ONN – Oakland Raiders Las Vegas Stadium Faces $278 Million Merrill Steel Mechanics Lien – Update
An update on a story that was presented here several weeks ago. Merrill Steel, one of the main subcontractors to the Las Vegas Stadium Authority / Mortenson McCarthy / Oakland Raiders joint venture, filed a mechanics lien of $278 million. The report on the lien, presented at the March 21, 2019 Las Vegas Stadium Authority Meeting, revealed what were potentially $100 million in cost overruns.
From the previous post:
The mechanics lien was filed by Merrill Steel and the letter reporting it, and documentation, was presented to the Las Vegas Stadium Authority as part of the agenda for the March 21st meeting. Bradley G. Taylor, a Las Vegas attorney for the law firm of Gordon Rees Scully Mansukhani, submitted the mechanics lien on behalf of Wisconsin-based Merrill Steel.
My real estate lawyer source said that “filing a mechanics lien is no small thing. It means someone is demanding to be paid for material and services rendered, and has not been paid. On normal situations, with a project this large (over $2 billion in total costs), you have deep pockets. And there would be a performance bond to cover those costs (so that contractors like Merrill Steel are paid).”
The documents placed on the website of the The Las Vegas Stadium Authority revealed that a performance bond was, indeed, filed, but it’s total value of $105 million, whereas the total value of work done was $172 million, and only $93 million was paid, leaving $70 million due. And that is not counting the $29,232,743 of “approved change orders” and the $69,876,679 of “pending change orders” or $99,109,423 in change orders placed by Merrill Steel during the course of their work in building the stadium to the point its at today. “It looks like someone wasn’t paid all they were owed,” my real estate lawyer source observed.
Indeed, the Merrill Steel document shows The Las Vegas Stadium Authority / Mortenson McCarthy Partnership presented a total value of the work done, that, when both pending and approved change orders totaling $99,109,423 are added, comes to $278,522,974. Again, $93 million was paid, $70 million is owed, and $8.6 million is contract retention. But, even with that $163 million paid and owed, there’s still and additional $115 million of unpaid work caused by the change orders and thus the lien against the property itself. That comes to a total of $278 million – the value of the lien.
And while the Raiders’ Don Webb reported that a lien bond was filed to “replace” the lien, it was only valued at $105 million, whereas the Merill Steel lien’s value is $278 million.
And to complicate matters more for both Clark County and the Las Vegas Stadium Authority and the Oakland Raiders, Merill Steel notes that it has the right to add any future change order values to the lien of $278 million. That means the $278 million lien could increase.
This update reveals what this vlogger learned and recaps the story for the new viewer.
Oakland Raiders Are Behind In Sponsorship Revenues Gained
The Oakland Raiders are behind in sponsorship revenues, and my sources have agreed that may be the reason Merrill Steel took the lien action that was reported at the March 21st, 2019 meeting.
By comparison, the Atlanta Falcons had gained 8 of its reported 11 “founding partners” sponsors as of May 3rd 2016, just over a year before what’s now called Mercedes Benz Stadium opened on August 26th, 2017. That list included nationally known firms like Coca Cola and in total Equifax, The Home Depot, NCR, Novelis, SunTrust, IBM and American Family Insurance.
Eventually, the list of “founding partners” would grow to include Georgia Power, AT&T, and SCANA Energy, with Mercedes Benz as the naming rights holder. In that, Mercedes Benz claims their deal with the Falcons is the largest marketing deal in its history. And while it did not reveal the cost, estimates range as high as $20 million per year.
By contrast, the Raiders have landed three – Caesars Entertainment, PPG, and Cox Communications – and the expected opening date of Las Vegas Stadium has been moved back to mid-September 2020, according to construction schedule documents posted at LVStadium.com website.
Both the Raiders Las Vegas Stadium and the Mercedes Benz Stadium were recipients of the same $850 million line-of-credit; the Falcons reportedly paid BofA back, and the Raiders are expected to do so (and could be kicked out of Las Vegas Stadium if that does not happen). The over $1 billion in sponsorships the Falcons secured before Mercedes Benz Stadium opened, went to pay back the BofA line of credit.
From that perspective, any observer would have to be concerned with the Raiders progress in signing up what’s needed: over $1 billion in sponsorships.
What’s the problem?
Part of the issue may be how much is being asked of some of the sponsorship levels, specifically naming rights. Reports are that $30 million-a-year for 20 years, or $600 million, was the desired mark for the Raiders and Legends, the Jerry Jones-owned firm that’s charged with selling sponsorships for Las Vegas Stadium.
According to the local Las Vegas blog Vital Vegas, one casino sponsor was said to have dropped out of the running because that $30 million was too expensive (T-mobile’s is $6 million annually).
Hear several Vegas casino companies are in talks for Raiders stadium naming rights, but at least one major player has passed as the number is (wait for it) north of $30 million a year. Rumored naming rights cost for T-Mobile Arena: $6 million a year.
— Vital Vegas (@VitalVegas) December 31, 2018
That ask is $10 million more annually than what the Falcons reportedly got for the new Atlanta NFL stadium. And from a radio perspective, Atlanta’s in the 10th largest media market, whereas Las Vegas is the 39th largest media market; San Francisco / Oakland ranks number 8. From a television view, Atlanta ranks 8th, San Francisco / Oakland ranks 6th, and Las Vegas ranks 42nd.
Raiders Still Without A Super Bowl Game For Las Vegas Stadium
Moreover, the problem for the Raiders is the lack of a signature event like a Super Bowl to justify such a large ask. To date, the Raiders have yet to secure a Super Bowl Game for Las Vegas Stadium; the Falcons won the right to host 2019’s Super Bowl 53 on May 24, 2016, again, over a year before the Mercedes Benz Stadium opened.
Raiders Not Winning On The Field, Either
And the Raiders on-the-field woes are not helping: the Silver and Black have been in the NFL Playoffs in 2003 and 2016 – just twice in the 21st Century.
It’s these money problems that just may be why the Merrill Steel mechanics lien was filed. Still working.
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