Some new news from the Las Vegas Review-Journal on the Oakland A’s current front-runner (maybe?) for a Las Vegas stadium site:
- Casino operators Bally’s Corp would indeed be giving the A’s nine acres of land currently occupied by its Tropicana’s resort complex, worth an estimated $180 million, free of charge. “We decided to give these 9 acres to this effort,” said Bally’s Corp. chair Soo Kim. “That’s a contribution. There’s no rent for them.”
- Kim added that A’s owner John Fisher would then give the land to the Las Vegas Stadium Authority after building a stadium on it, as Las Vegas Raiders owner Mark Davis did previously.
Bally’s giving up land for nothing is an interesting twist that we’ll return to in a second. But Fisher then giving up the land to the stadium authority for nothing — after getting to build his stadium on it — would actually be a significant benefit to the A’s owner, because it would get him out of paying property tax.
The idea that public ownership of stadium land is a benefit to taxpayers and not a cost is a huge misconception in stadium deals — or maybe “misdirection” is a better word, since it’s common for team owners and their allies to paint it that way. But in hard cold financial numbers, the last thing a team owner, or any developer, wants is to own their stadium or the land under it: You want to control all the stadium revenues, yes, but the more property you actually own, the more you have to pay property taxes on it. This is the main reason that virtually all new stadiums and arenas end up officially property of a government entity, even if all proceeds from use of the site (including naming rights on a government-owned building) accrue to the team owner.
How much would the A’s save by this dodge? We don’t know whether the stadium itself would be transferred to the stadium authority, so let’s just stick with that $180 million worth of land. Clark County’s average property tax rate is 0.72% of fair market value (I haven’t been able to find a source breaking that out for commercial properties only, so let’s go with that for now), which would be $1.3 million a year. Over a 30-year lease, that would amount to a savings of about $20 million in present value for Fisher on the land alone — which would obviously go up significantly if the value of a $1.5 billion stadium were made tax-exempt as well.
This gets more complicated in that the previous preferred A’s stadium site in Las Vegas was going to have all its property taxes, as well as all its taxes on anything else, kicked back to help pay for the team’s stadium construction costs. That would still presumably happen with land around the stadium site, just not the stadium site itself, since it would owe no property taxes to kick back. Still, this casts the “A’s public subsidy would go down from $500 million to $395 million” argument in a new light, since Fisher would get back at least part of the difference via his fresh tax break on the stadium land.
(And all this, of course, is assuming that the $500 million and $395 million figures even mean anything, since all we have to go on for them is the word of the A’s paid consultant. Actual legislation spelling out how this will work is still pending in the state legislature, though it’s now expected to be filed early this week.)
If the A’s stadium finances remain immersed in murk, it is clear that Fisher is making some high-placed friends in Vegas: Not only is Bally’s apparently on board with his relocation plans, but the Review-Journal article also noted that Vegas Golden Knights owner Bill Foley is in favor of an A’s stadium. That’s still not the biggest casino dogs in town, but it is one step toward building the “growth coalition” of business and political leaders that sociologists Kevin Delaney and Rick Eckstein have pointed out is necessary for earning quick approval of sports subsidy deals. Quick is what Fisher is going to need, given that the Nevada legislative session runs out three weeks from today; we should have a better sense of the lay of the land once the actual legislation drops, hopefully later today.
What’s in it for Ballys? Free naming rights? How’s that working out for them as their badged regional sports networks go down the tubes?
I guess they’re getting a venue adjacent to their casino partially paid with public money?
They’re definitely a lower tiered gaming company. They were the only bidders for the big Chicago casino, which is costing $1.6 billion on (although they’re getting state money to help build the property- seems like a trend with them!) The problem is the state of Illinois thinks gaming will help them balance the books, and the tax rate for gaming revenues is astronomical (Vegas is about 7%, illinois has brackets, I believe revenue over $25 million gets taxed at 40%!!!). Illinois thinks they will make $500-$1.2 billion in tax revenue from a single casino. As a comparison- the state of Indiana collected $691 million in taxes from all their casinos, 3 of them are located in the Chicago metro area.
They should have plenty of volume with Chicago being so large. But the tax rates seem way too high for that project to be that successful.
Bally doesn’t own those RSNs, it licensed its wordmark to Diamond Sports which is currently in Chapter 11.
Bally’s are notionally selling a small parcel of land that – depending on your POV – is either just big enough for a small MLB stadium or not big enough for a modern MLB stadium.
One thing that is clear is that there isn’t going to be any room adjacent for the sort of money making ancillary commercial property that most mallparks are built with these days… which is really just a property tax dodge since the team owner (typically) is redirecting commercial property taxes on his own commercial property to pay for his own development. Effectively, the commercial properties within the TIF/CRL zone that are owned by the team/team owner have a significant tax advantage over those within the zone that aren’t owned by the team owner…
So, given that there won’t be room for even one Hard Rock Cafe/Planet Hollywood/GAP (oops) within the stadium, I would guess that Bally’s thinks it will be able to create and own the commercial space within the ballpark district.
Whether it will gain any advantage from this, or just end up regretting dealing with Fisher and the founder of the almost amazingly successful but not quite Golden/Foldin’ Baseball League (like most other people appear to) is not clear.
I agree, there doesn’t seem to be a tremendous upside for them. All traffic brought to your properties is good, I guess, but unless they plan to cash in on being ballpark adjacent commercial land owners I don’t see a clear win for them.
If Bally’s has a sports book and gaming tables in the stadium, how much would they make? If they give the land away, can they claim a capital loss of $180 million to offset gains elsewhere?
Vegas is full of sharks. Fisher’s a rube with a baseball team in his wallet. I wish him the worst of luck. Not that he needs my help.
But talking about sports: Vegas – Dallas – Florida – Carolina. That’s not hockey, that’s NASCAR.