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Bali Hai site emerges as top choice of stadium developers, but can they make a deal?

Posted at 2:30 PM, Aug 06, 2016
and last updated 2016-08-06 17:47:52-04

Developer Billy Walters is open to selling his lease with the government on the Bali Hai golf course to developers of a proposed stadium for the Oakland Raiders, which could then be built on the site just south of the Las Vegas Strip, sources have confirmed.

The golf course site has emerged as the prime choice of Las Vegas Sands officials as problems with other sites seem insurmountable. The Bali Hai site has its own issues – part of it cannot be developed because of airport restrictions – but they can be overcome, sources said.

The Bali Hai site’s prominence came into focus Friday after I interviewed Clark County Commission Chairman Steve Sisolak, a key player in this issue as the head of the local government that would have to approve zoning and as an active member of the committee that must make a recommendation to the Legislature. (Sheldon Adelson lieutenant Andy Abboud confirmed Saturday that the Bali Hai site is now the prime focus.)

In that interview, which is below, Sisolak made it clear that time is running out, and he indicated he would not support much more than a third of the entire cost being funded by tax dollars.

The issue now appears to come down to a confluence of politics, policy and time.

Stadium advocates believe they have the votes in the Legislature to approve a small room tax increase to fund the project. But lawmakers and candidates may be loathe to lose a month of fundraising time (because of a legally mandated blackout period) during a campaign’s endgame. And lawmakers’ terms begin right after the election (not in January), so the stadium folks would have to deal with a substantively changed legislative matrix, which may not be as amenable.

The NFL owners meet in January to vote on relocation. Twenty-four of the 32 owners must approve the plan.

The Bali Hai site now seems like the best bet because Walters, who is under federal indictment for insider trading, is willing to make a deal on the lease that has made little money for the county and which he has been trying to change since the golf course business tanked so he can build retail there, sources with knowledge of the situation said. Walters may value the lease for as much as $100 million, but might make a deal for a fraction of that, sources said. And not many people in Las Vegas could make such a deal who aren’t named Sheldon Adelson.

The Bali Hai site has fewer obvious problems than some of the others. There are impediments, though.

About 40 percent of the 100-acre site cannot be used for any development because it is in a so-called Runway Protection Zone. The entire site has height restrictions because of McCarran International Airport's proximity, which would require the developers to dig hundreds of feet, an expensive proposition.

(A nearby 62-acre parcel on Russell Road also is in the mix, perhaps as a use for parking and tailgating, which apparently is important to the Raiders.)

But Walters has a longstanding relationship with Sands executive Rob Goldstein, and the sense of many involved is that a deal can be struck. (One wild card: Some have suggested that Adelson may be more inclined to that site than Ed Roski, who owns Majestic Realty, a partner in the endeavor.)

“Making a deal with Billy is the key,” one source close to the situation told me. “I don't know what deal he will make, if any. I don't know Billy's financial situation. I don't think anyone does. A change in ownership of the lease would allow the county to potentially renegotiate the terms…”

The lease on Bali Hai has long been controversial. Sisolak and others believe the county made a terrible deal with Walters, who is famous for getting sweetheart government contracts because of his political influence. He still has an 85-year lease on the land, which was conveyed to the county by the Bureau of Land Management, with a condition that if it was developed (leased or sold) the county is required to pay BLM 85 percent of the proceeds (the school district and the airport get the rest). But this has caused tension between the two government entities because no payments have been made to the BLM for much of the lease’s term because Walters has said his profits have disappeared.

Walters, who has flooded the political system with money, previously has proposed changes to the lease to allow him to build a commercially successful enterprise. But those talks have been stalemated. Until now, perhaps.

The stadium committee meets on Aug. 25, but it is unlikely to reach any resolution until September. And the panel would have to reach consensus on a site and private money/public money before making a recommendation to lawmakers. (Gov. Brian Sandoval seems supportive of a stadium. But Steve Hill, the chairman and the governor's alter ego on the panel, has recommended reducing the public money share by $250 million (from $750 million to $500 million), which may be a reflection of Sandoval’s thinking, too.)

So the soonest lawmakers could meet, it seems, is October, the last month before the election. Therein lies the problem: Would they be willing to take the heat of approving room tax increases for the stadium and a convention center expansion so close to the election? Maybe so, if they believe they can sell their constituents on it being a “tourist tax” that could bring benefits.

Sandoval would have to be persuaded to call lawmakers into session. There's another method: Two-thirds of the lawmakers could make the session call, but if the governor is not supportive, that would be a fool’s errand.

And all of this would have to be signed, sealed and delivered before that NFL owners meeting in January.

Sisolak, who clearly supports the stadium and has been financially backed in his campaign by Adelson and Walters, and others have expressed pessimism in recent days. There are other factors, too.

Although they have been publicly supportive of a stadium, MGM Resorts officials are keenly aware that their arena (although it has less than a third of the seats that a stadium would) was financed by private dollars. The Bali Hai site is close to one of their prime properties, Mandalay Bay, so the right deal might sway MGM.

The overall gaming industry attitude is difficult to gauge. The economic benefits of a stadium are questionable, as many studies have shown. And Las Vegas is sold out on most weekends anyhow, so would it make much difference? Maybe.

The most compelling argument is the opportunity to get a pro football team – right after a pro hockey team – and change the entire community dynamic while adding another dimension to drawing people to visit.

Even as time runs out, Bali Hai may be the solution.  But like the song of the same name from "South Pacific," it could also be a place where dreams seem attainable but are evanescent.