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.

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!