Rent not always key indicator of NFL stadium deals

PALM BEACH, Fla.

NFL owners, including those representing the league’s powerful finance and stadium committees, on Monday begin three days of private conferences that will include discussion of the Oakland Raiders’ proposed move to Las Vegas.

The meetings will help determine the fate of the Raiders’ planned relocation to a proposed $1.9 billion domed stadium. A vote on relocation will not be taken but could come at the bigger annual league meeting March 26-29 in Phoenix.

It is unclear whether the Raiders will reveal to owners the financial institutions that Raiders managing general partner Mark Davis reportedly has lined up to replace the lost support of Las Vegas Sands Corp. Chairman and CEO Sheldon Adelson. Adelson’s family had pledged $650 million to the project. The remainder of the stadium financing

would be covered by the Raiders ($500 million) and $750 million in bonds backed by a Clark County hotel room tax increase.

Adelson, along with investment banking giant Goldman Sachs, withdrew from the project in late January. At the time, he criticized the Raiders in a written statement for the proposed lease agreement the team submitted to the Las Vegas Stadium Authority. Among other terms, the proposal stipulated that the franchise would pay $1 per year in rent.

On Thursday, the day after the owners end their conclave, the stadium authority meets to receive updates on lease negotiations with the Raiders and stadium financing issues. It is unclear whether Raiders executives, namely Davis and team president Marc Badain, will appear.

The Raiders’ rent proposal led to some criticism in Las Vegas, but it is not out of line in the NFL because teams’ stadium rental agreements run the spectrum, Review-Journal research found.

Some teams pay no rent at all, but that can be quite misleading. For instance, the Cleveland Browns pay $250,000 a year for their stadium lease but are responsible for concessions, security, utilities, field maintenance and other related expenses.

“You look at the leasing agreement and say, ‘Oh, they’re paying (little or no) rent,’ ’’ said Paul Johnson, director of the National Sports Law Institute at Marquette University. He has studied the subject extensively, and he examined the R-J’s capsule summary of NFL stadium financing. “But in this context, it’s almost meaningless.’’

In the Raiders’ instance, the stadium authority, which would own the planned domed stadium off Interstate 15, probably would lose tax-exempt status on the $750 million in bonds it plans to issue to fund the project if it accepted even $1 in rent. The stadium authority cannot receive stadium operating income.

“There’s more to the deal than just the rent,’’ said Lester Bagley, who spearheaded the Minnesota Vikings’ new $1.1 billion U.S. Bank Stadium project as the team’s executive vice president of public affairs and stadium development. “If the rent is $1, there is a political dynamic and leveraging.

“The Las Vegas situation is unique. They’ve never had an NFL team and they’re trying to get one. They’re willing to make an attractive offer to an NFL (franchise). It is really hard to compare one (stadium) deal to another.’’

For example, the Vikings pay $8.5 million a year in rent, but they also pay $1.5 million into a capital improvements fund.

“The rent,’’ Bagley said, “is just one component of the overall financial deal.’’

Houston Texans owner Bob McNair chairs the finance committee. It includes owners Arthur Blank, Atlanta Falcons; Joel Glazer, Tampa Bay Buccaneers; Clark Hunt, Kansas City Chiefs; Jim Irsay, Indianapolis Colts; Woody Johnson, New York Jets; Shahid Kahn, Jacksonville Jaguars; Jeffrey Lurie, Philadelphia Eagles; and Stephen Ross, Miami Dolphins.

Art Rooney II of the Pittsburgh Steelers is chairman of the stadium committee. It includes the following owners or representatives: Michael Bidwill, Arizona Cardinals; Joe Ellis, Denver Broncos; Stephen Jones, Dallas Cowboys; George H. McCaskey, Chicago Bears; Mark Wilf, Minnesota Vikings; and Jed York, San Francisco 49ers.

The Review-Journal is owned by the family of Las Vegas Sands Corp. Chairman and CEO Sheldon Adelson.

Jon Mark Saraceno can be reached at jsaraceno@reviewjournal.com. Follow @jonnysaraceno on Twitter.