Casino billionaire backs out of Raiders stadium deal in Las Vegas
The team will have to turn to another investor to fund its $1.9 billion stadium in Nevada
After three months of speculation that Sheldon Adelson might back out of the Raiders' stadium deal in Las Vegas, the casino billionaire finally made the move Monday and officially cut all ties with the team.
In a statement to the Las Vegas Review-Journal, Adelson said that his family "will no longer be involved in any facet of the stadium discussion."
In October, Adelson had threatened to pull out of the deal because he didn't like the terms that the Raiders were offering.
"They want so much," Adelson said at the time. "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.' "
The billionaire casino mogul was expected to contribute as much as $650 million to the $1.9 billion stadium project in Las Vegas. The rest of the funding is scheduled to come from the Raiders and the NFL ($500 million) and a tax increase on Vegas hotels ($750 million).
In a statement, the Raiders said the team's plan is to still move to Vegas.
"The Raiders deeply appreciate the efforts of the Adelson family to bring the Raiders to Las Vegas. We know this project could not have advanced to that point without them," the team's statement said. "The Raiders remain steadfast in honoring Mark Davis' commitment to Governor [Brian] Sandoval and the state of Nevada to pursue relocation in Las Vegas."
Sandoval released his own statement and didn't sound as confident as the Raiders about getting a deal done. For one, the governor of Nevada said the state won't be chipping in a single cent more than the $750 million that was approved for the project.
"I would like to thank the Adelson family for their role in bringing a publicly owned stadium to Las Vegas. It is unfortunate that they were unable to come to terms with the Raiders," Sandoval said. "The terms of the legislation do not change and the state's contribution will not increase as a result of this announcement. I am hopeful that the Raiders are working to secure the additional funds that would have been provided by the Adelson family."
The governor also added that if the Raiders can't figure something out to fill the funding gap, then the state might just use the money to build a stadium for UNLV.
"At a minimum, we have set up a framework and funding source for building a stadium for UNLV," Sandoval said. "The process in place outlines that the Stadium Authority Board will continue to evaluate stadium site locations, development plans, and vet all operating agreements.
The Raiders clearly saw Adelson's exit coming. When the team met with NFL officials on Jan. 11, the same week it officially applied for relocation to Las Vegas, the franchise presented an alternative stadium funding plan that didn't include Adelson's $650 million.
Under the alternative plan, the Raiders said Goldman Sachs would be willing to help finance the remaining $650 million if Adelson were to back out.
Jeremy Aguero, who works for a company that was hired by the Las Vegas Stadium Authority, explained the situation earlier this month.
"The team's presentation highlighted its research that the Las Vegas market can support the team, that bringing the NFL to the market aligns with the league's strategic goals and that Goldman Sachs is committed to financing the project with or without a third party," Aguero said, via the Review-Journal. "The Raiders told the committees that there is no deal in place yet with the Adelson family and that the team is pursuing approval with no third-party involvement."
The problem with the Goldman Sachs plan is that the company was expecting Adelson to be involved, which is why it was willing to finance a $650 million deal. According to the Los Angeles Times, if Adelson isn't involved in the deal, the company isn't going to loan the money to Raiders' owner Mark Davis.
Although that contradicts what Aguero said after the league meeting, it's definitely believable. Among the NFL's 32 owners, Davis is one of the least wealthy, which is why a company like Goldman Sachs would have a hard time justifying the financing a $650 million deal for him -- unless he had other investors (like Adelson)
That being said, with Adelson out, it might be easier for the Raiders to get the 24 votes they need for the relocation to go through. The NFL's 32 owners are currently expected to vote on the move in March, and with Adelson out of the picture, the Raiders' path to Vegas becomes clearer. One of the biggest issues the NFL had with the deal was the fact that someone with casino ties (Adelson) was involved.
Now that Adelson is out, that will likely placate the NFL when it comes to the league's fear of putting a team in the city that bills itself as the Gambling Capital of the World.
On the other hand, there is some good news for the Oakland area. A league source told CBS Sports NFL Insider Jason La Canfora that the deal becomes more risky without Adelson's help.
Adelson pulling out of Raiders stadium is no small deal. As one connected source put it: "you now have to assume that market can support...— Jason La Canfora (@JasonLaCanfora) January 31, 2017
"A lot of debt, plus the relocation fee, plus an angry Adelson, and $100m less (in funding) from the league for leaving California"— Jason La Canfora (@JasonLaCanfora) January 31, 2017
If the Raiders were to get a stadium deal done in Oakland, the team and league would pitch in a total of $600 million. Instead, the NFL and the Raiders will be contributing only $500 million to the stadium in Vegas. However, the Raiders will also have to ask Goldman Sachs to finance $650 million, which is a huge amount of debt to take on for owner Mark Davis, who's not as wealthy as most NFL owners.
Steve Sisolak, who serves as the commission chair for Clark County, told the Nevada Independent that Adelson backing out could kill the deal.
"This is not a wrench in the wheel, the wheel fell off," Sisolak said.
Right now, it seems like the Raiders chance of relocating is 50-50 at best. Before the Adelson announcement, the move felt like a lock.
If the Raiders' move to Vegas is approved, the team is hoping to sign a lease with the Las Vegas Stadium Authority that would call for the Raiders to pay only $1 a year in rent. That one dollar rent is reportedly what rankled Adelson and caused him to back of the deal.
For the move to happen, the Raiders are going to have to convince 23 other owners they can afford to take on $650 million in debt to finance the stadium. Davis is going to have to lobby hard to convince the other NFL owners that moving the team to Vegas is the best move to make for the league.
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