With a big smile, Nevada governor Brian Sandoval signed Senate Bill 1 at a ceremony on the University of Nevada, Las Vegas campus on Oct. 17. The crowd, which included university president Len Jessup, MGM Resorts CEO Jim Murren, City of Las Vegas mayor Carolyn Goodman and Oakland Raiders owner Mark Davis, erupted into applause.
With a flourish of his pen, Sandoval paved the way for a 65,000-seat, domed stadium to be built in Las Vegas and for the Raiders to be the city's first NFL team.
The bill, which passed the Nevada State Assembly and Senate earlier in the month during a special legislative session, approved $750 million in public financing for the stadium, as well as a 0.88 percent increase in hotel-room tax to help fund the project. The rest of the money for the $1.9 billion stadium will ostensibly come from Las Vegas Sands founder and CEO Sheldon Adelson and the Raiders football team, which are expected to provide $650 million and $500 million respectively
However, even as lawmakers celebrate the prospective arrival of an NFL team in Las Vegas, some stadium-financing experts are skeptical of the deal that would bring the Raiders to town and give them a shiny new home
A report by Applied Analysis commissioned by the Southern Nevada Tourism Infrastructure Committee estimated that 46 annual events at the new stadium would draw roughly 450,000 additional visitors to the city who wouldn't have come otherwise and create $620 million impact for the Southern Nevada economy
Stanford economics professor Roger Noll laughed about those figures. "That's why so many people go to Green Bay and Detroit," he said. "Stadiums are not big tourist attractions."
Noll is an expert on stadium financing, and said that throughout the NFL, the vast majority of tickets are sold on a season-ticket basis. "Roughly 90% of the people in attendance at an NFL game traveled less than 15 miles to get there," Noll said.
The claim among proponents of the Vegas stadium that about a third of tickets would be sold to tourists is a "huge red flag," he said.
He also saw a problem with that $620 million economic impact figure, which assumes that tourists who travel to Las Vegas specifically to see an NFL game will stay for more than two nights and spend significantly on dining, shows and gambling while they're in town
"What you'd expect to happen based on experience elsewhere," said Noll, pointing to the Anaheim stadium across from Disneyland and stadiums in Florida, is that "spending at the stadium replaces spending at other attractions. The net tax collections don't go up because of those tourists. It's a shifting from other things.
The Las Vegas deal is also out of step with current trends in stadium financing in the U.S
"The standard deal is a public subsidy in the range of $300 million. The new Rams stadium in Los Angeles doesn't have any significant public subsidy at all," Noll said, adding that it relies on tax forgiveness in lieu of public money
Noll said that while public-financing ballot measures were typically approved in the 1980s and '90s, since the turn of the millennium, "now they're more likely to lose than to win.
"This is definitely an outlier," he added of the Las Vegas stadium deal. "This is moving against a trend."
But is it a bad deal for Las Vegans? That depends on who you are.
If you're a football fan or a member of Raider Nation living in Las Vegas, the annualized $50-$100 cost per capita might be worth having a pro team down the road.
Noll said you should think of a subsidized stadium like a library or public park. You do it because you feel like it's a benefit for the community.
"It's not something you do because it's going to make you rich," he said.