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Leagues and Governing Bodies

Oakland to get L.A. treatment

NFL set to give itself more control over potential team movement to Bay Area

Despite work on a package for the Raiders’ current home, signs point to a Las Vegas vote.
Photo by: GETTY IMAGES

With NFL owners appearing ready this week to conditionally approve the Oakland Raiders’ relocation to Las Vegas, their blessing will likely include a key provision declaring at least part of the prosperous Bay Area a league-controlled market, sources said.

The NFL for years had such a provision covering the now occupied Los Angeles market, a way of informing clubs they could not act unilaterally to relocate or market there (though that did not stop Rams owner Stan Kroenke from quietly scooping up land in Inglewood in 2013 and forcing the issue).

A similar provision is set to be inserted into the relocation resolution that owners are scheduled to vote on at their annual meeting in Phoenix, sources said.

“I have to think that the league will want to maintain as much control over the Oakland market as possible,” a team owner said, speaking on condition of anonymity because the resolution has not been voted on yet. Whether the league will carve out Oakland or include more areas of the region such as San Francisco, this owner replied, “I don’t know yet.”

The San Francisco 49ers moved an hour down the coast to Santa Clara in 2014, so if the Raiders leave, one of the most prosperous areas in the world will not have an NFL team.

The provision reflects the league’s awareness that it is leaving a far more vibrant market for a lesser one, something that for the last two decades the NFL has worked to halt. Oakland and its environs form the sixth-largest market in the U.S., and Las Vegas the 40th.

In fact, after a rush of teams leaving for lucrative stadium deals in smaller markets, the league created a stadium financing program in 1999 specifically to keep teams in large markets. (Nevertheless, it appears the Raiders will get $200 million in league financing.)

Declaring the Bay Area an NFL market does not mean the league is already eyeing a return there. For one thing, the Raiders plan to play two more seasons in Oakland, and many in league circles think the market is overhyped in terms of its ability to serve as a home for multiple sports teams.

“It is kind of a dog marking its territory,” said Dan Etna, partner and co-chair of the sports practice at Herrick Feinstein. “What the NFL is trying to do is say, ‘Hey, we are reserving the potential for an NFL franchise, the Oakland area has a lot of positive things going forward.’”

One NFL source scoffed at the importance of the provision, saying the league controls vacant markets so by definition it is their market.

The provision would have little affect on the 49ers, other than to perhaps limit their marketing activities in areas covered by the regulation. That would suggest the area covered would be the north and east Bay area, and not across the water in San Francisco.

There are still several essential uncertainties surrounding the Vegas move. The team does not yet have a lease, a developer or a financing plan.

The team has a commitment from Bank of America to lend, but banking sources said the Charlotte-based financier has yet to begin informing the lending market how much debt there will be or the terms. Lead banks typically syndicate the loans by getting other lenders to assume some of the debt.

That means owners this week won’t know interest rates, loan covenants or even debt size.

Bank of America is replacing the $650 million that had once been pledged by casino magnate Sheldon Adelson, and the team had already said it would put in $300 million. With roughly an additional $350 million for relocation fee, that brings the team’s liability to $1.3 billion.

Several sources said Majestic Realty would fill the role of developer. Calls to Ed Roski, who runs Majestic, were not returned. If Roski is the developer, that likely would give the league comfort given their familiarity with his once-proposed stadium project outside L.A.

Meanwhile the team is still haggling over a lease with the Las Vegas Stadium Authority. The league could either sign off on the lease when it is ready, or require that owners vote on it as a separate item.

Owners also have to get comfortable with the Raiders playing two seasons as a lame duck in the Coliseum, and a third season perhaps in Sam Boyd Stadium in Las Vegas.

Why would owners push through the Vegas vote with so much uncertainty? One source said owners simply have Raiders fatigue, brought on by the team’s endless stadium problems in Oakland. A league source said, however, that if the owners vote, they don’t see any of the items as a significant risk.

There is the potential this week for the owners to push back any vote until May, but that seems unlikely. The Raiders reportedly have an expiring option in coming weeks on a piece of land near the Las Vegas airport, and would want the certainty before triggering that deal.

This much is for sure: Owners and the league have coalesced around the idea that there is no solution in Oakland.
The city and Alameda County are working with Fortress Investments, soon to be owned by Softbank, on a stadium package for where the Raiders now play. The league worries that Fortress’ rate of return is too high, however, and the Oakland A’s have the right to play on the land into the 2020s.

Advocates of the Oakland effort point out that the owners don’t know terms of Bank of America’s loan, and that the A’s are actively considering relocating within the area. Even if they don’t, these sources say, there is plenty of room on the site for the current stadium and a new one.

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