Las Vegas Stadium Financing and Relocation Explained

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The Las Vegas Strip and skyline including various hotels and casinos are seen at night in Las Vegas, Nevada, in this photograph taken October 18, 2016. / AFP / SAUL LOEB (Photo credit should read SAUL LOEB/AFP/Getty Images)

Las Vegas Stadium Financing and Relocation Explained

There has been a lot of news this past week on the Las Vegas Stadium financing plan. Starting off on Monday and Tuesday, the Oakland Raiders officially announced to the NFL Stadium and Finance Committee that Bank of America would finance the funding gap . Then on Thursday the Las Vegas Stadium Authority had it’s meeting. Both meetings are expected to be the last before the NFL Owners meet in Phoenix, Arizona on March 26th thru 29th.

To be clear. What is being reported in this article is only valid if the NFL Owners approve the Raiders to relocate to Las Vegas. While that seems highly likely, it is not guaranteed.

With that in mind, lets dig into the guts of this.

The Las Vegas Stadium Authority

The LVSA’s responsibilities per Nevada SB-1 2016. The LVSA will provide the $750 million in state funding through issuing bonds. Also, collect the .88% hotel tax to repay the bonds, set up a waterfall fund, and cover LVSA expenses. The Board will also set aside a percentage of remaining yearly funds to add upgrades to the stadium, and collect sales tax revenue for Clark County. Other responsibilities include, but are not limited to.

  • PSL sales to be put towards stadium construction
  • Enter into a development agreement with a developer of the Raiders choosing.
  • Enter into a lease agreement with the Stadium Events Company
  • Ensure the project conforms to all state laws.
  • be the final arbiter of any dispute between the Raiders and UNLV.
  • Ensure the Raiders have irrevocable funding for the project.

One final note on the LVSA. The Las Vegas Stadium Authority will own both the stadium and the land it sits on. And will not be used as collateral for any loans or debt obligations of the Raiders, or the Stadium Events Company. The LVSA also does not share in any revenue, other than taxes, generated by the stadium. That means no entity listed below will pay any money for leasing or operating the stadium.

The Las Vegas Stadium Developer

The stadium developer is expected to be a subsidiary company of the Raiders. It will be responsible for designing and constructing the project. This includes getting permits, blueprints, infrastructure, hiring sub contractors (15% of which must be located in Nevada), and go through the developmental process with Clark County. Other responsibilities include.

  • Creating a development plan that is approved by the LVSA
  • Ensure the stadium construction is complete by kickoff of the 2020 NFL season.
  • Follow all laws and regulations of the State of Nevada including prevailing wages.

The Raiders will likely bring in many development partners like Legends and others to ensure their vision of a stadium is met, and is also compliant with all laws and regulations. The Raiders also must spend $100 million on the project before tapping into the $750 million offered by the state. The last $50 million of project cost will be paid by the public after the developer has funded 100% of its share of the stadium costs.

The Stadium Events Company

The Stadium Events Company will enter into a lease with the Las Vegas Stadium Authority. This will be an operations agreement for no less than 30 years. The responsibilities of this company are as follows, but not limited to.

  • Enter into an operations agreement with the LVSA
  • Ensure the proper maintenance and upkeep of the stadium.
  • Enter into a lease agreement with the Raiders and NFL
  • Enter into a Lease agreement with UNLV that conforms to SB-1 2016
  • Actively seek other entertainment and sporting events to host.
  • Secure and repay loan from Bank of America.

The Stadium Events Company is expected to be wholly owned as a subsidiary company of the Raiders. The assets and future revenue of this company is what is being used to secure the financing from Bank of America. Since we do not exactly know what the APR is of the $650 million dollar loan, I’ll list a table of possibles below.

  •  4% would be a payment of $37,238,393.04 annually.
  •  4.5% would be a payment of $39,521,454.12 annually.
  •  5% would be a payment of $41,872,086.60 annually.
  •  5.5%would be a payment of $44,287,542.12 annually.

All calculation above are assumed to be standard amortization rate over 30 years. Understand this is just an example, but this type of loan has been used before. Levi stadium was financed over 30 years with a 5% APR rate for example.

The previous revenue expectation was between $125-225$ million annually. However new information has come to light. See Below.

University of Nevada Las Vegas.

