Posted by John Vrooman on Monday, March 27, 2017 in National Football League.

Interview with ESPN.

• What kind of impact can the Raiders’ move to Vegas have on the Cardinals – whether it be taking away fan interest or travelers who visit Phoenix for games?

With the opportunistic, public money-grabbing relocation of the Oakland/LA/Oakland Raiders to Sin City, the Southwest desert is about to get real crowded with NFL football.

The economic weakness of the Sin City professional sports market is the disproportionate reliance on what has recently become a very competitive gaming industry, combined with a fluid, transient fan base. The underlying financial structure of Vegas is fragile. The secret to success in a marginal edge sports market like Vegas is revenue certainty, and the current shell economy in Vegas is risky business even for the fully diversified NFL monopoly cartel.

The value of an NFL franchise generally increases about 30 percent just by moving into a new venue—even on Mars, or in the case in the middle of the desert. Given the lopsided one-dimensional economic structure of Vegas and relative size of the TV market (45^th) Vegas does not appear to have the critical economic mass or economic depth to support the NFL over the ups and downs of the long run professional football cycle. This is true even in a shiny new stadium in the desert and regardless of a relatively risk free NFL revenue sharing check for over two-thirds of the Raiders total revenue.

The NFL Las Vegas relocation case is similar to the Jacksonville 1995 expansion. Jacksonville was selected because of the advance sellout of club seats and its geographical location in the media grid. The Jaguars are now roughly equal in value to the Oakland Raiders at about $1.5 billion and both clubs are currently stuck at the bottom of the NFL food chain.

This is largely because the Jags are trapped in a small media market, land-locked and surrounded by established long-term markets of other competing NFL clubs like the Dolphins, Falcons. There is just no place for the Jags to go except maybe to sail across the Atlantic to London. The same will probably be true for the Las Vegas Raiders.

The Raiders would be desert-locked in a small economically isolated and lopsided Las Vegas. The Broncos rule the Mountain West and the Cards now own the Southwest desert. When the Raiders leave the Bay Area, the 49ers will have NorCal locked down and that leaves the Rams and Bolts to split SoCal. There just would be no economic room for the Raiders in the Southwest desert and the Vegas market doesn’t have the size or depth to carry the club alone.

Normally the Raiders in a new venue would increase in value to about the NFL average of $2.5 billion, but probably not in Vegas. Within a few novelty seasons, the Raiders will probably be back in the bottom NFL economic quartile before the shine was gone from the publically subsidized silver and black Vegas stadium.

Public subsidies for stadiums are game changers. Something-for-nothing welfare for rich NFL owners is what this stadium extortion game of musical chairs is all about—and it has been since Al Davis originally bolted Oakland for LA in 1982. The public subsidy of $750 million for the Raiders in Vegas is the largest public extortion subsidy ever paid out for a new venue. 

• Can the impact be positive? Could it be a good thing to build the football culture in the southwest? If so, can we see the southwest become a football hotbed eventually, similar to the Northeast?

The relocation of the Raiders to Vegas is probably a zero-sum, if not negative sum move in terms of the NFL football economics of the Southwest. More football competition between the lines is always better in terms of the quality of the game itself and synergistic regional rivalries could develop among the clubs. Expectations should probably be turned more toward the NFC or AFC South divisions.

The NFL makes these internally profit maximizing decisions with an opportunistic eye on their internal bottom line, not the welfare of the fans or the quality of the game between the lines. Unfortunately, the damage to the Cardinals’ bottom line will probably outweigh and outlast the economic gains.