $1 a year in rent and keep all the stadium revenues for himself, didn’t mention Adelson at all, so there’s really no reason for anybody to flip out about this.

Flipping out, of course, is precisely what some people are doing:

Elected officials including Clark County Commission chair Steve Sisolak, who had spoken with Adelson earlier on Monday, said the development put the future of the move in jeopardy.

“This is not a wrench in the wheel, the wheel fell off,” he said. “This is an enormous setback in my opinion.”

(It’s “wrench in the works,” not in the wheel, which would be — oh, never mind.)

The issue here is less whether Davis can find somebody else to throw a few hundred million dollars in cash his way in exchange for future payments (that’s exactly why places like Goldman Sachs exist) than what it means politically to lose Adelson, whose connections were what enabled the Raiders to get their $750 million stadium subsidy offer from the state of Nevada in the first place. And while the subsidy legislation has already passed, Davis and the state still need to negotiate that lease, so it’s a bad time to be losing a powerful local friend — something you’d think Davis would have thought through, if you assumed that sports team owners think more rationally than the rest of us, which is probably a bad assumption.

In any event, this is a worthwhile time for Nevada elected officials to remind themselves that the Vegas Raiders stadium plan really is a godawful one, especially when you consider not just that $1 a year rent but that Davis would get all naming-rights, ticket, and even concessions revenue, while the state stadium authority would be on the hook for all operating expenses and even any property taxes, per the team’s proposed lease. While backing away from a deal because Sheldon Adelson isn’t involved in it is usually the exact opposite of what I’d recommend, this might be a good time to make an exception.

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.

Raiders to file papers to move to Vegas, it is said (by someone [we can’t tell you who])

So on Saturday morning (updated again on Sunday), NFL.com’s Ian Rapoport had this to report:

The Raiders will file relocation papers to move from Oakland to Las Vegas, according to sources familiar with their thinking. … The stunning move, one that should be made official in the coming days, is expected to add a new city to the NFL’s ever-changing landscape. The Raiders would need 24 votes from the league’s owners to formally make the move, a vote that will come this spring…

As for the support from the room of owners, it’s described as making progress and gathering momentum. There isn’t nearly the opposition some anticipated originally. And it continues to build, with some of the most prominent owners vocally in favor of it.

Number of named sources cited: zero. Citations are to “sources familiar with [the Raiders’] thinking,” “sources,” and that passive-voice “it’s described as.” So what we know for sure is that somebody wants the world to know (or think) that the Raiders are all set to move to Las Vegas, and that the NFL is set to approve it.

Anyway, we’ve known for a long while that Davis wants to move to Las Vegas, or at least that he says he wants to. (Notwithstanding that he still doesn’t know who he’s going to build a stadium there with, after getting $750 million in public money to help with the costs.) Does this mean the move could be official in another couple of months? That this is an attempt to shake down Oakland, or even once-and-maybe-future Davis stadium partner Sheldon Adelson, for a more Davis-friendly deal? What kind of relocation fee would Davis have to pay for moving from an old stadium in a large market into a new stadium in a fairly small one? All good questions to ask Rapoport’s sources — here, go to it.

Raiders could have new evil billionaire to partner with on Vegas stadium

Wednesday’s NFL meeting about the Oakland Raiders‘ possible relocation to Las Vegas was a big bust as far as actual news goes, with the exception of Pittsburgh Steelers owner Art Rooney II’s cryptic statement that “the Raiders are looking at this potentially going without Mr. Adelson.” We now have some indication of what that was all about, though, as a Las Vegas stadium authority consultant reported yesterday that Raiders owner Mark Davis thinks he has another option for raising money if he can’t come to an agreement with casino baron Sheldon Adelson:

“The team’s presentation highlighted its research that the Las Vegas market can support the team, that bringing the NFL to the market aligns with the league’s strategic goals and that Goldman Sachs is committed to financing the project with or without a third party,” [Jeremy Aguero of Applied Analysis] said.