The University of Nevada Las Vegas will enter into an agreement with the Stadium Events Company. Per SB-1 2016, UNLV is only required to pay game day, and practice operating expenses. The team will have its own locker room, and will be able to sell its own tickets, including club seats, and suites. UNLV also gets to keep all game day revenue, including concessions, digital and changeable signage, as well as, parking.

Negotiations are on going with the Raiders and LVSA as to concession choices, advertising limits, and field markings. However I have it on good authority from Joe Arrigo of Scout.com, the leading insider for the Rebels, these negotiations will result in a lease that is good for all parties.

The Raiders.

It is the responsibility of the Raiders to enter into a lease agreement with the Stadium Events Company. The expected terms of that deal will be for 30 years with an additional (4) five year options. During the first 30 years the Raiders, as long as the contract requirements have been maintained, may not break their lease. Furthermore, they may not even begin negotiations with another city. If they do so the Raiders will be subject to severe damages that have yet to be disclosed. Another expectation will be that the Raiders will be allowed to play between five to ten international home games during the first 30 years.

The Raiders will keep all game day revenue. This will include general tickets, club seats, and suits. Also, they will be responsible for maintenance costs associated with the team’s use of the facility. They will have their own locker room and possibly a Raider Hall of Fame. The expected, team specific, revenue the Raiders are projecting is around $125 million a year.

Naming rights, Rent, and Sponsorships.

Right now it is impossible for me to list which Raiders company will get this money. Barring that which is used by UNLV specific to their game day. The reason for this is simple. Bank of America. I would expect BofA will have required a certain amount of guaranteed revenue to be included in the Stadium Events Company. This could include possible rent from the Raiders. The obvious reason for that is to insure their loan is secured.

What I can tell you is, that what I, and others, have been reporting about the financials could be seriously undervalued. Throughout the SNTIC and legislative process, the financials were pretty consistent. The overall stadium revenue projected out between $250-$350 million annually. It has recently been reported, by Jason Cole of Bleacher Report, and privately, by my sources, that the Stadium Naming Rights and sponsorship deals, that are already signed, blow away the old projections. Those were around $30-$35 million annually.

The way it was explained to me, is that there will be an overall name to the stadium. However there will be an area in each of the four corners that will also get named as well. So far I am hearing numbers exceeding $70 million annually. Not only that, but not all the corners are bought and paid for yet. I am told that this revenue stream could easily be over $100 million annually alone. If what I am hearing is correct, it could actually have NFL Owners sniffing for a bit more money in their pocket in the form of a higher relocation fee. See below.

NFL Relocation procedure.

Article 4.3 of the NFL Constitution and Bylaws covers relocation procedure. The policies of relocation are also modified, and amended, from time to time, by the NFL Commissioner using powers given to him by Article 8.5. What that basically means is that each relocation is fluid and unique. In this forum 24 of 32 owners hold sway and they are only bound by a three-forth majority. All other policies and procedures, rules, and guidelines can, and have been, changed, in past relocation votes. Keep that in mind as I lay out some guidelines that are specific to this relocation below.

The relocation application. The application to relocate is due by February 15th. For this application to be approved the team must exhaust all “reasonable” efforts to remain in the host city, including getting league help. The relocation plan usually requires approval by the 18 member NFL Stadium and Finance Committee. By all accounts, the Raiders have satisfied these requirements. However, having their application approved does not guarantee relocation will be approved.

Once the NFL Owners, and the League Office, are satisfied with the above, they will have a meeting to discuss and possibly vote on relocation. This item is usually put on the agenda roughly a week prior to the meeting. That vote is expected, but not guaranteed, to be during the NFL Owners Meeting, in Phoenix, later this month.

The Relocation Fee

Approval for relocation is actually only a small part of the decision. The real meat and potatoes is in the details. Here is where every relocation is different and unique, the relocation fee.

The relocation fee is money paid to the other 31 NFL Owners. The reason behind this fee is that the other NFL Owners are giving up a territory to the Raiders and they want a slice of that projected revenue. So there are many factors and guidelines considered when coming up with this fee. I’ll list the top three.

  1. Market size of Las Vegas compared to Oakland.
  2. New income streams available, compared to old ones.
  3. The expenses of both locations and their desirability.

