The Oakland Raiders Owner Mark Davis is working to try and move his team to Las Vegas, and he says in search of a “new home” for the NFL team. While Davis claims he can’t get a stadium “deal done” in Oakland, and others including this vlogger, claim otherwise, the question is why Las Vegas?
Mr. Davis has partnered with The Las Vegas Sands Corporation, owned by billionaire hotel casino operator Sheldon Adelson, and Majestic Realty Corporation. The result, for now, is a proposed 65,000 seat, $1.4 billion stadium that would also be a home for a Las Vegas MLS Soccer Team.
While Oaklanders like myself may bristle at Davis’ move to take the Raiders out of their birthplace, Oakland, as a fan of professional stadiums, it’s hard not to be excited about this ambitious attempt. That said, pure enthusiasm for a building project does not at all mean it’s a good idea.
The basics of success of an NFL stadium are the same as that for any sports facility: sales of tickets, season tickets, club sales, and luxury suites, as well as sponsorships. must be at a level to not just pay for club operations, but stadium rent, and even debt service on a serial bond issue that would be floated to pay for at least part of the cost of construction of the venue. The cash flow from a stadium must be such that it can produce annual revenues that cover these costs, even as the sports league itself may have media rights deals large enough to help defray some of these expenses.
Indeed, with professional sports player salaries at king’s ransom levels due to the same media rights fees, it’s not a sign of great planning to believe the player’s association will allow the use of a percentage of money they believe is their’s by right for stadium construction costs or operating costs. On the other hand if the stadium partner is a government organization, its executives will certainly bristle at being left to shoulder all stadium expenses. Thus, good stadium fiscal planning is a must and conducting a complete market analysis is of paramount importance. Even in Las Vegas.
The very name “Las Vegas” is associated with the good life: The Rat Pack, Sinatra, casinos, beautiful people, parties, and events from boxing to shows. With all of this, and gambling activities that, at times, attract high-net-worth individuals, one would be excused if they assumed that Las Vegas population demographics were such that its residents had some of the highest hourly wages in America.
Thinking this myself, I elected to go back to the basic regional economic analysis techniques I learned as far back as undergraduate school at Texas-Arlington, and then used more as an urban planning graduate student at the University of California at Berkeley. One common task is to compare the wage levels of metropolitan areas when considering the subject of what is called “plant or retail relocation.”
In the case of relocating an NFL team, since the sales of tickets and the other offerings mentioned above are considered to be a significant part of the revenue lifeblood of the team, we have to know one thing: how much money do the residents of the place we are considering moving to make?
To determine this, I first wanted to establish what the average wage of people in the metropolitan areas of NFL cities was. To to that, I had to go to the website of the Bureau of Labor Statistic at BLS.gov, and then go to what is called the “regional homepages” section, then go to “Geographic Information > Consumer Spending News Releases”, then click on the state, and then click on “Other BLS products” for that state, and then look for the city, and then pick out “Occupational Employment and Wages” for that metropolitan area – and not for any specific occupational category, but for all of them.
So I did this and not just for each NFL city, but also for St. Louis, which is not an NFL city since the Rams moved to the Los Angeles Metropolitan Area, but I wanted to see how it compared to LA. Then, I conducted the same actions to get the information for Las Vegas.
What I found shocked me.
Las Vegas Has Lower Average Wage Than All NFL City Metropolitan Areas, Except Green Bay Wisconsin
San Francisco Metro $33.34
Washington DC $31.22
Boston Metro $29.84
New York Metro $29.63
Oakland Metro $29.03
Seattle Metro $28.43
Baltimore Metro $25.81
Denver Metro $25.51
San Diego Metro $25.49
Los Angeles Metro $25.48
Minneapolis Metro $25.04
Houston Metro $24.92
Philadelphia Metro $24.88
Detroit Metro $24.50
Chicago Metro $24.48
Dallas Metro $23.57
Charlotte Metro $23.25
Atlanta Metro $23.23
Kansas City Metro $22.50
Cleveland Metro $22.26
St. Louis Metro $22.26
Cincinnati Metro $22.23
Phoenix Metro $22.04
Indianapolis Metro $21.91
Pittsburgh Metro $21.84
Buffalo Metro $21.66
Tampa Metro $21.40
Miami Metro $21.22
Nashville Metro $21.13
New Orleans Metro $20.71
Jacksonville Metro $20.67
Las Vegas $20.10
Green Bay Metro $19.99
NFL Average $24.23
While LA Rams Owner Stan Kronke moved his team from an area with an average hourly wage of $22.26, to one with a rate of $25.48, Oakland Raiders Owner Mark Davis is threatening to go from $29.03 to $20.10 in looking at Oakland versus Las Vegas.
