How Moving the Raiders to Vegas Went from Completely Crazy to Crazy Like a Fox Overnight

When rumors first began to spread last week that Oakland Raiders owner Mark Davis was set to commit to moving his team to Las Vegas if elected officials there approved a new NFL-sized stadium, the whole concept seemed a little—what's the word?—insane.

Sure, Davis is unhappy with his stadium deal in Oakland, where Mayor Libby Schaaf shows no interest in throwing hundreds of millions of public dollars at him to build a new one. And he's still pissy that the NFL picked Stan Kroenke's Rams over his Raiders to move to Los Angeles. So it's no great surprise that he sounds eager to explore his other options, declaring, "The world is a possibility for the Raider Nation."

But Vegas? A town that, for all its other attractions, is a smaller media market than both Greenville, South Carolina, and West Palm Beach, Florida, and where most of the people with spending money are tourists unlikely to plunk down big bucks for Raiders season tickets? Given the fiscal realities, Raiders-to-Vegas seemed like pure public posturing, a leverage move intended to shake loose stadium money from Oakland or San Antonio or St. Louis or somewhere, anywhere else.

Then came Davis's appearance last Thursday before the Southern Nevada Tourism Infrastructure Committee, an appointed group of political and business leaders. Everything changed—but not, as most of the headlines had it, because Davis had committed half a billion dollars to the Vegas stadium project and promised to move his team there if it were approved.

Rather, Thursday's big news was exactly the opposite: Davis, along with casino developer and would-be Republican kingmaker Sheldon Adelson, was looking to stick Clark County and the state of Nevada with as much as all of the costs of a $1.4 billion stadium—making it potentially the largest stadium subsidy in United States sports history—while not committing to a move in the slightest.

For Davis and Adelson, it would be a deal too rich to refuse. For Nevada residents, though, throwing a billion dollars or more at the NFL's least liked owner and the 22nd-richest man in the world would represent a new pinnacle of sports-swindle insanity.

From the start, Adelson's Vegas stadium plan has looked awfully dubious from a taxpayer perspective. The Sands casino owner initially floated it in January as a "public-private partnership" to build a new stadium for UNLV's football team while possibly luring the Raiders; a few days later, it turned out that the public share would come to a whopping $780 million in hotel, rental-car, and taxi taxes, with Adelson covering the other $420 million. That would already challenge the record $715 million Indiana shoveled into the new Indianapolis Colts stadium.

(Just to be clear: Yes, spending tourist taxes on a stadium is still a cost to local residents, even if they're not the ones directly paying them. Not only is this money that could otherwise be spent on something else—freeing the general fund from being used for whatever that something else is—but when you raise hotel and car-rental fees enough, some tourists start avoiding your town for cheaper destinations. And that can happen even when your town is Las Vegas.)

Thursday's stadium revelations, though, upped the ante considerably, in a tour de force of cup shuffling misdirection. First, Davis did indeed promise to move the Raiders to Las Vegas if the stadium project wins approval from the state legislature—but only if the rest of the league owners approve giving him an easy out if he decides he wants to back out: "Sorry, guys, my NFL buddies wouldn't let me do it."

Next, there's that $500 million that Davis said he would put up. Truth be told, the Raiders owner has indicated that $200 million of it would come from the NFL, presumably via the league's G-4 stadium funding program, which dates back to when New England Patriots owner Robert Kraft talked the league into helping him with new-stadium costs in order to keep him from moving his team to a smaller market, as had just previously happened with the Raiders and the Rams leaving Los Angeles and the Oilers departing Houston. (The G-4 fund is currently restricted to funding stadiums for teams staying put in their current markets, but that hasn't stopped Davis from including it in his financial plans.) Much of the remaining cash would likely come from things like naming rights and personal seat licenses. St. Louis figured it could get about $235 million from those sources for a new Rams stadium, so Las Vegas could presumably come close.

It turned out that getting all of the stadium revenue while sticking the public with more than half of the overall bill wasn't all that Davis and Adelson had in mind. Yet another partner, Craig Cavileer of Majestic Realty, revealed at a press conference on Thursday that the private developers would also want to cover their own private contribution with public tax dollars, via a "tax increment financing" district that would kick back property taxes to the project's developers. "We invest $650 million, and in return we have a stadium that we operate," he explained. "And we also have the tax district which gives us a refund, if you will, on an annualized basis for whatever increment we create."

Ah, the TIF. Of all the schemes that real-estate developers have concocted to get their hands on public subsidies for their projects over the past few decades, TIFs are perhaps the schemiest. The concept is simple enough: If we weren't building this project, the developers say, the land wouldn't be paying much if anything in the way of property taxes. So how about you let us keep any additional property taxes that get generated—the "increment"—to pay for our costs? It's a win-win!

Unfortunately, TIFs have worked out pretty poorly in real life, for several reasons. First off, new property taxes that come with new development aren't really a freebie. Any time something new gets built, it requires support from the government—roads, police and fire protection, schools if there's a residential component—which is precisely what those property taxes are meant to pay for. If they're instead getting siphoned off to pay for the developer's construction bills, then all those new costs end up sitting squarely on taxpayers' shoulders.

