Raided

When legislative police vehicles picked up Clark County lawmakers at the Reno airport and drove them to the capital for the special session of the Nevada Legislature, they passed a billboard on the freeway near the Damonte Ranch exit. It read:

STADIUM, JOBS, & GROWTH!

Hold Your Local POLITICIANS Accountable!

Avoid Personal and Regional Issues and …

NEVADA WINS!

The billboard revealed a touching confidence in its sponsor’s belief that Reno locals would want to hold Washoe County politicians to voting for a huge sum of corporate welfare for an out-of-state corporation to bring a pro football team to the other end of the state. North/south rivalry is nowhere near as sharp as it once was, but there are limits. Besides, the term growth does not sing as happy a lyric in Washoe as in Clark.

But then, the billboard wasn’t really aimed at locals. It was part of a web of ways legislators were being coaxed into voting for a $750 million package that somehow turned into $1.1 billion before the session was over.

At a time when state government was facing a $400 million shortfall, when Washoe residents were being asked to enact a sales tax hike to raise $780 million, the governor and legislature eased the plight of the truly needy—the $1.4 billion Oakland Raiders Inc., which claimed it could afford only $500 million for the project, and billionaire—32 times over—Sheldon Adelson, who held his fortune and his newspaper over the heads of the legislators.

Businesspeople and their lobbyists who like to say, “Government should operate like a business” were on hand to make sure it didn’t. If the Nevada Legislature were a board of directors, its members would not take action on first examining the proposal, would not race into a decision, would not ignore experts or accept pie-in-the-sky claims. They’d adjourn after assigning a team to examine feasibility and come back when they actually knew something.

The billboard, the expensive printed material laid out for legislators by the Raiders, the presentations before joint sessions of the houses, the attempt to suppress critics of the deal from being heard—all that seduction wasn’t really needed. Most legislators were anxious to be seduced.

The special session agenda had to be punched and kicked to get the right combination of stimuli for the legislators. One item designed to ease the shortfall in state schools had to be dropped since it would have been embarrassing for legislators to slap together patchwork funding for schools while aiding billionaires. A long hoped-for rehab for the Las Vegas convention center was tacked on to make the stadium more palatable—the convention center being real tourism bait and the stadium being dubious tourism bait. And some special interest items were eliminated as distractions that could wait.

Among governments, the financial community and economists, arena and stadium deals have long been in poor odor. What was going on in Nevada unnerved them all. It was feared that, because of the Nevada giveaway, owner insistence on big welfare packages would become common when they had been declining. In the Raiders’ hometown, the mayor made clear she wasn’t going to subscribe to Nevada-style profligacy. “Oakland made that mistake in the past and will not repeat it,” Mayor Libby Schaaf told the San Francisco Chronicle last week when it was suggested Oakland meet Nevada’s price. In Oakland, government was turning to the private sector to fund its effort to keep the Raiders. In Nevada, the private sector was turning to government to fund luring the Raiders.

The team is seeking to abandon Oakland before the bonding on the last Oakland Coliseum upgrade—done to bring the Raiders back to the city from Los Angeles—is even paid off. St. Louis, which has lost the Rams to L.A., faces similar payments on a vanished team. In San Diego, the Chargers are demanding more money while the city still pays off the last stadium upgrade.

Shortly after Gov. Sandoval called the special session, an interview with Roger Noll, Stanford economist, former senior economist with the President’s Council of Economic Advisers, and co-editor of Sports, Jobs, and Taxes made news: “Their financial welfare would depend on selling 22,500 tickets every single game to people following the visiting team,” Noll told the Chronicle. “There is no team in the NFL that comes anywhere near one-third of their fan base being tourists. … You take away all that, you take away 75 percent of the economic benefit of the stadium.”

We asked if he had ever seen results of the kind described in studies to Nevada legislators, which he had read. “The prospective studies about the financial effect of a sports facility on the budgets of local governments and about the effect of a facility on permanent jobs in the locality are always overstated,” Noll told us. “But I have not seen any impact study that is as wildly overstated as the one for the Las Vegas NFL stadium.”

