Thursday, Jan. 4, 2018 | 4:25 p.m.
It’s an axiom of business: You have to spend money to make money.
UNLV hopes it did that in spending big on outside lawyers to negotiate its stadium use deal with the Raiders. It’s an agreement university officials hope will turn their football program into a reliable revenue source for an athletics department that faced a $5 million budget shortfall just last year.
University regents reviewed the finalized document in a two-hour meeting Wednesday and will meet again in two weeks to consider approving it. Attorney Daniel Etna of Herrick Feinstein LLP, a New York law firm retained by UNLV for the Raiders talks, answered most of the regents' questions.
Etna came both with the significant clout of Herrick’s experienced sports law practice and a hefty price tag of $745 per hour. Combined with local representation by Mandy Shavinsky of Snell & Wilmer, the university’s outside legal fees for Raiders discussions through Dec. 21 totaled $189,179.
“I know there were some issues concerned with cost, but in the scheme of issues, the total cost is less than one game (of rent) over a 30-year period,” said Thom Reilly, chancellor of the Nevada System of Higher Education.
University officials retained Etna in July, just weeks after receiving an initial stadium-sharing proposal from the Raiders that tilted heavily toward the team. UNLV President Len Jessup said his legal staff did not have the expertise to solely represent the school in this situation.
“You’re just bringing in people with experience that you don’t have. We needed that — Dan with the NFL experience, just professional sports in general and how contracting goes, and then Mandy with the local experience with big commercial real estate contracts,” Jessup said.
Etna said the constraints of Senate Bill 1, which authorized $750 million in tax money to fund the $1.9 billion stadium project, presented an unusual background for the talks. That legislation also tied UNLV’s use of the stadium for its football games to the Raiders receiving a public subsidy.
“It was a very difficult negotiation,” Etna told regents.
In their first proposal, the Raiders asked for the use of nearly 80 acres of UNLV land for game-day and event parking, as well as control of luxury suite and club seat sales.
The final agreement allows the Raiders no use of UNLV parking and allows the university to keep revenue from parking fees charged for the stadium’s 2,375 on-site parking spaces.
“Any type of arrangement that would have made it more difficult for students to park would have been a challenge,” Reilly said. “We’re a commuter school, so that really eliminated any day but Sunday.”
Reilly said the Raiders did not back off the parking request easily.
“It was a challenging part,” Reilly said. “I think we ultimately ended up where everybody felt comfortable.”
The deal also allows the Rebels to sell roughly 70 percent of the stadium’s expected 100 luxury suites, keeping net revenues from those lucrative arrangements.
“Suite revenue is a very big source of revenue for us,” UNLV Athletics Director Desiree Reed-Francois said. “It was important to us that we were able to maintain that. We also have a responsibility to our donors and our patrons that we are going to be able to service them at the level they expect and deserve.”
How much rent UNLV will pay remains an open question. While SB1 requires the university to pay only the actual cost of using the stadium, neither side knows what those costs will be in a building that will not be finished until 2020.
Las Vegas Stadium Authority Chairman Steve Hill told regents that average rent is $100,000 to $175,000 per game in similar situations around the country, according to research by authority staff. UNLV currently pays $50,000-$75,000 per game to use Sam Boyd Stadium, and the program consistently struggles with attendance.
The Raiders and UNLV will meet after each Rebels game and review invoices for stadium services to determine how much the university must pay. A game that draws 20,000 fans would theoretically cost less than one with 40,000 fans because less staffing would be required to operate the stadium.
Within the stadium, advertising revenue could present challenges for the team and university in the future. The Raiders are the primary tenant of the 65,000-seat building and will retain the right to as many as 14 exclusive sponsorships. That means if the Raiders signed an exclusive deal with a particular beer company, UNLV will not be able to obtain revenue from competing companies for advertising within the stadium.
“With advertising, it’s a fish of a different color,” Etna said. “The Raiders were very, very mindful of what they could and could not do on the advertising front.”
Despite that potential issue, UNLV’s negotiating team made major progress on a number of items from July’s opening Raiders offer.
“Overall, I think everyone is really pleased with where we started and where we ended up,” Reed-Francois said. “There was an ebb and flow in this negotiation, but I think, after the end result, it’s something we can both walk away with our heads held high that we got a good deal.”
“These are two strong advocates, and we were both advocating for our positions. But in the end, we did what was best and what was in the spirit of the bill.”
To get there, the university made a major investment in its legal team. It’s a lesson Reilly said he took from his time dealing with the troubled Regional Justice Center construction as Clark County Manager.
“If there’s anything I learned, it’s that you want to bring in expertise from the very beginning to protect yourself.”