The Las Vegas Review-Journal reports that the Southern Nevada Tourism Infrastructure Committee will meet again this week to finalize more details of a proposed NFL stadium that could host a relocated Oakland Raiders, and as befits a paper owned by the billionaire hoping to build the stadium, it totally buries the lede:
The committee has all but settled funding sources for stadium construction, [committee chair Steve] Hill said: an increase in the hotel room tax and a special tax district that includes the stadium and a football practice facility that would be used by the Raiders.
Hill explained that the tax district, as envisioned by the committee, would redirect revenue from sales taxes on goods sold on stadium grounds; the live-entertainment tax on tickets for stadium events; and the modified business tax on the payrolls of those employed at the stadium, including professional football players. Hill said the primary reason for imposing a special tax district on the practice facility is to capture payroll tax revenue from the Raiders.
That’s a whole lot of new specifics on how the previously floated tax increment financing district would work; let’s break it down:
- “Sales taxes on goods sold on stadium grounds” is a potentially huge amount of money, especially if the stadium and practice facility includes any restaurants or other amenities open on non-game days. It’s tough to break out local stadium sales from Forbes’ figures, but if we guesstimate them at $100 million a year for the Raiders, plus a fraction of that for non-NFL events, at an 8.15% sales tax rate, that’s … how about we call it $10 million a year, for a present value of about $150 million.
- The live entertainment tax is another 9% on ticket sales, which would normally go into state coffers. If it’s instead kicked back to the stadium builders, and we guesstimate $50 million in annual ticket sales, that’s another $4.5 million a year, for a present value of $70 million.
- The modified business tax is 1.475% on wages, so if NFL team payroll is around $150 million (non-players add a trivial amount), that’s another $2.2 million a year, for a present value of $34 million.
Add all that to the $750 million in cash (from hotel-tax revenues) that Sheldon Adelson, Mark Davis, and their partners are asking for, and taxpayers would be putting up an even billion dollars toward a $1.4 billion stadium for the benefit of one billionaire and the most disliked owner in the NFL — who, in turn, after league money and naming rights were rolled in, would be on the hook for somewhere around bupkis. That would seem to be the headline to me, but I guess that’s why I don’t work at the Review-Journal.
If these taxes would not be burdened by the local population, I see no problem with it. I believe in free market principles and if the free market produces $1 Billion to benefit already wealthy people, then so be it. The other way that the free market can play this out is that, this extra tax discourages visitors to Las Vegas, and if that happens then so be it.
Actually it will be a burden on the local population. I live here and I can tell you firsthand no one wants this deal. It will get pushed through without a public vote, further invalidating the Nevada State Constitution.
Oh, and the $1 billion public contribution is much more than that. Try $1.6 billion. Yep, the entire thing will ultimately end up being financed by the public. And for those who want to think only Democrats are for hand-outs, know this: the Governor is a RINO and the Assembly and State Senate are ran by Republicans. Our RINO governor has already attempted to hit the people with the largest tax increase in the history of Nevada by levying a tax on gross receipts on businesses. You read that right; gross receipts. Not net profits. Gross receipts. So if you are operating in the red, they still want their cut.
At least when Demos ask for handouts, it generally are for those in most in need of it. Repubs give handouts to those who don’t need it. In fact, over the last 4 years, a serious transfer of wealth is occurring here:
Tesla receives nearly $3 billion in tax subsidies
Faraday Automotive receives nearly $2 billion in tax subsidies
NV Energy successfully lobbies to kill rooftop solar while pocketing nearly $300 million in extortion fees from MGM, Sands, and Wynn Resorts
Adelson and Davis receives $1.6 billion in tax subsidies (Future)
Couple that with the county wanting to tack on an extra $1 in gasoline taxes, claiming it’s indexed to inflation (which is a lie, since inflation is less than 2%, yet they are claiming it is 4.54%) in raising $3 billion over the next 10 years; and you have a broke city. A city who is second from last in educational funding and scholastic achievement. A city that is overwhelmed with crime and not enough police officers. A city so corrupt its politicians don’t even bother hiding it any longer. Said politicians are so star-struck at the sight of a Buffett or a Davis, they simply accept the peanuts they are given while writing billion-dollar checks they can’t possibly cash without bankrupting the public.
Thank goodness I will be leaving my hometown within a month. The city and state’s soul is gone.
Jay,
I was about to ask if anyone in Vegas really wants this to happen.
Fine…there is the ‘status’ that can come from having an NFL team there. HOWEVER due to all of the tax and revenue issues, which will benefit very few…one has to wonder WTH anyone with half a brain would want this to happen.
Of course, the mini-test case for the potential trainwreck will be when Bettman’s Folly arrives. And one can bet (pun intended) the interest will wane there as well….not just because of the revenue shell game. But due to this having failure written on it before the first puck drop.
One other item: seeing the blackout rule may not be in effect if and when the Raiders make the move….are the revenue numbers going to be based on those who buy the tickets or are PHYSICALLY in the seats, buying concessions, etc? Not being dense here…..just it needs to be on the table.
It’s not an extra tax, it’s the regular tax money that would normally flow to the city and state. And there’s the problem: If people in Vegas decide to go see the Raiders instead of a show at one of its umpteen arenas, all the tax revenue gets siphoned off to Davis and Adelson, and the public loses what it would have otherwise gotten if the NFL had never come to town.
If the Raiders arriving causes an additional 500,000 people a year to visit Vegas, that’s a different story. I don’t know anyone who thinks that, though Ben Miller will probably show up soon to prove otherwise.
