Las Vegas – Las Vegas Stadium Construction Update: in this update on the topic of Oakland Raiders Las Vegas Stadium construction and financing, a great video on Twitter shows, from the inside, the progress of the seating areas and the stadium floor.
To be sure, there’s a long way to go, with the south end of the stadium in a much less complete condition than the north, and vast areas still in need of additional steel, concrete, and materials placement. Overall, there’s progress, but many storm clouds remain.
First, there’s been no news of any other stadium “founding partner sponsor” signing up. So, far, that means there are still just PPG Paint, Cox Communications, and Caesar’s Entertainment.
The news that L.A. Rams’ Inglewood Stadium was able to land just a $400 million possible bid from the finance startup SoFi is completely damaging to the Raiders / Las Vegas Stadium / Legends target of landing a $30 million-a-year, 20-year deal, or $600 million. The SoFi L.A.Rams naming rights deal is reported to be an embarrassingly low $400 million, considering the stadium’s cost is about $5 billion, and even that naming rights number’s being questioned by many.
Second, as I’ve said before, the Raiders / Las Vegas Stadium / Legends group needs at least a $500 million naming rights deal – absent some creative deal-making or a foreign company willing to make a massive American splash or Sheldon Adelson (a deal which Dallas Cowboys Owner and Legends Hospitality Co-Owner Jerry Jones is certainly capable of making happen) that number’s not going to be reached.
The reason is simple: no sponsor would pay $500 million for a naming rights deal in Las Vegas, when the L.A. Rams can’t even snag that in Los Angeles, and that’s, by many measure either the largest or second media market in America.
Moreover, would Legends themselves, which is responsible for naming rights deals for both the L.A. Rams and the Oakland Raiders, even work to deliberately out-do their Los Angeles deal in Las Vegas, the 42nd largest media market? I’d say not likely. Mark Davis not having Adelson directly and publicly involved looks more problematic with each passing day.
On the other hand, the SB 1 Nevada law that gave legislative birth to the stadium deal, allows the Oakland Raiders complete silence on financial details and disclosure. This is one deal that’s not seen a lot of sunshine. If it can’t get a $500 million deal, the Raiders run the risk of opening at a deficit versus needed revenue.
Right now, the Raiders are at about $300 million in founding sponsor deals, and that’s being generous; they have three where the The Atlanta Falcons had eight a year before opening – most new NFL Stadiums have between 11 and 14 at the end of the day. The Atlanta Falcons cleared $1 billion in founding sponsor deals. The Golden State Warriors hit $2 billion for Chase Arena (a record). The Oakland Raiders are pulling up limp at this point, and arguably could have scored better in Oakland, and that includes the possibility of gambling – but that’s for another post, soon.
Then, there’s that hotel visitor / stadium tax revenue problem.
According to the Las Vegas Convention and Visitors Bureau, the April visitor count is about 0.2 percent less than the year before, and marks another month with a drop and not an increase in hotel visitors. That will negatively impact stadium hotel tax revenue, and because within that number, convention attendance was down 6.1 percent over April 2018.
It also erased gains realized the previous April 2018 when compared to April 2017; in April of 2018, convention visitors were up 11.1 percent, so now they’re down by about half. Overall, this is not the trajectory predicted by consultants to the Southern Nevada Tourism and Infrastructure Committee, and if these declines continue, not even the application of $31 million in surplus personal seat license will get the Stadium Authority out of trouble.
The overall revenue, even projected into the future, is not enough to cover the monthly bond debt times the 1.5 debt coverage ratio. I challenge the Stadium Authority to present not it’s budget, but a simple spreadsheet that shows the monthly bond debt times the 1.5 debt coverage ratio, and minus the monthly hotel stadium tax revenue collected since the bond was active, and project those numbers into the future. I’ve done it, and the picture’s not good – thank God for the Clark County Taxpayer.
The Clark County Taxpayers just called – they’re not happy.
Still the bright spot in all of this continues to be the casinos and how they’ve snapped up suites and tickets. To what extent that points to a seemingly logical future of the Oakland – then Las Vegas Raiders as casino-owned is another question.