Across the nation, others were watching—some in hunger, others in disbelief. They scrutinized the proposal, often rigorously, which the 63 legislators and many local journalists did not.

The scheme involved the sale of bonds, so Bond Buyer was watching: “The Nevada legislature is one of only four states that have biennial sessions. … Reviews by the state’s fiscal staff of department heads and agency budget requests indicate a budget shortfall.”

It involved construction, so Construction Dive covered it: “If approved by legislators, hikes in the Clark County, NV, hotel room tax would finance $750 million of the 65,000-seat stadium’s construction costs, as well as an expansion of the existing convention center.”

Lawsuits might ensue, so Courthouse News Service was reporting: “Meanwhile, NFL Hall-of-Famer and former Raider Ronnie Lott is among those seeking a new stadium deal that would keep the Raiders in Oakland.”

Sources like these might have been useful to the legislators, but that was the last thing legislative leaders wanted. They avoided having experts testify. They put up boosters and public relations people like state economic development director Steve Hill, his job to put the most positive spin on the stadium, or folks with conflicts of interest like Las Vegas casino owner Steve Wynn, who wants public money used to fill his casino/hotel with customers. But people with experience or just everyday taxpayers without financial stakes in the project, were discouraged from testifying. Legislative leaders tried to bar them entirely until embarrassed into allowing it. In the Assembly, legislators were denied the right to debate. It was almost as though a financial conflict of interest was needed to get a hearing on the stadium.

Wynn: “My friend [Cowboys owner] Jerry Jones and [Patriots owner] Robert Kraft and others with whom I have a personal relationship have told me that the NFL is ready to do it.” The statement is filled with holes. He mentions two people by name, neither of whom have committed in writing to the project. If they come through, that is two out of 32 owners. Legislators took Wynn’s word for it that he can get “and others” to come through. It takes just nine owners to halt the Raiders move cold.

Indeed, the legislators seemed to go out of their way to avoid getting anything in writing before acting but blithely believed anything favorable to the project they were told. Neither the owners or the Raiders have put anything in writing that they can’t back out of, which raises again the question of why this issue is before a special session. NFL owners will meet in January and may vote on allowing the move. Or they may not—no vote, no move. Why wasn’t this project handed to the regular session of the Nevada Legislature, which meets in February, after the owners meet, when the legislators would know if they had anything to act on, and could then give any deal real scrutiny?

Not only wasn’t Raiders owner Mark Davis not signing anything, he still has other irons in the fire. Oakland has an alternate berth in the Rams new stadium, and Oakland is putting together a package that would cost Davis $200 million less than the move to Las Vegas. On top of that, NFL Commissioner Roger Goodell is disinclined to do anything for Las Vegas, preferring the Raiders stay where they are. “Keep in mind, a privately funded stadium would also maintain the NFL’s hold on the Bay Area market and its 2.5 million television households,” Market Watch pointed out. “With Oakland seeing an influx of new residents and increased developments, the NFL knows it can get in on the ground floor of the one spot in the Bay Area that hasn’t already maxed out its potential. Compare that to Vegas, where 736,700 television households don’t tend to generate nearly as much disposable income ($51,552) as the Bay Area ($73,562) does.”

Unlike the Washoe County room tax, nearly all of which is spent on tourist promotion, the Clark County room tax goes mostly to public programs like roads and schools, 38.7 percent to education. So if the room tax increase enacted last week were being allocated normally, $290 million of the $750 million would go to schools. Instead it’s being diverted to the Raiders handout.

Nevertheless, Clark County casinos have never stopped thinking of the room tax as theirs—at one time 90 percent of it was used for tourist promotion (still the case in Washoe). That may be why they say tourists, not locals, will pay for the stadium. “Tax revenue belongs to the people of Nevada—it does not belong to Steve Wynn or Sheldon Adelson,” Progressive Leadership Alliance of Nevada leader Bob Fulkerson responded. “That revenue belongs to our children and we need it to build their future, not to give it to the eighth richest man in the world for his stadium.”

The rationale concocted for the Nevada scheme was that Las Vegas will decline as a tourist destination unless it gets the stadium.

