New LV Stadium Proforma Shows $4-Million Hole

financial-blackhole-300x234[1]A new detailed pro-forma income statement just released by #MLS2LV appears to have a $4-million “hole” that will turn the stadium’s promised profit into a loss, and likely leave city taxpayers on the hook.

Here’s the study: AECOM LV Stadium Revenue Proforma

Sunday afternoon, city staff distributed a detailed pro-forma income statement on the proposed new soccer-specific stadium to members of the City Council. The 104-page document was prepared by AECOM consultants and paid for by Cordish. It is dated August 20, but was apparently not sent to the city until this weekend.

On page 88 of the PDF file, the first five years’ revenue and expense are shown side-by-side.

For 2017, more than half of the stadium’s forecast total revenue comes from rent of 4.5-million, in round numbers. Page 89 includes a narrative description of where this rent comes from. It includes $3.5-million in rent from the MLS team, supplemented by much smaller amounts from other renters of the stadium. The stadium is the landlord and the teams are the tenants, or renters.

This is the same $3.5-million that the City has earmarked for helping to pay back the “general obligation” bonds (the city wants to borrow appx $120-million to help fund stadium construction, guaranteed by the city’s general fund revenue). The loan (bond) payments are actually about $7-million per year for the first ten years, then $8-million per year for the next twenty years.

City staff says the loan repayment will require the $3.5-million from MLS team rent, and another half-million from other events at the stadium. This is a total annual payment by the stadium of  $4-million per year for the first decade, increasing to $5-million in years eleven through thirty. In addition, $3-million per year will be cut out of city’s spending for parks and redirected to the loan repayment.

On page 88, the stadium shows itself collecting these rents (and spending most of it on operating costs), rather than going to the city (where it would be spent on loan payments).

The stadium pro-forma does not have an “expense” line of $4-million in loan payments.

The pro-forma proposes to spend the same $4-million per year two times, once (shown on the pro-forma) for operating expense and profit, and a second time (not shown on the pro-forma) for debt repayment.

Adding the loan repayment cost to the pro-forma would turn the stadium’s proposed profit into a loss, which under the terms of the proposed agreement would be covered by taxpayers. Because Nevada is not a “home rule” state, raising taxes is not an option for the City Council. Instead, services would have to be reduced.

8 thoughts on “New LV Stadium Proforma Shows $4-Million Hole”

  1. Excellent observation and reaction. But why does it take so long for the hired hand, Abrams, to find what you have found so quickly? Could it be the $375 per hour pay after the 50 hours at over 18,000 is used up is a very tasty goal to the consultant group? And these other users of the stadium that have been suggested such as women’s soccer and men’s lacrosse are going to draw who to the luxury boxes? Is this going to compete with the other stadiums being built for events? And what happens when UNLV gets the football stadium and jumps into the events buying game?……This is a risk that only private funding should take, not the Las Vegas taxpayers…..Wow, over 230 million paid back for 120 million in bonds over 30 years (7 million per year for 10 years followed by 8 milion per year for 20 years)…..Quite a racket……Just to satisfy soccer moms……….

  2. I’m really, really curious to understand, with all the other stadia in the Valley present and future, when this one will break even and start returning income to the taxpayers. I agree with the writers above who say it should be a totally private enterprise project. I’m a soccer fan who’d go to games but I was never a player. For thirteen years I refereed youth soccer and some adult matches eventually 467 matches. But my MBA and years as a construction cost estimator for the same company that built the Ivanpah solar plants I want to know when the taxpayer would get a return on their investment. I don’t believe government should be competing with private enterprise in any way.

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