Clark County, Nevada, with the help of seven banks, sold their Oakland Raiders Las Vegas NFL / UNLV Stadium bond issue, raising just $645.15 million for bonds that have an interest rate of 3.94 percent.
Assuming the 1.5 to 1 debt coverage ratio, the average monthly debt service will be $4,512,237.27. Now, since a non-level, increasing debt service structure is being used (and I’ve not yet got a hold of that structure which should be posted by now), it means that at some point, that debt service mark will go beyond that average mark of $4.512 million, and that it’s someplace under that.
The fact is, the average monthly revenue from the stadium hotel tax was just $4.157 million. Moreover, using last year’s stadium hotel tax per month revenue, there were only three of 12 months where the money cleared the mark of $4.512 mil.
So, if the actual debt service is a sliding scale that starts low, and goes high, then what Clark County has done is pushed the taxpayer debt problem back a few years, rather than deal with it this year. Just how many years depends on the structure and the real numbers and how they impact a real, honest revenue forecast – which has not been done.
It’s clear this was designed to sell a lot of bonds so financial planners and bankers could make good money.
The other problem is for The Raiders: they remain $55 Mil short of what’s needed to meet the $49.644 million that has been raised over the last 12 months and will go to the Raiders May 1st. As I said, Clark County never intended to bond the whole $750 million subsidy – they could not afford it.
So, this was the next best option: collecting some of the money, bonding most of it, and leaving $55 million to be collected by the tax and then passed on to the Raiders. Just how long will it take for the Raiders to get that $55 million gap closed? Just about 13 months at the current average monthly rate of stadium hotel tax revenue collected.
It’s also very clear this deal’s going to wind up busting and spilling over into the Clark County General Fund. But it’s OK – the taxpayers will cover the shortfall. Trouble is no one asked the taxpayers if that’s what they wanted to do. So, if the future, at some point, if a recession does not move up the time-table, Clark County services and education funding will be harmed by the Raiders Deal.
Raiders Deal II!
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