“Among peer tourism cities, Las Vegas is the only one without a 60,000-plus seat stadium,” wrote Las Vegas Metro Chamber of Commerce CEO Kristin McMillan in an essay published in Adelson’s newspaper. “This means that cities such as Dallas and Orlando have a competitive edge.” Actually, it means the city’s business infrastructure, not the city, is falling behind. The difference is whether taxpayers or businesspeople are responsible.

“Our competitors for tourism and convention dollars are closely watching how Las Vegas proceeds,” wrote two Brookings Mountain West scholars in the Las Vegas Sun. “More than 42 million annual visitors also will notice what action Nevada’s leadership takes. … We hope Nevada’s political leaders recognize the high stakes and choose to double down on the Las Vegas tourist economy.”

Among those watching was Neil deMause, co-author of Field of Schemes: How the Great Stadium Swindle Turns Public Money into Private Profit. He wrote on his blog, “Starting to sense an agreed-upon message here: Sure, people are flocking to Las Vegas now, but if we don’t have a football stadium, they’ll have no reason not to go to Dallas instead! Why this would suddenly start happening now after decades of Dallas having a football stadium and Vegas not is anyone’s guess, but as ’cold Omaha’ statements go, it’s a vivid enough image, I suppose.”

And the conservative site Hot Air asked, “Minneapolis and Detroit might have some argument for the need to boost tourism through major-league sports, while markets like New York and Los Angeles would have far fewer. In what universe, however, does Sin City need a boost in tourist buzz?”

Clark County Sen. Aaron Ford said he did not want to tell a worker in need of a job, “I had a chance to give you a job, and I voted no.” DeMause responded on his blog, “If that’s the bar, then no government expense for anything ever would be rejected, since it’s hard to spend money on anything without creating at least some jobs. Apparently, Ford can sleep perfectly well when he considers facing laborers who could be employed by doing something else with that $750 million that might have a better bang for its buck than a football stadium.”

Market Watch noted damage Adelson was doing to Nevada: “Don’t expect the [Adelson-owned] Las Vegas Review-Journal newspaper to point out what a terrible deal this is for the city, which will be paying the single-largest sum of up-front public money (bond interest always adds up to more) ever paid for an NFL facility. It will be $130 million more than Indianapolis paid for Lucas Oil Stadium in 2008.” (Emphasis added.)

It was telling that Adelson’s corporation, the Sands, refused to join him in building the stadium, forcing him to put up his share ($650 million) alone. Yet state legislators ignored this message from a leading business. For that matter, Wynn, former Las Vegas mayor Jan Jones of Caesars and MGM exec Jim Murren were sent out to promote the project—yet none of their corporations pitched in a few million. If four different major Las Vegas casinos wanted no part of the project, why would Nevada put tax dollars into it?

The studies shown to legislators predicted results that have never been achieved in any other market, and experts in athletic facility finance—not invited to Carson City—said they were unlikely to come to pass. Jeremy Aguero of a Las Vegas economic analysis firm disagreed: “Being in Southern Nevada is what makes it different.” The notion that the laws of finance and economics work differently in Clark County, Nevada, than in the rest of the country—let alone other tourist meccas with larger base populations—was novel, but not all lawmakers were buying it. Sen. Ruben Kihuen said, “I understand Las Vegas is not like any other city. …. But how often have other cities been pitched the same false bill of goods?” In the hermetically sealed container from which reality was excluded that legislative leaders tried to make of the capitol, the impression was left that if a study was presented saying that the stadium would end poverty in the United States, most legislators would buy into it.

Why is the taxpayer subsidy needed for the Raiders stadium when a Las Vegas hockey facility was built entirely by the private sector (MGM Resorts International and Anschutz Entertainment)? The answer is simple. T-Mobile Arena, built for an NHL team to be named later, is much more likely to make its costs. Forty-one games a year will be played there. In the stadium, however, the Raiders would play eight times a year. The taxpayers’ deep pockets were regarded as a good partner for the shortfalls that could easily accompany this project. Harvard urban planner Judith Grant Long has calculated that 78 percent of stadium costs end up being picked up by taxpayers, the rest by owners. UNLV will also use the stadium—paying for the privilege. The $750 million is apparently not enough payment. But even with the UNLV games, fewer than 50 events would be held. When it was testified at the legislature that the stadium would provide 14,000 permanent jobs, an audience member joked, “What will they spend their time doing?”

