Answering Oakland Raiders Las Vegas NFL Stadium Hotel
Tax Revenue 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. Right now, the average is at $3,814,747 – $345,252.56 less that what it should be at per month. While that’s not the only problem, they’re on track to collect $45,776,969.33 for the 12-month period. So, even their waterfall mark is off.
2. Why do you say the Las Vegas Stadium Authority can’t afford the $750 million subsidy?
Because even if the LVSA 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 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.
That’s $1,198,113.60 per month more than the current monthly average Clark County stadium tax revenue of $3,814,747 – in fact, it’s also more than the $4.16 million average needed for the $50 million waterfall. 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.
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 that 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 the public and only by the 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 two things: the too-low stadium hotel tax rate, and the One October horror. 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.