“The Raiders told the committees that there is no deal in place yet with the Adelson family and that the team is pursuing approval with no third-party involvement,” Aguero said. “However, if an accord with the Adelson family is reached later, the team would bring that back for league approval.”

This makes sense: If building a Las Vegas stadium (with $750 million of it paid for by taxpayers) is a good deal for Adelson, it’s likely to be a good one for Goldman Sachs as well. Though it’s important to note that Goldman would only be the financier here — Davis would have to borrow the money and repay it later. Still, if he’d rather make annual loan payments than share revenues and potentially team ownership with Adelson, sure, go for the vampire squid, or at least pursue it as an option so you have some leverage with your prospective partner.

The big question is whether that $750 million is still on the table if Adelson is no longer involved. I’ve looked at all the reports on the legislation and been unable to tell whether the money is contingent on it going to Adelson, or if it’s just free-floating money that can go to anyone looking to build an NFL stadium. It would certainly be ironic if Adelson ended up putting in all this lobbying effort, including buying the local newspaper, only to get shoved unceremoniously aside. Though if you believe the scuttlebutt that Adelson only did this to block hotel tax money from going to a convention center that would compete with his, maybe he won’t care so much, especially after the convention center got its money anyway.

And yes, all this is a dumb way to decide which cities get pro sports franchises. In case you were wondering.

NFL meets to discuss Raiders, Chargers moves, doesn’t decide squat because why rush into things?

The NFL’s stadium and finance committees met yesterday as promised, and while nothing really was decided about either the Oakland Raiders‘ possible move to Las Vegas or the San Diego Chargers‘ possible move to Los Angeles, we have some hints of where things are headed. And as befits a league run by a bunch of rich guy who decide things by arguing about who has the biggest balls, the outcome looks to combine one helping of naked avarice with two of farcical train wreck.

Yesterday’s joint meeting was apparently mostly focused on the Raiders, with league VP Eric Grubman later telling the L.A. Daily News’s Vincent Bonsignore that team owner Mark Davis has made “impressive” progress on a stadium deal there. Which, yeah, we noticed, but has the NFL made any progress on deciding whether to approve the move?

Okay. Has Davis at least made up his mind about whether to take Vegas’s $750 million subsidy offer and go in with billionaire Sheldon Adelson on a stadium there?

Okay! So no news at all, really, other than “check back later.”

There are still two big unknowns in the Raiders-to-Vegas potential move: First off, the NFL needs to decide on what relocation fee Davis would be charged, which the league still hasn’t discussed, though they have hired the same consulting firm that picked $550 million out of a hat for the Rams‘ move to L.A. to figure it out. And second, Davis has to hash out a deal with Adelson on how to split revenues and costs, which they apparently still haven’t been able to put their heads together on. Adelson no doubt thinks he has Davis over a barrel since he has few other options for getting ahold of $750 million in public stadium cash, which is probably why the NFL deployed Pittsburgh Steelers owner Art Rooney II to say this yesterday:

“I think the Raiders are looking at this potentially going without Mr. Adelson,’’ Rooney, chairman of the league’s stadium committee and one of the NFL’s most influential owners, told reporters in New York after league meetings on relocation and stadium issues.

Davis told the Review-Journal, “I have nothing to say right now.”

That sort of could make sense, maybe: If a Vegas stadium is viable for Adelson, then it’d be viable for some other developer as well, and Davis is the one with the rare commodity in an NFL team. Or he (or Rooney) could just be trying to drive a hard bargain with Adelson to get more money flowing into team/league coffers. Davis has until February 15 to decide on whether to file for relocation, and the NFL could always decide to extend that deadline if they want, so that leaves plenty of time for haggling.