Backers claimed the 0.88 tax increase would produce about $50 million annually. What if it doesn’t? The legislators were not only taking money from the taxpayers for the project, but the cost of bond payments also falls on the public. It gets stuck at both ends. The $750 million taxpayer contribution was not an investment. It was a giveaway—of other people’s money, including schoolchildren’s.

The $750 million in taxes provides the largest single portion of the stadium cost. Supporters of the stadium talked outlandishly and optimistically when trying to sell the project, but when asked why the public doesn’t get a piece of the action, they turned cautious and pessimistic. There would be no or few profits, they said, so there was no point including the public in earnings. These machinations raised the suspicions of those on both left and right, from Democratic Clark County Commissioner Chris Giunchigliani to Washoe GOP Assemblymember Ira Hansen.

Labor was split on the stadium. Laborers Local 872 was enthusiastically in favor of it, which put it in bed with the virulently anti-union Adelson. The state’s largest union, Culinary Workers Union or UNITE HERE Local 226, was opposed to the deal and posted a video attacking it. But some things are measured on different scales. Jobs for union members are bread, while corporate welfare for the likes of Wynn and Adelson is butter.

The legislators gave no consideration to what happens if the chronically migrating Raiders and its owner in a few short years demand improvements backed up by a threat to leave—as Davis has done before.

The special session fell amid the High Holy Days, and the legislators took one day off for the Day of Atonement, which occasioned a round of caustic comments. It was also on that day that legislators started getting increasing numbers of angry calls and messages, eventually prompting the effort to ram the stadium through the Assembly fast.

The Senate voted 16 to five for the stadium. The Assembly went for it 28 to 13.

A resolution was also passed which seemed to suspend ethics rules.

The stadium decision may have been taken by what conservative talk show host Ed Morrissey caustically calls “the governing class in the Silver State,” but it got impetus elsewhere. It is fair—and probably essential—to ask whether this dubious proposal would ever have been taken seriously if it did not have Adelson’s juice behind it.

It is increasingly difficult to distinguish between bribes and campaign contributions, to the point that the federal courts—including the U.S. Supreme Court—are taking on cases to try to sort it out.

U.S. District Judge Myron Thompson has written, “The Supreme Court needs to address this issue and provide guidance to the lower courts, prosecutors, politicians, donors and the general public. … Much ink has been spilled over the contours of campaign finance law. Far less attention has been paid to what actually constitutes a ’bribe.’”

Former Republican U.S. senator Alan Simpson of Wyoming has said, “Who can seriously contend that a $100,000 donation does not alter the way one thinks about and possibly votes on an issue?”

It is believed that Adelson and his machine have passed out upwards of a quarter of a million dollars to Nevada legislative candidates so far this year.

Bryan Callahan and Riley Snyder of Politifact reported last week that Adelson and political entities he controls have also given “more than $336,900 directly to [Sandoval] and his associated political action committees.”

The policy consequences of the Nevada Legislature’s Raiders decision are almost as serious. Team owners are delighted, and government officials across the country dismayed, “about someone upping the ante for stadium subsidies” as deMause put it.

Good people work hard to pay their taxes, and when it is then sent not to schools and roadbuilding but to chancy gambles that usually do not pay off, the process of governance is distorted and public confidence—already low—sinks further. There are dozens of ways that $750 million could have been spent on more productive jobs that lasted longer and did the taxpayer’s work instead of Mark Davis’s.

And these unearned subsidies create pressure for higher taxes. The $750 million is about a tenth of the annual state government budget, and was badly needed at the 2017 legislature.

At the end of the Black Sox world series, on Oct. 10, 1919, Chicago Herald and Examiner sportswriter Hugh Fullerton, in his last report, all but said the series had been fixed: “Almost everything went backward, so much so that an evil-minded person might believe the stories that have been circulated during the series.” Exactly.