Its July and after the bonds for the Oakland Raiders Las Vegas Stadium have been sold, it’s obvious now to anyone who would pay attention to the stadium hotel tax revenue numbers that there’s a problem. And no work by Sheldon Adelson’s media writers will cover that fact up, and just reveal that Mr. Adelson is involved in and supportive of the Las Vegas Stadium for The Raiders and the NFL. Everyone knows that Adelson’s media people won’t bad mouth the Raiders Las Vegas deal until Mr. Adelson wants them to.
To set the record straight amid fake news media reporting, this vlogger addressed questions.
1. How can you say there’s a problem if they’re collecting tax money monthly for a $50 million waterfall?
Because for the desired $50 million waterfall to be reached, the average monthly revenue would have to be at $4.16 million. Th average monthy revenue from the stadium hotel tax is less and at $4,076,952.50 that’s less that what it should be at per month: $5 million. Moreover, the media quotes the stadium authority budget, but does not look at the stadium bond debt service.
The fact is, the bond is backed by the Clark County Taxpayer. It will dip into the general fund if the stadium tax shortfall occurs, and that’s closer and closer to reality with every bad hotel visitor count that happens each month.
Let’s face it, Clark County and the Las Vegas Stadium Authority come close to losing their lunch each month, so nervous they are that the Las Vegas economy’s not producing the stadium hotel tax revenue needed for the bond issue.
2. Why do you say the Las Vegas Stadium Authority can’t afford the $750 million subsidy?
Because even if the Las Vegas Stadium Authority were able to subtract $50 million from the bond issue, and have a $700 million bond issue at 4 percent interest for 30 years (the life of the Raiders and UNLV lease for the stadium and the reported term of collection of the stadium tax), using a simple municipal bond calculator, the monthly bond debt service would be $3,341,907.07, and you have to multiply that times required the debt coverage ratio of 1.5 to get the monthly income you need from the stadium hotel tax to meet industry requirements to pay off that bond – that equals a need for a stadium tax revenue per month of $5,012,860. That mark was reached once in the short history of this, and that was March of 2017.
Not once since then has the monthly stadium hotel tax revenue been over $5 million – only March of 2017 and that’s it.
Which begs the question: why have a $50 million waterfall, and not more to meet the bond average, in the first place? And that’s another giant problem that points to Nevada politics. And I’m not done, here.
Now, the real bond was issued in April, and that’s $650 million – but even then the actual bond debt service is still a problem. The Raiders and the Las Vegas Stadium Authority realized $103 million less from the bond sale or $547 million – not $650 million. The Raiders are collecting the stadium hotel tax revenue directly now, and are behind by $56.7 million when the money that was already collected is given to the Raiders (and it was) – they now are looking at a 14 month time frame to collect that money and fill the gap.
All you have to do to see the problem is look at the actual, projected annual bond debt schedule (available publicly) and then divide that by 12 to get the monthly debt number, then multiply that times 1.5 to get the monthly revenue needed to meet the debt coverage requirement. Then look at the average stadium hotel tax revenue collected to date.
For example, for 2019, take the debt service for that year of $36,003,763 and divide that by 12, for 12 months, then multiply that times 1.5 and you get $4,500,470.38. That is the money you need per month to pay that debt. How the hell are you going to do that when your stadium hotel tax revenue is averaging at $4,076,952.50 per month? Huh?
In other words, the Raiders and Clark County have a projected monthly bond debt deficit of -$423,517.88, or total of -$5,082,214.50 for that year, right out of the gate.
That’s called a bond debt service shortfall, right out the gate.
3. If the Las Vegas Stadium Authority can’t afford the $750 million subsidy, how did we get to it?
Because both Oakland Raiders Owner Mark Davis and Las Vegas Sands representatives said they would walk away from the Southern Nevada Tourism and Infrastructure Committee, and stadium talks, if the subsidy was not set at $750 million. That flew in the face of the original studies which showed that even a hotel tax of one percent (and not the 7/10ths of one percent or the eventual 88/100ths of 1 percent), would allow a subsidy of $550 million.
But then the elected officials on the SNTIC didn’t want a one-percent rate, and so it was dropped, first to 7/10ths of one percent, and then to 88/100ths of 1 percent – and the consultants were tasked to make it look like it could work, even though it really could not work.
But the Oakland Raiders and Las Vegas Sands were going to run away and Raiders President Mark Badain balked, so the SNTIC / LVSA consultants created a way on spreadsheet to show how a $750 million subsidy could be done. What they did, was avoid showing the use of a low bond interest rate of 2 percent, and while they showed bond debt payments extending out beyond the 30 year tax period, failed to tell anyone where that money was going to come from if they were going to stop collecting the tax after 30 years – even as the chart showed eight additional years of monies collected after the tax ended.
Well, the simple answer is this: the Clark County General Fund. Thus, the promise that the stadium was going to be funded by only by the stadium hotel tax, and not touch the Clark County General Fund, was not true.
All of this was done to keep the Oakland Raiders and Las Vegas Sands at the SNTIC negotiating hearings for a stadium.
Now, the real numbers are here, they’re not good, and because of three things: the too-low stadium hotel tax rate, the One October horror, and decline in Las Vegas overall casino industry market share in America and the World. Even after the eventual recovery of Las Vegas tourism, the problem produced by the too-large subsidy and the too-low tax rate will mean Clark County General Fund suffers – unless the 39 percent public contribution rule is applied as spelled out by the law. If that’s done and the Raiders are asked to pay the difference, that also would impact the team’s ability to have a stadium in Las Vegas without going broke in the process.
And About That $160 Million In Personal Seat License Revenue – It Was Supposed To Be $250 Million
This is another case of the Las Vegas Media just laying over and rolling over and doing what Uncle Sheldon Adelson says to do. The Raiders, for years, said they had $200 million they would bring in for stadium construction representing Personal Seat License Revenue. Then they upped that to $250 million. And now, it’s down to $160 million and the Las Vegas Media thinks that’s a good thing. In other words, it’s OK to lose $90 million money for stadium construction in the data presentation, because that’s what happened.
When The Las Vegas Media stops the fake news it will be so nice. Until then…
Zennie Abraham is the CEO of Zennie62Media