Now it has been suggested, for some time, that these considerations should amount to between $250-$350 million dollars. I have reported this range myself. Those numbers were based on projections with Sheldon Adelson as partner. However, as listed above, the Las Vegas Stadium project might be a lot more lucrative than first presented. And from what I am hearing, this could possibly lead to the NFL Owners asking for a little bit more of a slice. Jason Cole of Bleacher Report tweeted that he hear that the owners could be asking for more. Somewhere in $300-$650 million range leaning towards the higher figure.

Repayment of Relocation Fee

Lastly will be the repayment schedule. This will be set during the vote and it could be anywhere from five to twenty years. It all depends on how much the fee is and estimated yearly revenue. The higher the fee the longer the it is expected to be paid back. In the Case of the Raiders, I am hearing either 15 or 20 years. Keep in mind, that the NFL Owners, in this situation, will not want to overly tax the revenue. It is likely these payments will be taken from the Raiders revenue share.

The NFL G-4 Program

The G-4 program, in how it will be used in Las Vegas, is a $200 million dollar loan from NFL Ventures. The interest rate is 2%, which makes it the best loan an NFL Team can get. It is paid for by the incremental Visiting Team Share (VTS) or waived VTS of premium club seats. Yes, you read correctly, the loan is paid back in money that would normally belong to the other NFL Owners.

The annual payment amount of this loan $15,444,204 dollars over 10 years. Should there be a shortfall from the VTS revenue the Raiders would then be responsible for any gap.

So there you have it. After laying this out in detail I hope readers, be it fans or county commissioners, are less confused by the process. I plan to update this once this relocation process is complete, should the Raiders be approved for relocation.

19 COMMENTS

      • Its funny that someone mentioned Qualcomm Stadium, considering it still suffers from annual revenue shortfalls after nearly fifty years of existence. Then again, you seem to believe the Vegas stadium will do something that no other NFL stadium has been able to achieve.

  1. The projections are ridiculous! The Raiders will be lucky if they can get a stadium naming rights partner willing to spend more than $5 million per year. What they are forecasting as annual stadium revenues is a farce. I would like to see specific data that is comparable with other NFL stadiums. Then we would have a general idea as to how much money a stadium can generate.

    • If you don’t know what other stadiums are making, then you have no basis for saying what is ridicules and what is not.

      • What are other stadiums earning? If they are such great revenue generators, why the need for $750M in taxpayer funds? If a stadium is so profitable, why doesn’t Mark Davis build it on his own? The reality is NFL stadiums are not profitable. Most will sit dormant for over 300+ days per year. What I do know is that Levi’s Stadium provided the City of Santa Clara with a paltry $3M return in its first year of operations. Of course, that is after their city invested more than $100M into the project. What’s even more amusing, is the 49ers are already asking for a reduction in their rent payments.

        • First the 49ers have an option in their lease to do a one time reduction request in Lease payments. So they are exercising that right. Santa Clara does not just gain income from direct revenue. It gains from taxes produced by the economic flow generated by the stadium. Levi is actually a very good public private partnership which is a win win for both the 49ers and Santa Clara.

          As to the profitability of stadiums it depends on a myriad of factors. Local competition for large events, public,private investment details, location, and many more.

          As to the 750 million from Nevada. Nevada gets a place for UNLV to play for operating cost alone, and it keeps all game day revenue, which means a state funded institution will be getting revenue from it. Also over 95% of that 750 million will be paid back by out of state tourists, which will also generate around $30-35 million annually in taxes because of generated economic flow.

          Arlington, for example, hosts over 120 events per year, and helped the city survive the recession with sustained GDP growth, and increased taxes since it was opened. So much so Arlington is on track to pay the bonds it secured off in half the time.

          So again it depends city to city. Again when done right they can be very profitable for both the city and team.

