That provision in the U.S. house tax bill to bar use of federally tax-exempt bonds for pro sports facilities is already starting to freak out proponents of the Oakland Raiders‘ planned $1.9 million stadium in Las Vegas, which is set to use $750 million in public bonding:
“We stress-tested the model for things like higher interest rates,” [Nevada economic analyst Jeremy] Aguero said. “We understand the potential that comes with either legislative risk, or interest-rate risk or development risk, for that matter. I wish I could tell you it’s going to cost X amount of dollars in order to make it work but we need to go through the exercise of making sure we understand all the components of that legislation because that’s not the only one that will affect municipal finance.”
Okay, sure, figuring out how exactly this bill’s passage would affect the Raiders stadium costs is complicated. Figuring out roughly how much it would affect it, though, is dirt easy: Tax-free bonds typically allow an interest rate 1-1.5% below taxable bonds. So adding that much to the financing costs on the state’s $750 million would mean an extra $7.5-11.25 million a year, which over 30 years, converted into present value … I get between $115 million and $173 million worth of added interest costs.
So that’s a hefty chunk of change, and the big question would be who would pay it: The state or Raiders owner Mark Davis? That all depends on what it says in the team’s stadium lease — and in all likelihood it just says “we’ll use tax-exempt bonds,” meaning the whole thing would need to be renegotiated to settle who’d be on the hook for the extra cash. That would certainly be interesting.
(Note: It’s also important to remember, as I almost didn’t while writing this headline, that this would not be an increased cost of the stadium — it would just be shifting $115 million to $173 million worth of costs from the federal treasury, which would have been subsidizing it with tax exemptions, back to the state. It would make a hidden subsidy less hidden, in other words, but somebody’s paying those costs regardless.)
No problem – just take another $100 million from the education budget.
^^^lmao right on the money
Not all from there. Fire Dept a 100% negative cash flow usually. They never bring on money, you know how much a fire truck costs
Cut that budget too
Cut the public libraries as well. Who reads anyway and everyone owns a phone with internet or has a laptop.
Neil,
We’ve got to get you on the “alternative energy” subsidy beat.
As opposed to the non-alternative energy subsidy beat?
I think both roles are open….
There are no tax breaks for installing a gas station or coal mine at your home or place of business.
This as the Raiders are looking to have a place to play in 2019 and 2020.Las Vegas might be rethinking this.As it is the area is about to get Saturated with professional Sports.The Vegas Golden Knights have lived up to expectations.And the Wnba San Antonio Stars were just sold & are moving to Las Vegas next summer.The Las Vegas Lights FC of the USL will be starting in March and playing in Cashman field.And the 51’s are getting a new stadium in Summerlein in 2019.While a new stadium would help UNLV they’re not really filling Sam Boyd stadium as it is.So this will be an interesting development to say the least.
Also,I don’t know if the State of Nevada would or should take on that extra burden.I’m sure they would want the Raiders to contribute more.Maybe the voters of Nevada need to speak up about this.While the Stadium would bring in things not previously there; Super bowl,Final four,Large concerts,at what cost?
Big concerts? Vegas doesn’t have big concerts?
Stadium concerts such as U2 or a group like the Rolling Stones.It’s a stadium that perhaps could be used 25 times a year if that.
I’m 56. I grew up in the Bay Area of California. We had so many stadium shows to go to, it was an awesome time of life. But, music changes. The big stadium shows are mostly gone. Thinking that the 100 year old members of the Rolling Stones will continue to tour for years is no reason to build a 2 billion dollar stadium. U2 is about the only stadium act left that I can think of. Where are the band’s to fill a stadium show?
The voters weren’t consulted the first time when this fiasco was rammed through in a special session of the state legislature. It’s absurd to think that would now change.
Perhaps they will rethink it (on a personal note I hope they do). However, since they signed off on $750m without apparently giving any thought to “at what cost” I can’t imagine they will start using logic and rationale now.
You’re exactly right, John. Logic and rationale don’t exist in the state legislature of Nevada. Remember, they also failed to consider the extra $200 million in infrastructure costs associated with the stadium the state will have to pay for.
May not be your favorite website (it’s not mine) but the points made in this story are spot-on. A small part from the story:
“Do big sports tax breaks bring even more in economic growth to any city that applies for them? Unfortunately, the truth seems to be that the millions that cities and states give sports teams are almost never returned in kind—and not just by the NFL, but this is generally true for all sports.”
NFL Unhappy with Tax Reform Proposals that Cut Billions in Sports Stadium Subsidies
http://www.breitbart.com/sports/2017/11/06/nfl-unhappy-tax-reform-proposals-cut-billions-sports-stadium-subsidies/
The stadium deal is dead. Las Vegas is backing due ringer extra money and due to the fact the raiders have signed a three year lease at home the stadium would if been done in the summerof 2020 however the stadium would sit for one year empty so the deal is off.