Raiders’ proposed move to Las Vegas presents financial challenge

There are several issues facing the Oakland Raiders’ potential move to Las Vegas that the NFL and owner Mark Davis will need to address before the notion gains any real momentum. For our purpose we will avoid the legal issues, owners’ concerns, PR issues, and, well, that little problem of legalized gambling, and focus strictly on the financial feasibility of the market. In the end, the biggest concern for owners and the NFL is the bottom line, and moving to Vegas may not be as fiscally successful as some people think.

The Las Vegas market is small. It is the 40th-largest media market in the United States behind non-NFL cities such as Orlando (19), Portland (24), Columbus (31), San Antonio (32), Salt Lake City (34) and Austin (39). None of those cities outside of San Antonio have been considered for an NFL franchise. The Bay Area in which the Raiders are currently located is the sixth-largest market in the United States.

Not only is the city small relative to its reputation, but it is a city of transplants. Before fans get up in arms about transplant cities and point to L.A. as a prime example, L.A. is second in the U.S. in metropolitan statistical area with 13 million people. Las Vegas in 29th with just over 2 million. There’s a lot greater chance of getting a casual fan in the stadium in L.A. than Vegas. This doesn’t take into account the corporations headquartered in each city and market for suites and PSLs.

Fine, maybe the Las Vegas team would rely on tourism traffic. After all, it would be a great destination for bachelor parties, reunions and away-game trips for friends. There are issues with that as well. First, the Raiders will essentially be playing away games every week. Second, what happens when the novelty wears off? Kansas City, Denver and Chargers fans aren’t going to that away game every year, so that is three games where the Raiders would need to rely on the local market. Even fans that make the trip once probably won’t return every year their team plays.

Finally, the team may have sponsorship problems. Some brands may be weary about associating themselves with a team in the Las Vegas market. Sure Sin City has cleaned up a bit, but there is still a stigma that comes with the gambling capital of the country. If sponsors get cold feet from PR backlash, that could mean less money coming to the Raiders.

Those are just the financial issues Mark Davis and his partners will have to face if they are really focused on moving to Las Vegas. With Davis apparently pledging $500 million to a Vegas project, it makes people wonder why he can’t commit that much to a stadium in Oakland where his team would be the only true Bay Area-located squad. Some quick math, Davis’ $500 million, plus $200-300 million from the NFL’s funding apparatus and $100 million for the failed move to Los Angeles puts the team close to $1 billion dollars worth of funding. That could likely get a stadium done anywhere and helps the NFL avoid the other Vegas issues beyond the financial challenges.

Michael Colangelo is Managing Editor of The Fields of Green and Assistant Director at the USC Sports Business Institute.

Follow @MikeColange or @fog_sports on Twitter and like our Fields of Green Facebook page for updates


Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.