          • Your opinion isn’t supported with any facts.
            First, anyone who believes a $3M return on a $110M investment is good needs to take a remedial economics course. The direct revenues from Levi’s Stadium are not going to recuperate what has been spent by Santa Clara. For example, had it not been for a direct reimbursement from the Super Bowl host committee, that city would have lost money instead of earning a paltry $744,000 from the game. That hardly makes a dent when factoring in what they have spent on the stadium.
            Second, profitability for a stadium depends on the established financial distributions which are determined via contractual agreement. For the most part, its always profitable for the NFL team, but not for the taxpayers. I defy you to provide proof of an NFL stadium that is producing enormous profits.
            Incorporating the UNLV football program as part of the stadium is a foolish position. Their teams rarely attract more than 20,000 per game. If that attendance holds steady, the ticket sales may not be sufficient to cover the operating costs for UNLV games. In addition, the projected revenues of the hotel tax are not realized and may produce revenue shortfalls. Furthermore, since the Vegas stadium will be a publicly owned asset, the agency which operates it will be responsible for the property tax payments. Will the funding source for that fiscal obligation derive from the hotel tax or stadium revenues?
            One of the long standing events at the Arlington stadium, is a popular rodeo which books the stadium for approximately two weeks. I don’t know who will book the Vegas stadium for a comparable amount of time every year. However, the industry standard for non-NFL stadium events on an annual basis is less than fifteen.
            Frankly, the fact the stadium is located in Vegas is irrelevant. I see it as being no different than most other NFL stadiums in the country. If it books more than ten profitable non-NFL related events on an annual basis, it would be a miracle.

  2. $100M per year in naming rights! Ridiculous! The Raiders will be lucky to get $5M per year from a title sponsor. The new TMobile Arena on the strip gets $6M per year, and it will be booked with far greater frequency than the Raiders stadium.

    • The amount of bookings a facility has is only one facet, additionally T-Mobile Arena only hold 20k, where as the Raiders Stadium is over triple that. Additionally the Raiders Stadium will be a fixture in the Las Vegas Skyline, which is a huge selling point on naming rights.

      However, had you read the article more clearly you would have seen that I spoke to Naming rights AND Corporate sponsorship numbers. Stadium Naming rights might actually break the 20 million mark annually which would be a new record, additionally each corner of the stadium will be named by a different company those go fro anywhere between 7-15 mil a piece, and then the Plaza will be named also. Then there are the corporate sponsorships for other things.

      To put this in context Mercedes Benz Stadium which is set to open this year, already have 900 million, over all value, in Naming rights and sponsorship deals inked with an expected 100 million more for their overall goal. Met life earns 17 mil a year for the Naming rights, then earns $7-10 mil per corner, per year, in their “Cornerstone Partnerships” deal alone. That is not counting other sponsorships and advertising.

      The Las Vegas Stadium and its proximity to the Strip and skyline is obviously a valuable advertising seller. The money I spoke to is what reportedly came out of the NFL S&F committee meetings last week. It was a huge buzz among NFL insiders. Hopefully this explains the confusion on the subject.

      • Where are you deriving your values from? Do you have specifics as to who the sponsors are? If they are casino interests, how will the NFL feel about that? Vegas is a transient city which doesn’t need additional markings. Everyone and their mother knows gambling is its driving force. The problem with your theory, is your belief because its Vegas there is high visibility. If that were the case, that city would be one of the highest ranked media markets in the country. The reality is Vegas is ranked 42nd, which would make it one of the smallest media markets in the NFL. Factor in the Raiders likely will not be shown to the Los Angeles markets, and the viewership looks even more bleak.
        There will be a whole lot of talk (hype) regarding sponsors and naming rights. None of that matters until a contract is signed. For example, the 49ers management bragged so much about Silicon Valley companies and their interest in team’s new home. In the end, Levi’s came in as the title sponsor (at a less than projected value) while there isn’t much largesse from the tech industry.

        • Juan you might want to speak to the Nevada Commission on Tourism. You seem to be under a lot of false assumptions.

          First Nevada spends Millions marking to tourists alone. Then there are the individual Casinos that market to their preferred clients.

          As to Gambling being the driving force in Las Vegas, that is totally incorrect. Entertainment, conventions, hotels, and Restaurants are what drives the Las Vegas Economy. You see there are casinos everywhere in the US, but Las Vegas continues to diversify its economy to make is a top entertainment and resort destination, as well as, a top convention destination. The idea behind bringing the NFL and a new Stadium is to add more diversification to its economy. Applied Analysis did the economic model and thoroughly vetted the economic flow that would/will be generated by building the Stadium.

          As to media market, again, it goes to exposure, and not just from local media. The market size will not dictate the exposure of the stadium on a national or even global level. Every new skyline picture will have the stadium, and its Brand shown prominently. Casino marketing will show it, State tourism marketing will show it. Again your assumptions do not hold water when faced with the reality of what Las Vegas is.

