Las Vegas Stadium Authority Has Sufficient Cash Flow To Cover Bond Payments With Expected Hotel Room Tax Revenue Decreases For March, April
By Alan Snel of LVSportsBiz.com
It’s obvious hotel room tax revenues being collected to help fund the Raiders’ $1.97 billion stadium project will plummet for March and April, but the stadium board’s consultant said there’s enough cash flow to cover the bond payments in this age of the COVID-19 pandemic.
“For FY2020, we expect to have sufficient cash flow to cover bond payments in the normal course and to make a modest transfer of excess funds to the debt reserve,” said Jeremy Aguero, the local Las Vegas consultant who is guiding the public Las Vegas Stadium Authority Board on the stadium-building process.
Construction has been deemed essential work by Gov. Steve Sisolak, so workers are continuing to build the Raiders’ Allegiant Stadium. The overall stadium project budget of $1.97 billion includes $1.4 billion for the construction of the domed, 65,000-seat venue. Southern Nevada is giving $750 million to the Raiders to help build the stadium. It’s a record public subsidy for an NFL stadium. The stadium board sold bonds to help raise the money for the public’s share of the stadium construction costs.
The Strip and Nevada’s tourism industry are closed for business because of a coronavirus pandemic that has claimed 46 lives in Nevada and created 1,836 confirmed cases in the state. The U.S. has 337,620 COVID-19 cases, according to the Johns Hopkins University and Medicine coronavirus resource center. No hotel business in Southern Nevada means no room tax revenues for the Raiders stadium.
The stadium authority’s projections for the hotel room tax that is being collected to fund the Raiders stadium have been very accurate. At the most recent stadium board meeting that was held in January (the March meeting was cancelled because of the coronavirus pandemic), the board released this graphic showing the room tax revenue projection from March 2017 to Nov. 2019 was off by a mere .1 percent. Take a look:
Keep in mind the stadium authority’s bond reserves have about a year and a half of money to cover 18 months of bond payments.
Aguero explained it this way: “The Authority’s bond reserves currently stand at roughly 18 months of bond payments, meaning that if room taxes were to fall to zero and stay there for 18 months, the Authority would still have the ability to meet its obligations. Under such a scenario, this would take us through the end of calendar year 2021. Obviously, monitoring room taxes will continue to be important.”
Construction is moving ahead at the 62.5-acre site on the west side of Interstate 15 across from Mandalay Bay.
There is also fresh pavement installed on the stadium site’s north side. Take a look:
The Raiders say the stadium will be ready July 31. There are two scheduled events in August — a Garth Brooks concert Aug. 22 and a UNLV vs Cal football game Aug. 29.
But will the NFL season start on schedule in September? It’s hard to imagine 65,000 fans inside Allegiant Stadium when it’s unclear when the peak of pandemic has not even hit the U.S. yet. The scope of COVID-19’s impact is also unknown. Will 65,000 people want to cram into a building in August when a pandemic has prompted physical distancing and people wearing masks in public?
This from the Sports Business Daily Monday:
NFL Chief Medical Officer Dr. Allen Sills said that “widespread testing would have to be available before the reopening of the league could be contemplated,” according to Judy Battista of NFL.com. Sills “cautioned against assuming that earlier comments from league officials about the league’s focus on starting the season on time mean it will definitely happen.” He said, “That’s everyone’s hope, that we are in a position to do that. But the reality is none of us know those facts for certain right now.” Sills added that the “widespread availability of point of care testing — where a test could be administered, and the results returned quickly — will be critical to decisions about when teams can report to facilities.” Those tests are not currently available, but Sills said that he is “confident they eventually will be, but he can’t say when.” Sills warned that it is “too early to say how large groups of fans would be handled until a vaccine is available” (NFL.com, 4/3).
We don’t know the answers. But the stadium authority is confident it will have money to cover the bond payments as part of the stadium financing package.
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