Vegas now has three arenas and no sports teams, this can’t end well

The new Las Vegas arena built by MGM and AEG with private money (!) opened last night with a Killers/Wayne Newton concert (!!), giving the city three full-sized arenas and no sports teams to play in them. That’s understandably raised concerns of arena glut, something that MGM execs acknowledged but then attempted to hand-wave away because grow the pie:

“Our goal is to get to 100 events at T-Mobile and have no impact on our other buildings,” said Rick Arpin, the company’s senior vice president of entertainment.

That won’t happen right away.

Bookings could drop as much as 20 percent at MGM Grand Garden and Mandalay Bay Events Center in T-Mobile Arena’s first year, Arpin said. The market will “right-size” in the next 12 months, though, as T-Mobile creates events that wouldn’t have existed or come to the market without it, he said.

That includes the long-awaited reunion of rock band Guns N’ Roses, which is christening the arena on its debut weekend with opening act Alice in Chains.

It also includes the residency of country superstar George Strait, who’ll headline the arena with dates in April, September, December and February.

“His engagement wasn’t going to happen without this building. He didn’t have to tour. He was compelled by this proposition,” Arpin said. “You’re going to see more of that.”

Beyond the crazy notion that Guns N’ Roses is reuniting just because Las Vegas built a third arena, let’s take this seriously for a moment: Is it possible that 50% more concerts will come to Las Vegas now that it has 50% more arenas? It’s not like the MGM Grand Garden and Thomas & Mack Center were both so booked to the gills that touring acts couldn’t find a way to play Vegas. Some artists on tour who were going to skip Vegas might be attracted by the lure of a newer venue, maybe, but that many?

We’ll just have to wait and see, I guess. Since MGM is paying for this new building — and owns one of the other arenas in town to boot — it’s not like it’s any skin off our taxpaying noses if it turns out to be a terrible idea. It could have important implications for Sheldon Adelson’s claims that a new heavily subsidized Las Vegas stadium will bring in tons more events, though, as well as an interesting test case for other cities thinking of papering their entire cities with wall-to-wall sports/entertainment venues. Stay tuned.


22 comments on “Vegas now has three arenas and no sports teams, this can’t end well

  1. You forgot about the Orleans Arena off the strip at the Orleans Casino. Not sure what kind of acts or how many of them perform there. I know the Vegas Wranglers used to play there, but if I remember correctly, the arena kicked them out. They also host some college basketball tournaments.

  2. Watch MGM tear down their old arena and expand the MGM grand hotel northward, just like the Wynn/Encore is looking to add a boutique hotel on the eastern side of their property where their golf course is currently located.

    What’s more odd than having 3 arenas? having 15 convention centers to choose from……. Is that “All Net Arena” officially dead?

  3. Why did you leave out mentioning its about 95% certain the newest arena will host an NHL team? The buildings are a;ll privately owned and more than likely paid off. Why is this really an issue? Slow day for you?

  4. I left out mentioning that because it’s not true — right now the NHL expansion process is in limbo.

    As for why it’s an issue, you might want to read my last paragraph again, if you read it the first time.

  5. So far, Golden 1 Center in Sacramento has booked Jimmy Buffett, Maroon 5, and MANA.

    Arena shows just aren’t what they used to be.

  6. @Neil – The expansion issues will be fixed because all these new arenas in Las Vegas will attract enough Canadians to fix the current currency imbalance between the two countries allowing the Quebec expansion to go ahead giving Las Vegas a team as a western balance.

    I do not believe this is any more outrageous than have been proposed for other arenas so I’m not wrong here.

  7. Re: “an interesting test case for other cities thinking of papering their entire cities with wall-to-wall sports/entertainment venues.” I’d take whatever lessons there are with a grain of salt.

    Las Vegas has, for various reasons most of which I admit I completely don’t understand, been an exception in all sorts of ways because there is only one Las Vegas (well I guess there is Macau, but that’s far away).

    As Las Vegas did well, other cities thought building wall-to-wall casinos was a grand idea. As Atlantic City how that worked out.

    When it comes to bizarre development schemes, what happens in Vegas does indeed tend to stay in Vegas.

  8. The $64,000 question here in Vegas is this: who is going to pay for all these toys the corporate elites want? The wages here have been stagnant for nearly a decade, the educational system sucks, there is little economical diversification and creativity, and the current tax structure is extremely flawed and heavily dependent on tourism. Tourists are now subsidizing employee salaries through tip-pooling, yet you want to tax them more (which in essence is taxing the citizens, since those dollars would go to much-needed social services and infrastructure improvements). This city has massive problems and the bills are coming due, yet everyone wants a stadium.

    In regards to the “All Net” arena: It had no shot. The developer (who is sickly rich but loves OPM) wanted to use EB-5 funds but couldn’t get project approval. Those funds cannot be used to develop leased property. The property has to be owned outright with no encumbrances (disclaimer: I own a EB-5 consultancy firm – the stories I could tell about people I come in contact with concerning EB-5 would blow your mind).

  9. If EB-5 projects have to be on owned land, how did Ratner/Prokhorov use it for the Nets arena development? I thought that was a lease-back deal.