          As to the NFL allowing casinos to Advertise, they are perfectly fine with that. Check out The Hard Rock Stadium in Miami if you need more understanding of that specific, or look inside the Oakland Coliseum for Cashe Creek Casino advertising.

  3. I guess you didn’t thoroughly read my comment which states Las Vegas doesn’t need more promotional allocations. That would be like stating New York needs to advertise itself.
    The Las Vegas economy is largely homogeneous and one dimensional. Whether its gambling or being a party spot, the focus is tourism. Aside from that, there isn’t much else. Gaming is the top industry in Nevada. As for the Applied Analysis study, I wouldn’t provide much reliability to their findings. Most of their team is comprised of UNLV graduates, and their findings are likely skewed to form a conclusion which is based on a directive made by those who support the stadium and hired them with the purpose of providing a positive report. In other words, I would consider their work to be biased and lacking independence. Frankly, if the Vegas economy were such a standard for others to follow, their unemployment rate would reflect full employment instead of being nearly three percentage points above the national average.
    You’re overstating the exposure which is brought on by a new stadium. When you see a photo of New York, its of Manhattan Skyline with the Statue of Liberty in the foreground, and not Metlife Stadium. Ditto for Los Angeles, where you normally see pictures of the Hollywood sign and not the LA Coliseum. People will not flock to Vegas so they can glance at the incredible NFL stadium. They are not tourist attractions.
    Sure, there are smaller casino advertisements located within certain sections of arenas and stadiums. However, I have doubts that league owners will feel good about having a casino as the stadium naming rights sponsor. The Hard Rock company is owned by the Seminole Tribe of Florida, which doesn’t advertise the casino as title sponsor of the Dolphins stadium. Furthermore, the casinos comprise the least amount of business units owned by Hard Rock Cafe International.

    • Again I did read your post thoroughly and a very big point among Nevada and LV Metro leaders WAS promotional. I covered this story from its infancy, and that aspect was important to them. You can disagree, but that IS their belief, now if you don’t like that, and you are an enfranchised citizen, speak with you vote. If you are not an enfranchised citizen, your opinion means nothing to them in that regard, and they are doing what they feel is best for their constituents.

      Putting down Applied Analysis or UNLV gets you zero credibility with me, additionally they also used the University of Michigan Sports Business division to do their own reports. Attacking the credibility of the data without any substance is unprofessional and a classic Ad Hom attack.

      Now you have gone into pure speculation, that is totally guess work and wrong. The company Metlife did a report on the value of the naming rights and the exposure it gave their company which translated into much more on the bottom line. The Hard Rock sponsorship definitely considered that they make money from the Casino in Hollywood, and again Casinos do advertise at the Oakland Coliseum. I respect peoples opinions, but at this point you are just making baseless assumption and accusations and trying to pawn them off as fact, with zero substance to them. Because of that this is where our conversation ends.

  4. I doubt if LV Metro officials are considering what’s best for Las Vegas. Rather, they’re wondering how they can personally benefit from the stadium.
    I’m not isolating the work of Applied Analysis. The issue is more general, in that many organizations hired to perform studies for new stadiums usually ended up with conclusions which were contradicted by the end results. Do you believe whomever hired Applied Analysis to perform the study were prepared to accept a negative conclusion? As for UNLV, its a decent college. However, I’m certain you can agree no one will ever confuse it with Stanford.
    As for my pure speculation, your previously mentioned the new Atlanta Falcons stadium has over $900M in sponsorship commitments. Yet, you didn’t mention that most of them are unrealized gains and many of those advertisers can withdraw their proposal. Perhaps the Falcons organization is highlighting that element to disguise the fact their PSL sales for Mercedes Benz Stadium have been slow and are still at roughly 70% sold. There may be intrinsic value for a naming rights sponsor. Has MetLife provided you with quantified information which attributes their naming rights to direct sales? I understand why you don’t want to engage any further. Most people don’t like to admit that NFL stadiums are money losing ventures, and that providing $750M in taxpayer dollars for such a project is an inhumane waste of money.

  5. A point of correction. The NFL G-4 loan is pad back in 15 years not 10 years. All numbers are accurate but the duration was a Type-O.

    Thank you for your understanding!

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