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GOP tax plan threatens big break for stadium bondholders, putting Raiders project at risk

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It's not just the Raiders spending big on stadiums. MLB team the Texas Rangers is expecting its $1.1 billion Globe Life Field to open in 2020. The Oakland A's, in the city which lost its hometown Raiders to Las Vegas and the Warriors to San Francisco, has selected a site near Laney College for its stadium, also opening in 2020.



College teams and major league soccer teams have also leaned on tax exemptions, just with much lower price tags. Pizza Hut Park in Frisco, Texas, now called Toyota Stadium, cost the public $69 million, or 57 percent of its total cost, according to Harvard professor Judith Grant Long's 2012 book "Public-Private Partnerships for Major League Sports Facilities."



Financing for the Las Vegas project becomes trickier when you factor in who owns the Raiders. There are 18 billionaire owners in the National Football League, according to Forbes. Raiders principal owner Mark Davis is not one of them.



Los Angeles Rams owner and real estate mogul Stan Kroenke, by contrast, is worth an estimated $8 billion, and is financing the new Rams stadium as a part of his 298-acre sports and entertainment district, without federal support. That scope might not be an option for Davis, who in comparison is worth an estimated $500 million and gets an annual income from operating his football team.



"Virtually every stadium in the NFL has been built within the last 20 years," Stanford's Noll said. "The Raiders are sort of at the end of the tunnel, and they're the ones that get hammered."



NFL stadiums built in the past two decades have gotten more elaborate and expensive, averaging $2 billion in renovation costs, which Noll attributed to access to public financing and owners' egos. He compared the modern football stadium to Egyptian pyramids, and owners as today's "pharaohs," looking to make a lasting monument.



These "pyramids" are rebuilt roughly every 20 years, which also tends to be when ownership changes, Noll said. If that time frame is right, a few could be ready for a face-lift; Arrowhead Stadium in Kansas City built in 1972, the Chicago Bear's Soldier Field, which opened in 1924 and was renovated in 2003, and the Buffalo Bills' New Era Field, which originally opened in 1973. The Washington Redskins have talked about a new stadium to replace FedExField, and a plan to renovate Nissan Stadium in Nashville, Tennessee, was released earlier this year.



In the meantime, the NFL and Nevada legislators are fighting back.



In response to the tax debate, league spokesman Joe Lockhart, told reporters on a conference call that the NFL teams are eager to keep the tax break, and touted stadiums as economic drivers for communities, Reuters reported.



Local lawmakers are looking to make sure their stadiums are exempt when the final version of tax reform gets passed. Despite previous opposition to government-funded stadiums, Republican Sen. Dean Heller of Nevada is lobbying for the Raiders' Las Vegas dome to have access to tax-exempt bonds. Nevada Democrat Rep. Dina Titus said the tax bill in its current form would damage her district, which includes Las Vegas.



"This provision is one of the many reasons why the GOP tax bill is bad for Nevada," Titus said in a statement the day the House passed its tax bill. "In case any of the Republican proposals move forward, I have been working with Rep. [Dina] Neal and other lawmakers to submit a measure in conference committee that would postpone the effective date."



Despite the tax code disruption, there's still bound to be demand for stadiums, said Allen & Co.'s Greenberg. The funding structure will change, and has already started shifting to rely more on private financing, he said.



"That is a trend that you're going to continue to see," Greenberg said. "The days of a municipality ponying up the lion's share of the financing for a billion-dollar arena in this environment, I don't see those days coming back."



Whether a stadium provision makes it into law remains to be seen. The Senate bill, if it passes this week, still has to be reconciled with the House's version before President Donald Trump can sign it. The Senate's version passed the Finance Committee, and next goes to the Budget Committee, which meets Tuesday.



Senate Majority Leader Mitch McConnell still needs to lock in 50 votes and half a dozen Republican senators are still wavering. Undecided lawmakers worry that tax reform, in its current form, would only modestly boost economic growth, significantly increase the national debt and give the biggest tax breaks to the wealthiest Americans, among other factors.





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