Worse yet, it's nearly impossible to tell in advance what would have happened with a particular plot of land if a certain development hadn't taken place. This is dubbed the "but-for" problem, and it can be huge: in Chicago, a frenzy of TIF-funded projects ended up diverting nearly half the city's property taxes after the city approved more than 150 TIFs, many for projects that would have been built with or without them.

Finally, there's the problem of what happens if property-tax receipts don't go up as much as expected—or, as sometimes happens, if they actually go down. This cropped up not long ago in another Nevada sports project: the ballpark for the Triple-A Reno Aces, which was to be funded largely by TIFs until it turned out that property tax payments dropped, leaving the city to pay the entire nut out of its general fund. (Majestic also proposed a TIF for an earlier incarnation of the UNLV stadium plan, before that fell apart three years ago.)

Greg LeRoy, director of the national subsidy-watch group Good Jobs First, says that despite all their flaws, TIFs remain a hugely important piece of the private-developer subsidy toolkit. The most heated battle right now is in Baltimore, where another billionaire, Under Armour CEO Kevin Plank, is asking for $535 million in TIF money to help underwrite the costs of development around his company's new waterfront campus. For Nevada, LeRoy says, the biggest question should be: "What's the footprint of the TIF district? Is it just the stadium?" (The beauty of TIFs for developers is that they can be drawn to encompass surrounding blocks as well, providing a potentially limitless revenue stream.) "People forget, and I put in my book, that George W. Bush's largest source of wealth was getting a sales tax hike applied to a large footprint around the Texas Rangers stadium," when he owned the team, with the proceeds going not to the city of Arlington but to pay off the team's costs. "And it was that enhanced value of the franchise that was the greatest single source of his wealth."

Thanks to the expandable nature of TIFs, there's no way of knowing exactly how much Davis, Adelson, and their other partners would want to recoup by this means. Added to the $750 million in hotel and rental-car tax money and the PSL/naming-rights revenues, though, and it's fair to say that the bigwigs behind the deal could end up paying next to nothing—while Nevada taxpayers could be on the hook for a billion dollars or more.

It's a stunning ask, and particularly so to Jim Nagourney. Now retired and living in Las Vegas, Nagourney was formerly a longtime executive and consultant on many stadium and arena negotiations; as deputy executive of Nassau County, he signed the New York Islanders to the long-term lease that recently expired and allowed the team to relocate to Brooklyn. He was also a consultant for the Rams on their "mother of all sweetheart stadium leases" deal in St. Louis, memorably telling his bosses, "Guys, some of this is crazy." Their response? "They can always say no, let's ask for it." (Missouri didn't say no, including to the state-of-the-art clause that eventually allowed the Rams to bolt back to L.A. this winter.)

Bringing the NFL to Vegas, Nagourney says, makes zero sense, not just because it's a relatively dinky market but because the usual justification given for attracting a sports team—bringing fan spending to town to boost the local economy—is less of a factor there than possibly anywhere else on the planet. "We don't need a pro team to be on the map—we're one of the three most popular destinations in the world," he points out. Unless a Las Vegas Raiders franchise somehow succeeded in marketing themselves to fans in far-flung parts of the nation, it wouldn't do much to bring in spending from outside the city—and even then, given that it's Vegas, it would likely only provide something additional for tourists to do while on their regularly scheduled visits, just as economists have determined is the case with spring training baseball in Florida.

Nagourney is skeptical that the deal will go through, if only because the key political figure in the whole deal, Clark County commissioner chair Steve Sisolak, has been asking pointed questions about the deal and its cost to the public. (Though Sisolak also said, "I don't think any community has a stadium built that makes a profit"—a classic all-the-other-kids-are-doing-it rationalization.) Plus, competing casino owners might not be crazy about their customers paying inflated room taxes to help fund a stadium that would only take away from their gambling time. Already, Nagourney notes, Broadway shows that play Vegas are forced to cut songs so that they can wrap up in 90 minutes and get theatergoers back to the craps tables.

For the Raiders' backers, though, even a long shot with such a potentially huge payoff is no doubt worth it, especially since the cost of putting forward this plan, as Nagourney says, is "tip money for lunch" for Adelson. And if Nevada officials do fall for this, it seems impossible that the NFL would force one of its owners to turn down a $1 billion gift, regardless of whether Vegas makes much sense as an addition to the league.

As Davis said last week regarding his NFL brethren, "If we give them an offer they can't refuse, and that's what we're talking about now, I don't see a problem." If Nevada says yes to the Raiders deal, it could have repercussions far beyond the fallout for Oakland football fans. It could establish a new blueprint for how multi-billionaires can demand that the public pay virtually all of their stadium construction costs, all the while insisting that they're providing a welcome "investment" in the locale being shaken down. And that would be insane.