The Raiders’ new home, the nearly $2 billion Allegiant Stadium, could have been the biggest roll of the dice in Las Vegas since Bugsy Siegel opened the Flamingo Hotel nearly 75 years ago. Instead, nearly a week before it officially opens its doors to the National Football League—and without a single fan allowed to pass through its turnstiles—the stadium is already paying off for the team’s owners.
A boost in projected finances from the new venue is a significant reason why the Las Vegas Raiders are worth $2.82 billion, according to data compiled by Sportico. That ranks 19th in the NFL, despite the Raiders finishing 32nd (dead last) in revenue last year, their final season in the antiquated Oakland-Alameda County Coliseum. The team’s $386 million in revenue in 2019 was 29% less than the average of the other 31 teams.
Unlike Siegel, the mobster and Las Vegas visionary whose costs famously spiraled out of control, the Raiders received help—and lots of it—from taxpayers. General obligation bonds, as well as cash accrued from hotel taxes, financed $750 million of Allegiant Stadium’s construction costs. Personal seat licenses (PSLs), which ranged from a reported $500 to $75,000, did much of the rest—generating about $550 million, according to a financial summary prepared by the Las Vegas Stadium Authority in May. “PSLs are always going to be driven by how much demand there is for a certain team; you have seen that in Las Vegas, where I think there is way more demand than there is supply,” said Alec Scheiner, a partner at the sports-focused private equity investment firm RedBird Capital Partners, at a SporticoLive event last week.
With respect to PSLs, “We as a collective whole were incredibly successful in the Las Vegas marketplace with the Raiders,” Shervin Mirhashemi, the chief executive officer of Legends, said in an interview. The stadium operations, planning and hospitality company, whose owners include the Dallas Cowboys and New York Yankees, coordinated premium seating and naming rights at Allegiant Stadium. The company also oversaw in-stadium sponsorships, for which it essentially created a new category to account for the particularities of the Nevada market. Mirhashemi pointed to incorporating four casino partners—MGM Resorts, Caesars Entertainment, San Miguel and Penn National Gaming—with different sponsorship designations in such a way that each is represented adequately in the stadium, a balancing act worthy of the Las Vegas Strip.
The use of technology similarly distinguishes the Raiders’ new home. Around the facility’s 10 levels, there are 1,700 Wi-Fi access points, nearly 2,500 flat-screen TVs, 227 miles of cable (more than enough to stretch from the stadium’s Al Davis Way to the Grand Canyon) and the largest outdoor videoboard in the NFL. The Raiders, principally owned by the Davis family, also have a senior executive (vice president) dedicated exclusively to implementing and overseeing technology.
Meanwhile, a similar story is unfolding in Inglewood, Calif., on an even larger scale. That is where Rams owner Stan Kroenke has privately financed a $5 billion, eventual mixed-use development, which includes newly-opened SoFi Stadium as its centerpiece. The Rams are the third most valuable team in the NFL at $4.1 billion, despite ranking 26th in revenue last year while playing at the University of Southern California-controlled Los Angeles Memorial Coliseum.
The 298-acre project is the largest real estate development in Southern California. The team’s more than $4 billion valuation is conservative since elements of the project remain under construction. Once completed and business is normalized post-pandemic, it is feasible that the Rams could surpass the second-ranked New England Patriots, whose fair-market value is $4.97 billion. “I don’t know, from a valuations perspective, where the Rams are going to start and the project is going to stop and vice versa,” Rams chief operating officer Kevin Demoff said at another SporticoLive event on NFL franchise valuations.
The Rams, too, turned to Legends, which implemented at SoFi Stadium what is likely the most robust technology platform of any sports venue. It includes a Google Cloud-based system across the entire development, integrated with systems from Cisco, Deloitte, and Samsung. “When it’s all said and done this network of technology partners interwoven together within each one of their areas of expertise, working on this overall technology platform, is innovative and is really unique,” said Mirhashemi, the Legends CEO.
There are practical benefits to these efforts from a P&L standpoint as well: stadium operators are able to store and analyze data from multiple streams, which feed directly into modeling to better forecast revenue by product category.
As tenants of the Rams-owned stadium, the Los Angeles Chargers share in sponsorship and naming rights revenue at SoFi, based on the terms of the Rams’ initial stadium and relocation proposal approved by the league. After receiving a boost from their new home, the Chargers have a fair-market value of $2.67 billion, ranking 22nd overall. As with the Raiders and Rams, this is disproportionate with team revenue; last season the Chargers ranked 31st in revenue at $390 million, ahead of only the Raiders.
Importantly, the terms of the team’s agreement with the Rams also has the effect of capping the Chargers’ upside. In other words, even if the Chargers were to become the toast of L.A., from a nuts-and-bolts valuations standpoint it is unlikely that they could eclipse the worth of their landlord, who assumed the risks of the stadium’s construction and maintenance—at least while the teams play under the same roof.
Nevertheless, much as with the Flamingo in Las Vegas years ago, for the Chargers who had been languishing in an outdated stadium, the deal to join the Rams in L.A. was in the end simply an offer they couldn’t refuse.
For Sportico’s interactive data visualization display of 2020 NFL Franchise Valuations, click here.
