Clark County Commissioner Chris Giunchigliani has a long list of things she would spend $750 million in public money on, if it was up to her. A light rail system, so Las Vegas can compete with cities with better public transportation. Firefighters, because her county has not hired a new one in years. And teachers, as public schools in Nevada perennially rank among the worst in the nation.
Nowhere on Giunchigliani’s $750 million public wish list would you find “help a wealthy NFL team owner and a mega-rich casino magnate build a $1.9 billion football stadium.” But that is exactly what Nevada’s largest county is poised to do, as the likelihood of the Raiders leaving Oakland for Las Vegas inched closer to reality this month.
Last week, Raiders owner Mark Davis made official his plan to move his team to Las Vegas by filing paperwork with the NFL; his fellow team owners could vote on the request in March. Davis decided to make the move, he has said, when Nevada lawmakers agreed late last year to provide a substantial public subsidy to help the Raiders build a new stadium. In October, Nevada’s legislature approved a plan for Clark County to provide $750 million for the stadium over the next 30 years through bonds backed by a new hotel tax.
When factoring in $900 million in anticipated roadway improvements that also will be needed, the Raiders’ new home in Las Vegas is on course to become one of the largest public investments in a sports stadium in American history. State lawmakers approved the spending despite decades of research that has concluded public stadium subsidies rarely pay off, and pointed criticism from one prominent economist, who used the words “wildly crazy” to describe the economic impact forecasts for the new Raiders stadium.
Giunchigliani, a former state legislator, is still dismayed by the decision, which will defray how much Davis (worth an estimated $500 million) and his likely business partner Sheldon Adelson (worth an estimated $31 billion) will have to spend to bring their gleaming vision of a domed stadium in Las Vegas into reality. Under the proposed plan, the Raiders will contribute $500 million, and Adelson will contribute $650 million.
“There are so many everyday needs that nobody wants to take the high road and say we need to increase taxes to pay for … Where are our priorities?,” Giunchigliani said in a phone interview.
Defenders of the public stadium spending point out that local taxpayers won’t pay for it; tourists will through a tax increase that amounts to 88 cents on every $100 spent at a Las Vegas hotel. The addition of a massive, weather-proof arena in the Nevada desert could bring dozens of events that otherwise would skip Las Vegas, tourism officials said, in addition to Raiders home games.
“Continuing to invest into our tourism economy helps drive the entire economy as a whole, which helps generate taxes for those other uses,” said Steve Hill, director of the office of economic development for Nevada Gov. Brian Sandoval, a Republican who supported the stadium financing plan.
A report produced last year by a Nevada state tourism committee estimated the stadium would generate $530 million in new annual spending in Clark County. Hill said officials are estimating the stadium will attract 450,000 people to Las Vegas each year who otherwise wouldn’t have visited. Stanford economist Roger Noll zeroed in on the forecasts for Raiders games to explain his skepticism of these estimates.
Nevada tourism officials are predicting the Raiders will sell about 43,000 tickets per game to Las Vegas area residents, which Noll thinks is a sound estimate, as Las Vegas will be one of the smaller NFL markets. The Raiders will sell out the 65,000-seat stadium, according to tourism estimates, by bringing roughly 22,000 tourists per game. Each of those tourists will stay an average of 3.2 nights, spending about $1,200 outside of the stadium while in town.
“There has never been a sports stadium in history that has had that type of economic impact,” said Noll, who has studied the economic impacts of stadiums for decades. “In order for those financial projections to work, this has to be the most successful football stadium ever built.”
Noll was alerted to the estimates in Las Vegas by James Nagourney, a retired sports executive and public administrator who protested the proposed spending last year.
Nagourney, 74, worked in city and county government in New York in the 1970s before joining the front office of the New York Mets, and then later the New York Islanders. Over the years, Nagourney has consulted for stadium deals in several cities, including Camden Yards in Baltimore.
While he’s advocated spending some public money on stadiums in the past, Nagourney felt compelled to speak out against the proposed subsidy for the Raiders stadium, which he feels is based on unreasonably optimistic assumptions.
“Our schools are ranked 50th in the nation, and we’re going to spend $1 billion on a football team that we don’t have enough people to support,” Nagourney said. “I got angry.”
The tourism forecasts present a central paradox, Nagourney noted: If the Raiders are wildly popular and sell out the stadium with local fans, there won’t be any seats open for the 22,000 out-of-towners expected every week.
“It’s the only park in America where success locally will destroy the plan,” Nagourney said. “It’s garbage.”
Hill, the state economic development official, said he’s aware of the work of economists such as Noll who dispute rosy impact estimates for sports stadiums, and has debated some of them on radio shows discussing the Raiders move.
When explaining why a public subsidy for a sports stadium will pay off in Las Vegas, Hill said studies in other cities don’t necessarily apply to the “Entertainment Capital of the World.”
“I know some of these economists tend not to like this answer, but I really believe this to be true: Vegas is different,” Hill said.