Raiders owe Oakland $800k in back parking fees, could be evicted in 2019 (or sooner)

Well, now, this is interesting:

The Oakland Raiders owe hundreds of thousands of dollars in parking revenue to the Coliseum stadium authority, which puts them in default on their lease and could jeopardize the team’s ability to keep playing at the Coliseum…

An audit by the authority discovered the Raiders have been making only minimum payments since at least 2013, and owe an estimated $25,000 more per game since then, which could total more than $800,000.

The team has exercised its option to play in Oakland for the 2017 season while their new stadium is being built in Las Vegas. But under the terms of their agreement, if they’re in default and do not make good on the money they owe, that option can be voided.

What’s significant isn’t the $800,000 in missed payments — that’s chump change in the sports industry — but the fact that it puts the Raiders in default of their lease. As we’ve covered here previously, the county-owned Coliseum Authority loses about $1 million a year hosting the Raiders, and county officials would love to see the team leave ASAP, but are hamstrung by two one-year lease extension options that it foolishly handed to Raiders owner Mark Davis last year in hopes it might entice him to stay put. (Note to elected officials everywhere: Giving rich people things for free does not induce them to do nice things back.) If the authority can void that lease on the grounds of missing parking payments, though, then suddenly it can drive a hard bargain with Davis if he wants to stay put until his new Las Vegas stadium is ready — say, by demanding that he help repay the $80 million in public debt that remains on bonds for the Coliseum’s renovation for the Raiders back in the ’90s.

Sadly, authority board members said that they’ll let the Raiders stay put through 2018 so long as Davis makes his back payments, which seems like a missed opportunity. (Though I should say I haven’t actually read the lease language, so I’m not sure how easy it would be to declare the Raiders in default if Davis came up with the $800,000.) It’s hard to see the Coliseum Authority agreeing to let the Raiders play in Oakland in 2019, though — unless, maybe, they came up with $80 million in rent? We can dream, anyway.

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.

 

 

Oakland group sends Raiders stadium plan to NFL, no you can’t see it, who do you think you are?

The would-be Oakland Raiders stadium builders led by Fortress Investment Group and former NFL star Ronnie Lott sent a formal proposal to the league yesterday, and it looks a lot like the $1.3 billion plan announced in November. Take it away, San Jose Mercury News:

The Fortress/Lott plan has called for a $1.3 billion, 55,000-seat stadium project at the current Coliseum site. The investors would contribute $400 million, the Raiders and NFL $500 million and the city of Oakland $200 million for infrastructure.

So that’s .. only $1.1 billion? (The November plan had the investors contributing $600 million.) Hey, Merc News, what’s up with your math? Any other news outlets have numbers that actually add up, or at least note the $150 million in free land that Oakland would give up in the deal? No? Damn.

The bigger question, in any event, isn’t who’ll front the money, but rather who’d receive which stadium revenues to pay themselves back. There doesn’t appear to be enough money to go around to make everyone — Fortress/Lott, Davis, and Oakland taxpayers — whole, so that remains the tricky part. It sure would be nice to see the actual proposal, what with the public on the hook for a $350 million chunk, but apparently it’s for NFL eyes only right now. If the league ends up taking it seriously, which doesn’t seem likely given their previous statements on the matter, maybe the hoi polloi will get a glimpse later on.

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.