On the Chargers front, meanwhile, the reason for the stasis is way more hilarious: It looks like team owner Dean Spanos doesn’t really want to move to L.A., and the other NFL owners don’t really want him to move to L.A., but the two sides are engaged in a massive game of chicken to decide whether the league will pay him to stay put. Per CBS Sports’ Jason La Canfora and his patented unnamed sources (though other outlets are reporting similar things):

There are some grave concerns among owners and the league office about the potential of having two teams in Los Angeles — the Chargers can exercise an option to move to L.A. next week, and sources said at this point they have no reason not to — and any subsidy offered to Chargers owner Dean Spanos would be born of those economic fears more than anything else…

The Rams have had a rough first season in Los Angeles and are already engaged in a coaching search, and the ratings in that market were not what some might have hoped for, as well. … Spanos has resisted leaving in the past and has his own concerns about the deal brokered with the Rams, one that would essentially make the Chargers a tenant to Rams owner Stan Kroenke at the stadium in construction scheduled to open in 2019, and there is sense among other owners that even a weak deal to stay in San Diego could carry the day.

There’s a lot to unpack there, but basically, if we believe La Canfora or whoever’s feeding him this stuff, Spanos doesn’t really like the deal being offered by Kroenke to move to L.A., but is trying to use the threat of taking it to extract some cash from the league to help him pay for a new stadium in San Diego. And the NFL can’t do much about it, as it already gave Spanos an option to move to L.A. last year when it approved the Rams move, and set the relocation fee to boot, meaning it can’t throw any roadblocks in the way of a Chargers move, just offer Spanos bribes not to go through with it.

Spanos’ option expires on Tuesday, which means something has to give really really soon. (He’s reportedly called a team staff meeting for this morning to discuss an undisclosed matter, which is presumably that he’s set to announce a move.) So, of course, yesterday’s meeting steadfastly avoided talking about the Chargers at all:

Just like the Rams decision did, it looks like this one is going to go down to the wire, and be decided by something stupid like egos or which NFL owners are Facebook friends. Both teams moving is still a likely scenario, but at this point I really wouldn’t rule anything out.

Oakland okays talks about giving Raiders $350m for stadium, pretends it didn’t just do that

The Oakland City Council and the Alameda County Board of Supervisors both approved the term sheet for opening negotiations on a new Raiders stadium yesterday. That’d be the plan that would provide $350 million in public land and cash, with no clear indication how the money would be repaid, and so of course one of the elected officials voting for the plan said this:

“To me, it’s worth taking the next step because we’re not committing taxpayer dollars to do it,” board President Scott Haggerty said.

Some days, I really don’t know why I bother.

The county supervisors voted after a three-hour hearing in “a room sparkling with sports celebrities,” according to ESPN. Among those was prospective stadium investor Rodney Peete, who appeared in one game for the Raiders in 2001 and so of course said this:

“I was lucky enough to play for 16 years. I played for six different teams, and we’ve all played for different teams. But we’re all here, fighting for the Raiders,” said former Raiders quarterback Rodney Peete, who is [Ronnie] Lott’s development partner.

Anyway, Oakland now has its counteroffer (or at least the framework for an idea for a counteroffer) to try to convince Mark Davis not to give Sheldon Adelson what he wants in order to move to Las Vegas, or at least to convince nine NFL owners to block a Vegas move while Oakland talks continue. It’s a bidding war that, like all city-vs.-city bidding wars, is not likely to end well — unless Lott and Peete can figure out how to build a $1.3 billion stadium and somehow generate enough new revenues from it to have themselves, Davis, and Oakland all turn a profit. Hey, hope springs eternal!

Schaaf stadium plan would give Raiders $350m in subsidies, unclear on how to get it back

Oakland Mayor Libby Schaaf’s plan for a new Raiders stadium may be a bit on the amorphous side, but that’s not going to stop the Oakland City Council and Alameda County Board of Supervisors from voting on it — or at least a “nonbinding term sheet” to start negotiations toward it — tomorrow. And according to the East Bay Express, that term sheet, if enacted, would put Oakland taxpayers on the hook for $350 million in infrastructure spending and free land:

  • $100 million in private bonds, to be repaid by “new, direct City ‘but for’ taxes generated by the stadium.”
  • $100 million in city Enhanced Infrastructure Financing District bonds, to be repaid by “City ‘but for’ taxes” as a result of “the ancillary mixed-use development.”
  • 105 acres of land on the Coliseum site, plus possibly the 10 acres currently occupied by the Oracle Arena and 15 acres set aside for an A’s ballpark “if no longer needed for the reserved uses.” Schaaf estimates the value of this land — and if you’re wondering which land, the 105 acres or the full 130 acres, that’s an excellent question — at $150 million.

