What’s Next for Vegas and the NFL

On October 20, 2016, in SELS Blog, by Matthew Weiss

By: Rohan Mohanty*

Nevada Gov. Brian Sandoval signed a bill Monday that sets into motion the potential relocation of the Oakland Raiders to Las Vegas. The bill was passed through the Nevada state Senate by a 16-5 vote and through the state Assembly by a vote of 28-13, in favor of the new legislation. If all goes according to plan, the Raiders will become one of two professional sports franchise in Las Vegas, the other being the NHL’s Black Knights which is set to kick off its inaugural season in 2017.

The bill aims to provide $750 million in public funding for a new football stadium as well as an additional $420 million towards the renovation and expansion of the Las Vegas Convention Center. The public funding will be provided through a 1.4 percent increase to the city’s hotel tax, which currently sits at about 12 percent.[1] Las Vegas casino tycoon Sheldon Adelson would provide an additional $650 million and the Raiders would add $500 million more. All in all, the total cost is estimated to be in the range of $1.7 to $1.9 billion.

Opponents of the bill argued that public investment would be better served to fund other areas of need in Nevada such as the state’s education system.[2] Nonetheless, the bill passed the requisite channels and was signed into law by the governor. The signing of the bill however, does not guarantee the Raiders will end up in Las Vegas.

The NFL lays out the rules and guidelines of franchise relocation in Article 4.3 of the NFL Constitution and Bylaws.

The NFL’s relocation guidelines as set forth in Article 4.3 largely disfavor franchise relocation. The league requires clubs to work in good faith to stay in their home territory.[3] This means working with the local legislature, league office and any other like entities to attempt for the franchise to stay at home. These guidelines however are not binding, meaning they are more so suggestions than hard rules.[4]

In fact, the guidelines were put into place when an appellate court overruled the NFL preventing the Raiders from moving to Oakland from Los Angeles in 1984. At that time, the guidelines for staying put were not included in the league’s bylaws and the Court stated that the NFL could not block the move because they did not have such relocation rules.[5]

What is most significant to the NFL, is that relocation is done in a way that advances the interests of the league. This means the relocation decision is made in a manner that ensures the long term financial health of the league and its owners. Ultimately, it is up to the league owners to decide by a three-fourths majority whether or not relocation advances their collective goals.

Raiders owner Mark Davis is set to provide an update on the Las Vegas situation to the league and its owners during the NFL fall meetings. ESPN’s John Clayton reported on SportsCenter that he estimates the Raiders would have about 50% of the required votes to relocate as of this week.[6] Thus, the Raiders would need eight more positive votes to get to the three-fourths majority or 24 out of 32. Clayton also reported that influential owners such as Robert Kraft, Jerry Jones and Jerry Richardson are currently in favor of the move to Las Vegas.[7] This would point to a positive sign for the chances of relocation.

The Raiders have up until February 15th of next year to submit a formal written notice of the proposed transfer to Commissioner Roger Goodell. From there, the owners would likely vote on the matter at the Annual League Meeting which is scheduled for late March 2017.

If approved, the Raiders would have to pay a transfer or relocation fee to the NFL. This fee is paid out to other members of the league to compensate for the opportunity cost of not having a franchise in its former location.[8] The fee is calculated by the league’s Finance committee and is usually paid out over a number of years. As a point of reference, the Rams recent relocation fee was $550 million. Teams that relocate expect to make up for the fee through new or increased streams of revenue they have access to by moving to their new location.

Once approved by the league and its owners, the relocating franchise is free to pack their bags and head to their new location. The stadium in Las Vegas probably won’t be ready until at least 2020, so the Raiders are expected to continue playing in Oakland for a few more years.[9] If momentum continues to move in its current direction, Las Vegas will likely become the new home of Raiders Nation.

*Staff Writer, Villanova University Sports Law Society Blog; J.D. Candidate, May 2019, Villanova University School of Law.

[1] Nevada Legislature approves plan to build NFL stadium in Las Vegas, ABC News (October 14, 2016), http://abcnews.go.com/Sports/nevada-legislature-approves-plan-build-nfl-stadium-las/story?id=42818676.

[2] Id.

[3] Ryan Van Bibber, The NFL’s Los Angeles relocation process, explained, SB Nation (January 12, 2016), http://www.sbnation.com/2016/1/12/10755318/nfl-los-angeles-rams-raiders-chargers-relocation.

[4] Daniel Kaplan, Relocation bylaw is not binding for NFL owners, SBJ (November 9, 2015), http://www.sportsbusinessdaily.com/Journal/Issues/2015/11/09/Leagues-and-Governing-Bodies/NFL-relocate.aspx.

[5] Id.

[6] SportsCenter. ESPN. 18 October 2016.

[7] Id.

[8] See Van Bibber, supra note 3.

[9] See ABC News, supra note 1.



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