I no longer know what “regular” tax money is, or what it is supposed to be used for.
I suspect the federal government doesn’t remember either.
Neil,
Initially there will be those who will want to see what the new ballpark is like, as well the extras in same. But after that….let alone the losing season that will go with that….they will stay away.
And barring a momentary lapse of common sense, it is unlikely with all the other options available for fun and losing money, that many will flock to see the RAIDERS OF THE LOST CAUSE. As well as we may end up with a return to Mt. Davis……the sequel.
My understanding of that tax is that it is a special tax on the hospitality industry. Not one that already exists.
“Hill explained that the tax district, as envisioned by the committee, would REDIRECT revenue from sales taxes on goods sold on stadium grounds; the live-entertainment tax on tickets for stadium events; and the modified business tax on the payrolls of those employed at the stadium, including professional football players. Hill said the primary reason for imposing a special tax district on the practice facility is to capture payroll tax revenue from the Raiders.”
Emphasis added. It’s not a new tax.
Hunh,
It is a combination of both. They are creating a TIF on top of tax revenue they would normally receive without it. You’re actually going to believe a politically-appointed representative who has a vested interest in lining his own pockets over common-sense? The developers already stated their intention is to create a TIF in order to guarantee a RoI for themselves.
Remember when Davis said he was contributing $500 million? Did you believe him then, or do you believe the facts, which state: Davis will contribute only $100 million, with the NFL contributing $200 million from G-4. Davis will also use revenue generated from PSL sales (estimated at $115 million). Still less than the $500 million, but I guess it’s close enough.
To my understanding, a relocating team is not eligible for the NFL’s G4 program.
If it is “redirecting” taxes that aren’t presently being generated in the area, one could argue that it is a new tax but will apply mainly (perhaps entirely?) to new development and business in the area.
Makes it sound more like a BRZ than a TIF, but potato/potahto.
Still, as mentioned in many other threads, if it redirects existing taxes, then the services and programs that the taxes on any development normally fund still have to be funded… and since this development’s taxes will go to pay for the development itself (mainly), then guess who pays for the government services that these taxes would normally cover….
This is the shell game states/cities/franchise owners play…. getting people to accept the incorrect notion that taxes are windfall profit for municipalities and that they can be kicked back without consequence.
They can’t.
It’s a TIF with a zero baseline.
I live here and I want it. Go ahead and tax tourists and players. The majority of the tourism tax gets put back into tourism so our crap education situation never benefited from it anyways.
Also, Mark Davis is NOT the most disliked owner in the league. He’s actually very much liked. You’re thinking of his late father, Al Davis.
It will give yet another reason to move back to the Valley, one of many actually.
But if Davis isn’t the least liked (Al’s legacy, sorry Mark), Dan Snyder is high on that list as well.
One thing that should help CCSD will be the November vote on Rec. Marijuana. Get it done NV
I am certain the Yorks are considered well qualified candidates for that list of least liked owners
Mark Davis is not well liked, just ask Oakland and the Bay Area. Neither was his Dad, just ask the City of Irwindale, Oakland and LA as well as all the owners Al sued. Keep in mind, the only NFL owner to show up at Al’s funeral was Jerry Jones, which says a lot about what other owners thought of Al. The idea that the other NFL owners would do anything for Al’s kid is ridiculous when you consider that many of them want him to sell the team to someone who actually has money, including Jerry Jones. Also, Mark Davis has been lying about what Oakland is doing.
On a related note, Las Vegas has confirmed it’s NHL franchise. Thoughts Mr. DeMause?
http://www.cbssports.com/nhl/news/las-vegas-nhl-expansion-team-approved-will-begin-play-in-2017-18/
Vice Sports article coming up in 3, 2…
1: https://sports.vice.com/en_us/article/hockey-night-in-vegas-the-nhls-newest-franchise-may-not-make-sense-but-it-will-bring-dollars
Nice breakdown Neil. Now I see what they are doing here. I’m definitely for the move, but also for reporting like this. Thanks.
Anyone bother asking Les Moonves’ attorneys what they think of taking out a franchise out of the nine county metropolis known as the Bay Area and placing it in the tiny footprint of L.V.? The CBS Tv contract will have to be downsized somewhat.
Anyone care to guess the cost to the League? And don’t argue none.
The NFL just happily went two decades without a team in L.A., and only has one now because Stan Kroenke forced the issue. I’m pretty certain football owners know that they could play only in cities starting with Z and it wouldn’t much affect their TV rights value.
Neil I said C-B-S— not the NFL.
CBS and the NFL both know that people in Oakland will still watch football if the Raiders leave. Hell, they might watch it more, since they’ll get to see better games.
Let me put it another way…If teams were televised by a RSN, the rights fees would be much greater in the Bay Area than one located in Las Vegas. You have about eight million more homes that receive Raiders games in Northern Cali than Southern Nevada. There has to be a cost associated with that. You discount it, but ask CBS 5 about ad rates and all that is associated with having a local team. It devalue the CBS rights somewhat. Now the flip side…Fox 2 in the Bay Area having the Niners will do cartwheels. Capisce?
They’re not broadcast by an RSN, though, they’re broadcast nationally. Sure, there’s likely to be some marginal effect on ad rates for CBS vs Fox in the Bay Area, but given that all NFL TV deals are loss leaders for networks anyway, I doubt anyone is losing sleep over it.