Raiders At Oakland Coliseum

Raiders IRS And Oakland Loan Issue: City Official Said Team Playing At Coliseum Was Payback

There is a fair degree of interest in a matter that I’m still rather skeptical about, and that’s the discussion around the 1995 $64 million “non-recourse” loan that was given to the Oakland Raiders as part of a deal to return to OakTown from Los Angeles. The information tossed about is not accurate and the idea that the IRS would come after the Raiders is highly questionable, and is provided by people who were not around when the Raiders came back to the Oakland Coliseum in 1995.

I was there, first, as The Montclarion newspaper columnist (who according to then-Oakland Tribune columnist Monte Poole, broke the story of the Raiders return to Oakland), then as advisor to Oakland Mayor Elihu Harris, with the specific assignment of advising him on all matters of the Oakland Raiders related to our master lease agreement (a topic we still talk about on our many livestream shows on Zennie62 YouTube Channel – like this one).

The bottom line is different from the way it has been explained in the media, to date. The idea that “approximately $200 million in income/loan accrual from a 1995 loan that Oakland/Alameda County made to the Raiders that was never repaid because it was supposedly non-recoverable” is not correct. I elected to step in as one of a handful of people who were involved in the matter then, who are still alive, today.

What that idea expressed in the media came from was the constantly-repeated auditor’s paragraph in the Oakland Alameda County Coliseum Joint Powers Authority Financial Reports. I took up the matter of the report’s language in a post regarding what was at the time a possible lawsuit around the relocation of the Oakland Raiders to Las Vegas, thus becoming (by location and new organization) the Las Vegas Raiders. On June 26th 2018, I wrote the following in an Oakland News Now blog post:

The request for compensation would focus on the $370 million relocation fee that the Oakland Raiders will owe the National Football League for the Las Vegas Relocation. In that, this would not be the first “relocation fee” the Raiders has to pay the NFL – that would be the $64 million “non-recourse loan” that was poid by the City of Oakland and the County of Alameda (which later formed the Oakland-Alameda County Coliseum’s then-new joint powers authority in 1995).

That so-called “non-recourse loan” was determined by the California Court Of Appeals to have not been that, and because the NFL Bylaws and Constitution was written such that what was givne to the Raiders was a payment and not a loan. That’s because the Raiders attempted to have that payment not considered a revenue enrichment. The California courts disagreed, stating the NFL Bylaws and Constitution did not allow for such financial discrmination. (See: California Supreme Court: The OAKLAND RAIDERS, Plaintiff, Cross-defendant and Appellant, v. NATIONAL FOOTBALL LEAGUE, Defendant, Cross-complainant and Appellant; Paul Tagliabue et al., Defendants and Respondents. 61 Cal. Rptr. 3D 634 (2007), 41 Cal. 4Th 624, 161 P.3d 151.)

That matter is important, because the financial documents from the Oakland-Alameda County Coliseum Joint Powers Authority explained as recently as in the June 30th 2016 Financial Report “As discussed in Note 4 to the basic financial statements, the Authority has loans receivable from the Oakland Raiders in the amount of $155,562,629 as of June 30, 2016. These loans have increased in the amount of $6,890,325 in fiscal year 2016 and have increased a total of $92,366,439 since the inception of these loans in fiscal year 1996. The Authority has not adopted a methodology for reviewing the collectability of Raiders loans receivable reported in the governmental activities and the major special revenue fund and, accordingly, has not considered the need to provide an allowance for uncollectible amounts. The Authority has not evaluated the recoverability of these loans through the maturity date in fiscal year 2036.”

In other words, this so called “non-recourse loan” is not that, and from my estimation as a former City of Oakland official charged by Mayor Elihu Harris to play watch-dog on Raiders-related issues, given the court’s decision, it looks more like the forerunner to the modern NFL relocation fee. By my estimate, that so-called $64 million loan to the Oakland Raiders to move from Los Angeles, that’s really a payment to the NFL, is now worth $218 million.

