When a politically well-connected billionaire suddenly develops an interest in enticing an NFL team to relocate to his city, it’s time for taxpayers to hold onto their wallets.
Sheldon Adelson, who heads up the world’s largest casino company, is but the latest in a long-line of corporate fat cats with friends in high places who stand to benefit from the public subsidies that flow in the direction of professional football teams. He has set his sights on the Oakland Raiders since that team’s hometown has very sensibly decided against using taxpayer funds to finance a new football stadium.
If Adelson can prevail upon Nevada Gov. Brian Sandoval to accept his proposal, taxpayers will be forced to foot the bill for the largest subsidy ever doled out for the construction of an NFL stadium. That’s no small achievement. Up until now, the Lucas Oil Stadium in Indianapolis, Indiana held the top prize for receiving the most public money, according to a report from the Taxpayers Protection Alliance.
The Lucas Oil Stadium received about $620 million in taxpayer subsidies. By comparison, Adelson is asking for $720 million from the taxpayers with the remaining $650 million covered by private investors. The details of Adelson’s proposal were spelled out during a May 26 presentation made to the Southern Nevada Tourism Infrastructure Committee. He is asking anyone who stays in a Las Vegas hotel to pony up for a lavish, publicly-funded 65,000 seat domed stadium.
The idea is to sell $750 million in municipal bonds and to pay off the securities with a new 0.9 percent tax on hotel rooms, which is about $1.08 a night. Proponents claim the tax would only hit tourists and not local residents. They also tell us that none of the private investors involved with the project would receive revenues collected from the room tax. An economic advisor to Sandoval has recommended reducing the public contribution down to about $500 million while boosting the private contribution to $900 million.
Adelson, the chief executive of Las Vegas Sands Corp., doesn’t need any help paying for any of the overpriced seats that will likely populate the stadium. He has accumulated $23.6 billion from his time in the casino business, Bloomberg News reports. Adelson is collaborating with Majestic Realty Co. to push the project forward and is in talks with Raiders owner Mark Davis. Adelson, and his partners, project the stadium will result in $870 million a year in new spending while creating 8,000 new jobs in Clark County, Nev., which includes Las Vegas.
Color us skeptical as this sounds a lot like the snake oil we’ve heard before.
Go back and review the sly salesmanship leading up to all the new stadiums in the NFL and you will find there is a familiar refrain. Government officials who carry the water for their corporate cronies constantly argue that the publicly subsidized stadiums are justified because the projects encourage economic growth by generating wealth and creating jobs.
Instead of accepting this pitch at face value, The Taxpayers Protection Alliance decided to take a hard look at the economic impact taxpayer-financed NFL stadiums have on the people who pay the taxes that fund the construction of most NFL stadiums. Our approach was straightforward; we compared median household income and poverty rates in counties with NFL stadiums before and after tax dollars were used to subsidize the stadiums.
Here’s what we found: median income decreased and poverty rose in those counties with publicly funded NFL stadiums. Taxpayers picked up the tab for more than half the construction cost of 12 stadiums from 1995-2013. During that time, national median household income rose 0.3 percent across the United States, adjusted for inflation. But in the dozen counties in which an NFL stadium was built using more than 50 percent public funds median household income plunged 5.7 percent during the same period. Clearly, the evidence is in and it tells us that publicly-funded stadiums are a drain on the local economy.
This might explain why Oakland has steadfastly refused to subsidize the cost of a new stadium even if it means losing their team to another city. This may be part of a larger trend as other cities are drawing a line in the sand. Seattle, for instance, recently turned down a proposal for taxpayers to cover at least some of the costs for a project that may have lured professional basketball back to that city.
The question is whether Team Adelson genuinely believes this will be a boon for Las Vegas and not just his own narrow interests. It’s a question the Republican governor of Nevada, who postures as a champion of taxpayers, needs to carefully consider.