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Business: Sudden death

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Stadium
Brent Holmes

As the Adelson-NFL stadium proposal moves rapidly forward, is Las Vegas getting a raw deal — or an honest discussion of the project’s pros and cons?

 

The story goes something like this:

It’s a textbook example of sleazy backroom power politics. In a series of secret meetings, a venal politician and pro sports team execs hammer out a sweetheart stadium deal, which is rushed through a vote before the public ever gets a chance to express its opinion on spending hundreds of millions in taxpayer money on the project.

Or maybe it goes something like this:

A giant pro sports conglomerate pitches an economically stalled city on a shiny new sports megacomplex — bankrolled largely by public funds. The city scrutinizes the proposal, discovering the cost to taxpayers is much higher than advertised. The mayor balks at the price tag. The public does, too, through numerous polls commissioned by the local newspaper. Despite the conglomerate’s huffing and hectoring, the mayor says thanks, but no thanks.

Those aren’t fairy tales. They’re true stories. The first happened in Georgia’s Cobb County in 2013, when then-County Commission Chair Tim Lee essentially slipped $400 million to The Braves for a new stadium in the Atlanta suburbs. (Outraged voters tossed Lee out of office the following election.) The second story is unfolding in Calgary, Alberta. Calgary Sports and Entertainment Corporation is pushing to build a new, $1.8-billion home for its pro hockey team, The Flames — with the public expected to pony up more than $1 billion. Calgary Mayor Naheed Nenshi has been cool on the proposal, telling the press earlier this year, “Perhaps in other cities ... the city councils have just written checks based on back-of-the-napkin proposals, without any consultation from the public, or without any analysis. That’s not how we operate here.”

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Such stories are worth keeping in mind as the pro sports stadium proposal by Sands Corp. CEO Sheldon Adelson, the NFL’s Oakland Raiders and Majestic Realty (owned by billionaire Ed Roski) moves forward. Adelson is dangling the prospect of the Raiders relocating to Las Vegas, hoping the state Legislature bites at the NFL bait and approves a hotel room charge increase to raise $750 million toward the nearly $2 billion project. A tourism advisory committee created by Gov. Brian Sandoval signed off on the hotel tax hike. And now, recent moves — such as Adelson’s give-us-the-money-or-we’re-walking ultimatum to the state tourism panel in August, and pressuring the Legislature for a special session devoted to the stadium — are making some politicians concerned that the process is more a backroom deal than a model of transparency. Clark County Commissioner Chris Giunchigliani thinks the full-court stadium push has “hijacked” the process.

“It is a rush job,” says Giunchigliani. “Why are we talking about a special session? The Legislature starts February 1, and you can have a methodical review.”

Indeed, getting a stadium subsidy typically takes longer. Consider Denver, where multi-Super Bowl champion Broncos are local religion — but the team still needed several years in the 1990s to win the state legislature’s blessing on a stadium sales tax before metro Denver voters approved it. Elsewhere, municipalities ask hard questions of would-be arena developers. In Seattle, city leaders were initially in favor of hedge-fund billionaire Chris Hansen’s proposal to lure pro basketball back to the Emerald City with a $490 million stadium (with $200 million of that supplied by public bonds). But the deal is now all but dead after the city took a hard look at how the stadium would affect traffic and commerce in Seattle’s Sodo District, and voted down a crucial street closure.

The point isn’t that the city council said no to a billionaire’s proposed arena. The point is that it thoroughly did its homework.

“In their talks about building an arena to bring back an NBA team to replace the Sonics, Seattle had a million public hearings, and the city council drove a hard bargain,” says Neil deMause, coauthor of the book Field of Schemes: How the Great Stadium Swindle Turns Public Money into Private Profit. “They did their due diligence.”

By contrast, Adelson/Raiders/Majestic are lobbying with little public-forum discussion. Outside of a monthly morning meeting held by the Southern Nevada Tourism Infrastructure Committee, there’s been no gathering for residents. (A Sands-commissioned poll found — surprise — that 60 percent of Nevada voters supported a publicly bankrolled stadium.)

“This few-month process is much shorter than the one we went through at the city with our (Major League Soccer) stadium debate a couple of years ago, and I think it should be examined more before taking government action,” says City Councilman Bob Beers. In the city’s soccer saga, Beers sought to get an advisory question on the June 2015 municipal ballot asking voters how they felt about a $56.5-million subsidy for the prospective MLS stadium.

And if the Nevada Legislature and the Clark County Commission do seriously grapple with the $750 million question, there are plenty of questions to ask — such as whether the stadium would really generate $530 million annually in county spending (“The numbers are absurd on many levels. The average NFL team generates less than $350 million in annual revenue,” says Holy Cross College sports economist Victor Matheson); and whether developers’ projected game attendance numbers are realistic (“The projections on the anticipated events, attendance, and overnight stays are all beyond the outer limits of wild optimism,” says Jim Nagourney, a former vice president of business for the New York Mets and New York Islanders, and former sports consultant for cities of Anaheim, Baltimore and Chicago).

Field of Schemes author deMause, a vocal critic of taxpayer-funded sports stadiums, advises the state and county to remember that they’re ultimately in a position of strength.

“If I had one piece of advice, I’d tell them to drive a harder bargain. The Raiders are being offered zero dollars in Oakland, so (local governments) are only bidding against themselves. Would the Raiders still come if they were offered $500 million or $250 million? (Elected officials) have to ask, ‘What is the team worth to us?’ But if you start negotiating from a position of, ‘How can we get a deal done?,’ you’ve already lost.” 

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