That’s right: as the chart above shows, of all NFL City Metropolitan Areas, the Las Vegas Metropolitan Area had an average hourly wage of $20.10. That’s far less than the NFL Average of $24.23 and if Las Vegas were to become an NFL City, it would rank higher than only Green Bay Wisconsin, which is at $19.99 per hour.
The city metro area that ranks next lowest to Las Vegas and Green Bay is Jacksonville at $20.67. And just above Jacksonville are New Orleans, Nashville, Miami, and Tampa. While the NFL lifted the blacks-out games policy for 2015 (where games aren’t shown in the NFL City’s metro area if tickets don’t reach a particular sales threshold before a contest), there’s still a recent history of games not seen in Jacksonville.
Indeed, blackouts were a constant problem for much of the new NFL organization’s history until 2013, but it’s hard not to see that part of the problem was due to the average wage level there versus other NFL cities. To adjust, the Jaguars have the lowest prices for tickets in the NFL as of 2015.
On the other hand, Green Bay Wisconsin rests within an area that has a storied love of and for football at all levels. Packers fans are the only ones in the NFL who actually own a substantial portion of the team. It’s the exception that proves the rule of low wages pointing to the greater chance of poor NFL ticket sales.
According to Statista.com, the next lowest ticket prices were in Tampa, Buffalo, Oakland, and Miami. Tampa and Miami are also in the bottom 10 NFL City Metropolitan Areas in average hourly wage; by contrast, Oakland’s Metropolitan Area is in the NFL’s top 10 at $29.03, which sheds light on concerns about the on-field product. The success and popularity of the 2015 Oakland Raiders, as well as the excitement generated by 2016 free agency deals, combined with the price levels to cause the franchise’s first year of season ticket sales so high that a wait-list has been established for them, and for the first time ever in Raiders history in Oakland or in Los Angeles.
With that, how can the Raiders expect to capture the same ticket sales results in Las Vegas as they have experienced this year in Oakland? Not only would the Raiders be going to a metropolitan area who’s average hourly wage is 30 percent lower at $20.10, but has never had an NFL team or any organization representing any of the major professional sports leagues.
While there are a number of factors that determine ticket sales, it should be clear from this first-cut analysis, that the Las Vegas Metropolitan Area is a weak-link in the overall economic profile of NFL Cities. Not only does it have a low average hourly wage, but has what would be a TV market larger than only Green Bay, Buffalo, New Orleans, and Jacksonville. Additionally, it’s total gross domestic product is 78 percent smaller than that for the San Francisco Bay Area as a whole. Once again, Las Vegas would be at the bottom tier of NFL City economic performance.
This news should also be important to Las Vegas and Nevada government executives, because they point to a labor base that may not wish to pay for the additional service cost burden the new stadium development will place on Las Vegas. The stadium can’t just be built there without determining how roads and sewer infrastructure will have to be enhanced to accommodate it, and its surrounding proposed developments. Can Las Vegas water supply handling system sustain the giant flush of what will be over 1,000 toilets at halftime at of an NFL game? Can the Las Vegas Strip handle the car traffic before and after a football game and still allow visitors to go to and from casinos and hotels?
Mitigating these problems will certainly call for more public money from Las Vegas residents and beyond what any hotel tax increase can fund over the planned $750 million ask. From the looks of the Las Vegas wage picture, residents will be far less likely to view the Raiders as a welcome addition to Sin City than Mark Davis thinks.
They will wonder why the billionaires can’t pay for all of this.
Stay tuned.