The Nevada legislature crossed party lines to vote overwhelmingly to approve public funding to cover nearly 40 percent of the cost of a .9 billion domed stadium in Las Vegas.
The 16-5 vote in the Senate came on the second day of a special legislative session called by Governor Brian Sandoval, an enthusiastic supporter of the stadium, which will be jointly owned by the family of billionaire casino mogul Sheldon Adelson and the National Football League’s Oakland Raiders. Team owner Mark Davis wants to move the team out of the California city. The stadium also would host the home games of the University of Nevada, Las Vegas football team. Sandoval said he would sign the bill on Monday.
The measure would raise the Clark County hotel room tax by 0.88 of a percentage point to finance $750 million in general obligation bonds over 30 years. Adelson, chairman and controlling shareholder of Las Vegas Sands, has pledged $650 million. The Raiders have committed $500 million.
A separate provision in the bill adds another 0.5 percentage point increase to fund $400 million of a $1.4 billion upgrade to the Las Vegas Convention Center, for a total room tax increase of 1.4 percent.
The Assembly vote of 28-13 achieved the two-thirds majority needed to pass the bill.
But the debate for and against the stadium has been passionate on both sides. Supporters, bolstered by testimony from the titans of the Las Vegas casino industry, say the 65,000-seat facility will create thousands of jobs and generate tens of millions of dollars in economic and tax spinoffs. Opponents, who claim those projections are overblown, decry the plan as corporate welfare at a time when the state faces a $400 million budget shortfall and has far more pressing needs in areas such as education and human services.
“This is a decision we have to make knowing that somebody’s going to be mad,” said Senate Minority Leader Aaron Ford, a Las Vegas Democrat who voted yes.
Senator Ruben Kihuen (D-Las Vegas), who voted no, questioned giving a $750 million “taxpayer handout to a multibillionaire who can easily pay for this from his own pocket.”
“It was bad public policy overall,” he said. “We’ve seen in many, many studies that stadiums are not good public policy.”
Clark County Commissioner Chris Giunchigliani, an outspoken opponent, said in public testimony: “Let the people who have the money build it. Don’t put us on the hook with bonds.”
She also criticized the decision to force lawmakers to vote on the stadium and convention center improvements as a package, claiming the latter was “hijacked” by Adelson to ensure a win for the stadium.
“There’s something very, very flawed with this,” she said.
The stadium’s route to Carson City came by way of an endorsement from a panel comprised of various stakeholders appointed by Sandoval to weigh the pros and cons. The panel agreed with supporters that the stadium will draw untapped visitor segments that will in turn spend in restaurants, casinos and shops, and pump hundreds of millions of new dollars into the local economy. Locally based economic consultants Applied Analysis estimates stadium-driven economic output at $620 million a year, plus $35 million annually in new tax dollars, presuming it hosts 45 or more events a year and draws 450,000 new visitors annually. It would, moreover, create an additional 5,982 permanent jobs throughout the region, with an average annual wage of $38,500, according to the firm’s research.
Critics say the facility will do little to create new money and visitation and instead will mostly shift existing money and visitation around and in the process deter visits from non-stadium tourists. They also point to the absence of any firm dollar cap on the taxpayer contribution, which could easily balloon to more than $1 billon, depending on how the stadium lease is configured. There are also cost overruns, transportation and infrastructure upgrades and costs such as policing and traffic control and future capital improvements that haven’t been factored in, they say.
The traffic issues held up the Assembly approval of the bill as a study that was published on October 4 just became public the day the vote was scheduled. The study said more than $800 million already approved in road improvements would need to be fast-tracked at the two likely stadium sites.
Neil DeMause, editor of Field of Schemes, a stadium watchdog site, characterized the funding agreement as the work of the “worst hagglers in Haggletown.”
“Somebody remarked the real winners would be Oakland,” he said.
“This is the worst deal for a city I have ever seen,” said Stanford University economist Roger Noll.
“It’s not just that it’s $750 million, but the underlying economic study that attempts to justify the subsidy is the weakest I’ve ever seen,” he said. “Selling one-third of the tickets to tourists might work if you’re playing the Rams, but if you’re playing Tampa, do you really expect 22,000 people to fly in from Tampa to go to the game? If you pull out that component of the economic impact study, you’re left with basically a financial disaster.”
Andrew Zimbalist, a sports economist at Smith College in Massachusetts, pointed to the opportunity cost of land usage in a relatively small area like Las Vegas as a potential hidden taxpayer expense.
Noll and DeMause said that the absence of a lease agreement, or even an assurance that the Raiders will relocate to Vegas, should be another major concern. According to news reports, the NFL has yet to formally consider the move, which requires the assent of three-quarters of the league’s owners. NBA Commissioner Roger Goodell says he prefers that the Raiders remain in Oakland, but powerful owners like Jerry Jones of the Dallas Cowboys and Robert Kraft of the New England Patriots favor a move to Las Vegas.
“Usually when a political body is deciding whether to fork out this kind of money, they would have a real plan in place. This is like signing a blank check,” Noll said. “Other than that, it’s a great deal.”
The American Gaming Association says the stadium deal and potential Raiders’ move could signal progress in the path toward the legalization of sports betting.
“The legislature’s action signals that sports betting and professional sports can coexist in a safe, regulated marketplace,” said AGA President and CEO Geoff Freeman. “Utilizing cutting edge data analytics, leagues and regulators can monitor betting activity in real time, and help ensure that the integrity of professional games is paramount. Nothing threatens the integrity of sports more than the unregulated marketplace of today where Americans wager at least $150 billion annually through bookies and illegal, offshore websites.
“It is time for a new approach to sports betting that eliminates the federal prohibition and acknowledges the reality that fans are seeking greater engagement with the sports, teams and players they enjoy.”
