New questions are swirling around a proposed $1.9 billion sports stadium in Las Vegas after a major private investor said he might walk away from the deal.
Casino owner Sheldon Adelson has said he is reconsidering his pledge of $650 million to help fund the project because officials of the Oakland Raiders, which may move to Nevada, were asking for too many concessions.
"They want so much," Adelson told Reuters. “So I told my people, ‘Tell them I could live with the deal, I could live without the deal. Here’s the way it’s gonna go down. If they don’t want it, bye-bye.' ”
His comments came after Gov. Brian Sandoval secured $750 million in public funding for the project, which would bring an NFL team to the state and expand the Las Vegas Convention Center. The money will be raised by issuing municipal bonds that will be financed through a tax hike on hotel rooms in the Las Vegas region.
“Legislators representing north and south, urban and rural, came together to prove we are one Nevada,” Sandoval said. “It is truly exciting to see our gaming industry, labor unions and small businesses come together with broad support for these important projects.”
Sandoval has not commented on Adelson's remarks. Adelson, who is chairman and CEO of Las Vegas Sands Corp., could not be reached for comment. Requests for comment to the Raiders organization – which has pledged $500 million toward the stadium project – also went unanswered.
The $1.9 billion stadium would produce nearly 8,000 full-time permanent jobs in Nevada’s Clark County and about 6,700 jobs in the rest of the state, according to figures from the Southern Nevada Tourism Infrastructure Committee. And it would produce $830 million in overall annual benefits to the state, the committee said.
But the promise for huge economic benefits may be little more than a mirage in the desert, said the author of a recent Brookings Institution study. That research concluded such projects bring little in the way of economic development benefits and end up being a drain on federal tax revenues.
“There’s, I believe, universal agreement among academic studies that sports facilities do not improve local economic conditions, but rather substitute leisure dollars spent in one part of the city for leisure dollars spent in another part of the city,” the lead author of the study, Ted Gayer, told AMI Newswire in an email.
The use of municipal bond financing means that interest earned by purchasers of the bonds will be exempt from federal taxes. This reduces the level of federal tax funds collected compared to what it would have been had the bonds been taxable, according the Brookings Institution study.
“This plan (in Nevada) is comparable to other stadium deals, though it is on the high side in terms of total costs and total municipal bonds issued,” Gayer said.
An NFL stadium build in Dallas, by comparison, cost $1.3 billion in inflation-adjusted dollars and required $337 million in municipal bonds, according to Gayer’s research.
"The ‘tourist tax’ – a tax on hotel rooms and/or rental cars – is a very common funding mechanism for these stadium deals,” Gayer said. “It is politically more amenable to the local population even though the burden of the tax is in part born by local businesses.”
Most stadiums also retain funds made through naming rights, tickets and concessions.
Tax losses to the federal government as a result of sports stadiums built or renovated since the year 2000 were $3.2 billion, the Brookings study found. High-income bond holders gain additional funds in the form of a tax break, worth an estimated $61 million.
“High-income taxpayers holding the bonds receive a windfall tax break, resulting in an even greater loss of revenue to the federal government,” the Brookings report says.
The report also found no justification for federal subsidies to sports stadiums, stating that the effects of individual stadiums are regional and not national.