Turns out that crazy plan for Las Vegas to front the money for yet another arena, partly via a tax on downtown businesses, was too crazy even for the city — but only because downtown businesses squawked. The new plan: Still have the city put up $239 million in funding, but figure out how to make up the $52 million from lost business tax revenue later.
With a vote scheduled today, the arena project’s backers spent Tuesday scrambling to make changes to appease opponents. The changes, however, only increased the gap between the approximately $150 million Cordish is pledging and the project’s estimated cost.
“It gives us an opportunity to figure out what that gap may be and what are some of the viable solutions to fill that gap,” City Manager Betsy Fretwell said.
Ah, yes, it’s not a $52 million hole. It’s an opportunity. To fill the $52 million hole. With, one hopes, a giant wad of cement.
Regardless of who’s taxed to come up with the money, the big question remains whether the arena would ever bring in enough revenue to repay the city’s costs, after the arena operator extracted its own profits. Cordish Cos., the proposed arena developer (and possible operator, though the company could also choose to contract that out) has promised 139 events a year, but given that arena expert John Christison has estimated you typically need 200 events a year just to break even on operating costs, before even touching construction debt, that doesn’t seem very promising. It’s even less promising when you see that only 30 of those events would be concerts, with the rest scattered among family shows, conventions, WWE, arena football, rodeo, etc.
Cordish projects that all this would provide $20 million and up in net operating income, which would be just barely enough to repay the city’s $239 million nut, but which sounds awfully optimistic given how little other arenas have taken in as profit. If I were the city of Las Vegas, I’d put in a call to some arena managers to ask them if Cordish’s numbers make a damn bit of sense, but right now looking very expensive gift horses in the mouth doesn’t seem to be in their job description.