That bit about “but for” is interesting, if only for rhetorical reasons. Taking future tax revenues from a new development project and kicking them back to help pay for the project is traditionally known as “tax increment financing” — but that’s getting a bit of a bad rep, in part because sometimes the new tax money fails to show up and the public is left holding the bag, and in part because it’s really hard to tell when you’re committing tax money that you might have been able to get even without the subsidy.

That latter issue is known as the “but-for” problem, which is why it’s interesting that Schaaf has chosen that very term to describe her proposal. The implication is that this isn’t that bad old TIF stuff, it’s money that totally wouldn’t exist without the stadium project, for reals. Except that it’s still really hard to tell that, especially in Oakland’s case: If a new stadium weren’t built and the Raiders stayed, they’d be generating some tax revenues for the city at the Coliseum, and if the Raiders left and the Coliseum site could be redeveloped in total, there would certainly be tax revenues as a result. Just calling taxes “but for” doesn’t make them so — and the term sheet doesn’t specify how the but-for would be calculated.

All this would hopefully be cleared up at Tuesday’s council and board of supervisors meetings, but given that they’re just voting on a term sheet to set up future negotiations to decide on actual legislation, my fear is that any discussion of specifics will be kicked back to those behind-closed-doors stadium talks. For now, then, all we can say for sure is that Mayor Schaaf is proposing $350 million in public subsidies for a Raiders stadium, and isn’t clear on how taxpayers would get that money back. I’m not sure that’s enough to get her kicked out of the Gang of Four, but one hopes it’ll get her a talking-to from some of her fellow mayors who’ve been holding the line on stadium subsidies, only to see her cave somewhat as soon as the specter of a team leaving town (maybe) reared its head.

Oakland’s $1.3B stadium plan for Raiders: Get NFL to reject Vegas move, figure out details later

Finally, we have some details — sort of — for Oakland Mayor Libby Schaaf and former-NFL-player-turned-developer Ronnie Lott’s stadium plan to keep the Raiders in Oakland. And it looks like this:

  • $600 million from Lott’s investment group
  • $300 million from Raiders owner Mark Davis
  • $200 million in G-4 funding from the NFL
  • $200 million in “infrastructure” spending by the city of Oakland and Alameda County

That comes to $1.3 billion, and you can certainly build a respectable stadium for that. The unanswered question, though, is: Who would get the revenues from the place? The San Francisco Chronicle report indicates that the public money “would be repaid from revenue generated by the stadium project,” and further that “the city and county would share some percentage of non-football revenues at the stadium,” though that might be targeted for paying off the remaining $95 million in debt on the Oakland Coliseum’s 1990s expansion. And what about football revenues? Would Lott’s group want some of those (probably), or be content with proceeds from building a retail development project around the stadium (probably not, since they’d have to pay for that separately from their $600 million in stadium expenses)? Is there enough money in this whole thing that everyone could possibly be made whole? (I really doubt it, since there not being enough revenues to go around is what made the previous private developer’s plan crash and burn.)

All this isn’t really any more detailed that the rough sketch that had been floating around before Schaaf announced it last week, so it’s not really clear what she had to gain from—

The hope is that the show of support will be enough for the NFL owners to block the team’s move to Nevada and open the door to the locals talking directly with Davis, which he has refused to do as long as the Las Vegas deal is on the table.

Oh, right. So take this less as actual stadium plan, and more as “Hey, NFL owners who may be having second thoughts about this whole ‘put a team in Vegas and hope that tourists buy season tickets thing,’ don’t listen to Davis when he says Oakland doesn’t care about him, we’re giving you an out if you want to vote no!” Given that NFL owner votes are known to be swung by ridiculous things, it’s not the worst gambit, really.