The question of where the Raiders will call home in the future is coming to a head and revolves around one important issue: Which unholy alliance can the NFL tolerate best?
That issue is central to the debate between Oakland and Las Vegas. Or, more to the point, between Fortress Investment Group and Sheldon Adelson. As it stands today, Raiders owner Mark Davis has made it clear he wants to move to Las Vegas, where the state of Nevada has already approved $750 million for a new stadium. Davis is also negotiating with Adelson, the wealthy casino magnate, for another $650 million in backing for the deal.
Meanwhile, the City of Oakland and Alameda County are ready to approve a deal that would sell the land where the Raiders currently play to Fortress. The city and county would also agree to kick in approximately $200 million for road and structural improvements. However, the city wants to essentially wash its hands of any involvement in a new stadium, leaving that for Fortress and the Raiders to negotiate.
As of now, Davis has shown little to no interest in that deal. He has had no direct talks with the city and county for months, instead using a designate to listen for him. The problem Davis faces is that the decision is not necessarily his to make because other NFL owners have to approve the deal. In addition, Davis has the smallest financial resources in the league. In poker parlance, Davis is a man playing from the short stack.
And he doesn’t have a lot of support from his fellow NFL owners. That was the main reason why Davis and the Raiders finished third in the running for a chance to go to Los Angeles in January 2016 when NFL owners approved the Rams and Chargers ahead of them.
The reason is years in the making. Davis’ famous father, Al, upset the NFL in the 1980s by suing the league for the right to move to Los Angeles (the Raiders went there and then returned to Oakland). But father and son made the situation even worse over the past 30 years. The Raiders continually failed to market their brand locally to the extent that other owners felt was possible. The Raiders have consistently ranked among the worst teams in the NFL in local revenue despite their local brand. Al Davis didn’t want to spend the time and energy to increase his local revenues, preferring to focus on football. Instead, he negotiated deals with Oakland that lowered his operating expenses and then paid for the rest by taking revenue sharing from the league.
In essence, while other owners mined their markets, Davis reaped the rewards from their work. While Mark Davis has been friendlier with his fellow owners since taking over, he has continued to follow the same financial plan as his father. What that means is that the Raiders never built the kind of war chest to determine their own fate. Davis has to rely on public and/or private support to get a stadium. Until now, Oakland has been unwilling to provide much of anything.
But Las Vegas and Nevada, prodded by Adelson’s political clout, did just that this year. The catch is that Adelson and Davis have to figure out a way to split the money on the proposed new stadium. So far, negotiations between the two sides have failed to produce an agreement that other NFL owners believe is satisfactory to them. The situation has been so difficult that Davis and the Raiders presented a plan to fellow owners on Nov. 30 that would have Goldman Sachs backing the project instead of Adelson. Other owners considered that idea to be bold, to say the least. The interpretation was that Davis was willing to cut Adelson out of the deal. The idea of cutting out the powerful Adelson in his hometown seemed far-fetched to them. One NFL source who knows Adelson well said he thought Adelson would do anything in his power to keep the Raiders out of Las Vegas if they tried to split from him.
Either way, the NFL fears that Adelson will be an extremely difficult business partner for the Raiders. The Raiders will need Adelson and cooperation from the rest of the city because the Raiders expect to be so dependent on fans flying in for games. According to marketing studies by the NFL, Las Vegas projects to having the smallest local customer base for season tickets among the league’s 32 teams.
Meanwhile, Oakland has tried to rally, but the plan with Fortress may not be much better. Fortress has an aggressive and cannibalistic reputation in the financial world. Fortress has what multiple sources said is a “loan to own” reputation. To some NFL owners, that may create the same revenue-sharing problems in Oakland as in Las Vegas. In other words, while Oakland is considered a vastly superior economic market to Las Vegas, the results may not be any different.
That means that at some point between now and March – which is the latest time when the NFL owners are expected to vote and the Raiders request to relocate – fellow owners will likely have to choose between one of two deals they consider to be substandard.