  10. I believe Vegas will get an expansion team and the NHL will wait on Seattle.

    Quebecor is loaded and would pay anything to bring back the Nordiques… via expansion or possibly relocation of Carolina. The Canes owner has been in talks with them since he can’t find a local buyer. At this point it makes the most sense to move a struggling eastern team to Quebec and expand by two in the west to even out the conferences.

  11. I thought Ratner owned the land through Forest City, giving Prokhorov the lease-option. Maybe I’m wrong on that. I do know that due to the fiasco in Brooklyn the entire program was almost brought down. So much fraud was involved it made my job much much harder. As a result, the rules have completely changed yet again.

    You wouldn’t believe how many companies I deal with on a regular basis solicit for EB-5 funds, yet don’t have a clue on how the program works.

  12. The Barclays Center chain of ownership is pretty complex (Property Shark claims it’s owned by a holding company office in one of Ratner’s buildings), but when I asked Norman Oder of Atlantic Yards Report, the expert in these matters, he said: “The arena is owned by the Brooklyn Arena Local Development Corp and leased to various holding companies, which are now controlled by Prokhorov.”

  13. Freaking brilliant. This is how it works: the Brooklyn Arena Local Development Corporation is known as the New Commercial Enterprise (NCE) and holds the funds (“holding company”). The Job-Creating Enterprise (JCE) are the individual development companies (“projects”). A recent development in the program allows NCEs to bypass Regional Centers, form subsidiaries to do to the projects, raise capital and subsequently “loan” JCEs the money. And you are correct: the money stays in-house, even though it isn’t suppose to. So in essence you have one company issuing securities and raising funds, then funneling said funds into a wholly-owned subsidiary of itself. Then using gentrification to their advantage since the area is (was) a TEA. You can see how this and other New York-affiliated companies almost brought the house down.

  14. The Brooklyn Arena LDC is an arm of the Empire State Development Corporation, though, which is the state of New York. The state wasn’t involved in the EB-5 funding, so far as I know.

    Though, come to think of it, none of the EB-5 money actually went to the arena, just the buildings around it. But I didn’t think that land was in Ratner/Prokhorov hands either.

  15. Surely it’s not some promotional pricing trickery by the arena operator combined with tickets being priced just a bit higher with the expectation of concert-goers paying just a bit extra to experience that new arena smell themselves.

  16. Dave, the NHL will have a long wait on Seattle because the plan there requires an NBA team and, even then, someone who is unusually generous towards arena-building (on the USA scale of NHL owners) from the NHL side of things.

  17. For the record, there are rumors saying that the LA Kings might move to Vegas. What is interesting is that AEG owns both the Staples Center and T-Mobile Arena. This possible deal could result in a better balance for both arenas since Staples is overbooked and can’t attract concerts with 3 teams in one place. With the Kings playing 4 hours away from their present home, maybe the Staples Center can host concerts, or better yet, the Oscars.

  18. Everyone is using Vegas for leverage since they know ho desperate the city’s corporate elite is for a shiny new toy. There is not enough corporate support and disposable income here to fund more than one major professional franchise. The tourism play isn’t going to work when visitors are continuously being gouged. They already pay to get here. Everything is overpriced, ridiculous resort fees that continues to rise, gratituity that subsidize employee wages (thank Steve Wynn for that), and coming soon parking charges (yes, the casinos wilo start charging $10/night for parking).

    I have friends from the Midwest who came to Vegas at least 4 times a year. They haven’t been here since last May. The reason: the fees. One was hit with over $250 in fees unrelated to his actual hotel stay. Money that could have went to the tables or on a show. My hometown hasn’t been the same since Wall Street took over. Now you have people of that ilk running the place into the ground, stripping away whatever tangible assets they can find. Nearly every major casino company in town is doing a REIT, making it easier to bail on their casino holdings while owning the property.

    Now in regards to the Kings moving to Vegas: it’s not happening. No way the NHL and its owners would ever allow that play. To leave the second largest market for the 41st? 15 million+ metro vs. barely 2 million? Not happening. Staples could use an upgrade, as it is the most utilized facility in the country. No facility houses 3 professional sporting franchises like Staples does.

    I agree with the gent earlier: Vegas is getting one of the expansion franchises. The NHL would prefer Seattle to get the other one due to market size and wealth. Quebec is a much more viable market in terms of fan interest and facility (one of the premier venues in all of sport), but it is small compared to what the NHL seeks. The ideal situation would be for the NHL to contract by two (either one of the Florida teams, Carolina, or Nashville), and relocate two (Arizona and Columbus).

  19. There are no actual rumors that the Kings are moving to Las Vegas, beyond one clickbait headline on a story about them playing exhibition games there:

    http://www.fearthefin.com/2016/4/7/11387542/the-los-angeles-kings-are-moving-to-las-vegas

    Which makes sense, because it would be insane for the Kings to leave L.A. for Vegas, not just because of the disparity in market sizes that Jay just noted, but because they’re owned by AEG, who also own the Staples Center.

  20. I think Alex’s comment above has the right idea — MGM will eventually tear down the Grand Garden Arena and expand the hotel there.

    NHL in Las Vegas seems like a very dubious idea. But if there’s a would-be owner who will pay the huge expansion fee up front, then the NHL may just take the money and let the new owner worry about how to make the franchise viable in Vegas.

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