Moreover, when this blogger was (again) the new Economic Advisor to Oakland Mayor Elihu Harris, Ezra Rapport, then the City of Oakland’s Assistant City Manager, and now Executive Director of the Association of the Bay Area Governments, specifically noted to me that the way the “loan” was paid back by the Raiders was via their remaining a tenant at the Coliseum. This was discussed as part of a meeting with myself, and two other Oakland City Council staffers in 1996, and because Rapport said “I want you all to know the Raiders documents because no one else cares.”

As one East Bay public official admitted to me on one occasion when we talked about the loan, and why previous Oakland Coliseum JPA administrations failed to do anything about having a way to collect on the loan, let alone reviewing the decisions of the court, that person said, “Zennie, the truth is we just plain fucked up.”

From this blogger’s position, the fault lay with the City of Oakland and the County of Alameda, not just the Oakland Coliseum JPA. After all, the City of Oakland and the County of Alameda formed the terms by which the loan payment was to be given – to get the Raiders back to Oakland. But the same entities failed to do any collective, reported follow-up on the matter, even as the Oakland Raiders were weaving in and out of court. That problem of lack meaningful of follow-up exists to this day, as of this writing.

The entry you just read above was written in Oakland News Now on June 26th, 2018. As of this writing, little has been done to change that state of affairs, but the action that was taken last year is significant: in 2020, the Coliseum JPA and the Raiders agreed on what’s called a “quitclaim deed” to resolve the $10 million non-recourse loan that was given to the Silver and Black to allow the construction of what became the Oakland Raiders Headquarters and Training Facility located in Alameda, County.

The idea, according to Alameda County Administrator Susan Muranishi and Oakland City Administrator Ed Reiskin in the July 1, 2020 Coliseum JPA Report To Board, is that the Raiders could not afford the total owed for the $10 million non-recourse facility loan when interest were applied. The idea was that, in the County’s and City’s words:

By letter dated February 8, 2020, the Raiders provided written notice of their intent not to exercise the option to play football at the Coliseum for the 2020-21 football season and to exercise their option to continue using the Training Facility located in the City of Alameda for up to 36 months, The Raiders have made monthly rent payments, as required by Supplement No. 7. As a result, the Raiders have provided a quitclaim deed to convey the Training Facility to the City of Oakland and County of Alameda as tenants-in common each with a 50% undivided interest. The Alameda County Board of Supervisors adopted Resolution No. R-2020-102 on March 17, 2020, accepting the quitclaim deed for recording. The previous Interim City Administrator for the City of Oakland executed a Certificate of Acceptance on May 4, 2020 accepting the recording of the quitclaim deed as previously authorized on March 21, 2019 by City Council Resolution No. 87585

So, from that presentation, and the consideration of the Raiders paying back the City and the County of Alameda just by playing at the Coliseum since 1995, the one consideration the Silver and Black could make would be the economic impact of the Raiders games at the Coliseum for all of those years, added up. Even though no study was done for Oakland, that Las Vegas would gain $620 million in one year with the Raiders, according to one study, is all you need to know that the Raiders impact in the SF Bay Area and Oakland would be that, or greater.

Given the quitclaim deed model that the City and the County followed, it would seem a fools-errand for the Internal Revenue Service to get involved in a non-recourse debt that obviously has a road to resolution. Moreover, the NFL was also trying to recover what it believed were payments due to each member club from the Raiders. If the Raiders suddenly have to pay the IRS on what’s considered revenue, then why won’t each team have the same tax burden? I just don’t see the IRS trying to straighten out this generation-old matter, right now, all-of-a-sudden.

That’s why I don’t believe the IRS has anything to do with this matter at all, and just may be someone who does not know the technics of the matter, but has some connection in the NFL (could be another reporter) who’s spinning an idea, then floating it to see the reaction.

I don’t think the wave of Las Vegas Raiders Staff departures has anything to do with this Oakland issue. As for the Oakland issue, the best resolution seems to be regarding the drafting of another quit claim deed regarding the Coliseum itself. Indeed, it’s something the City of Oakland really should consider if it wants to see NFL Football again, in the future.

Stay tuned.

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