MSG to build concerts-only arena in Vegas, because three arenas with no pro team wasn’t enough

Las Vegas just opened its third arena without a pro sports team to play in any of them, plus it’s considering building a pro football stadium, plus it has yet another arena (with a retractable roof!) that broke ground in 2014 and then has never been heard from again. So you know what that city really needs? Another arena:

[Madison Square Garden] announced Wednesday that it will build a 17,500-seat arena just off the Las Vegas Strip…

The new venue is a partnership among Madison Square Garden Co., Sands Corp., Azoff MSG Entertainment, concert promoter Live Nation and Oak View Group, an entertainment advisory firm.

“This will be a state-of-the-art venue of the future, an entertainment-only venue,” O’Connor told The Times.

On the one hand, this is not entirely crazy, because MSG successfully remodeled the L.A. Forum as a concert-only venue, and certainly they and Live Nation know something about the concert business. (The plan is for this new as-yet-un-price-tagged arena to have all its seats in front of the stage, so really “arena-sized theater” might be a better description.) On the other hand, it is completely crazy, because even if Las Vegas is a huge tourist destination, how many arena concerts can one city reasonably host? Even New York City only has three arenas (four if you count the Nassau Coliseum), and New York has like five times as many people living there as Vegas would have even if you double-booked all its hotel rooms.

This can only end with at least one of the Vegas arenas eventually going out of business. The good news, at least if you believe MSG officials, is that this will involve no public money, so it’s just the sort of crazy land rush that corporations would occasionally engage in even if subsidies didn’t exist. At least in Vegas, because that place apparently makes even corporate bean counters lose their minds.

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.

NHL reportedly rejects Quebec expansion bid because Canadian oil is too cheap

When the NHL indicated last summer that it could be interested in expanding by two teams in exchange for half-billion-dollar expansion fees, and then only two cities, Quebec and Las Vegas, bothered to submit bids, everybody figured that Quebec and Las Vegas would be getting NHL expansion teams soon. As it turns out, everybody figured wrong:

Former player Georges Laraque told a Montreal radio station yesterday that the NHLPA has been informed that Quebec City is no longer under consideration for a new team, at least not in this round of expansion.

The problem is apparently the weak loonie — no, not that one, but rather the crashing Canadian dollar, which currently sits at 75 cents thanks to low oil prices (Canada produces a lot of oil by digging up all of Alberta and running it through a sieve). So despite a relatively strong fan base, an ownership group led by the former prime minister, and a new arena with around $300 million in public subsidies, the NHL has apparently decided that Quebec will need to wait on the sidelines until it can confirm that it will generate more than Monopoly money for league coffers. (“Apparently” because the NHL has denied it, but only with a “no final decisions have been reached” no-comment denial.)

So what does that mean for Las Vegas, which initially sounded like the even-crazier expansion idea? Will the NHL really go ahead with adding just one team, in a market that would be the league’s smallest and most desert-surrounded? The NHL has refused to issue any timetables for expansion, so who knows? It’s entirely possible that the league could just go back to the drawing board and issue a new call for expansion bids — after all, if you’re going to get a bidding war going, you really want more than two cities going after two slots. You can smell the excitement in Seattle already!

Word “cool” does not mean what article on cool new Vegas arena thinks it means

How sad is the state of journalism in the year 2015? Sadder than the fact that the Las Vegas Review-Journal, an ostensible newspaper that reports on news, ran an article with the headline “10 cool things about the new Strip arena,” because we know these kids today like listicles, or something. No, the sad part is how low the R-J’s bar is for cool:

5. T-Mobile is rumored to have landed the arena naming rights, but company officials are not commenting. Talk of Las Vegas-based Ultimate Fighting Championship buying the name appears to have gone nowhere.

That’s right, Vegas sports fans: It’s cool that your new arena will be named after a cellphone company. Wooooooooooooo! Hey, maybe it’ll even have a cool nickname, like, uh, like, “the T.” That’d be cool!

Other things noted as cool include the fact that luxury suite owners will be able to walk from their cars to their seats via a special bridge so as not to have to hobnob with the hoi polloi, and that Toshiba will be installing face-recognition video cameras to send fans customized digital ads and then measure how long they stand staring at them. (No word on whether Toshiba’s cameras can distinguish staring in fascination and staring in horror.)

The top-ten list does include the fact that MGM and AEG are paying for the arena without public subsidies, which is cool, though in a truly cool world it would just be business as usual. That is not the world we live in, though, so one-tenth of a yay.

New Vegas arena nearing completion, NHL team could be next because NHL is crazy

The L.A. Times ran an article on progress on Las Vegas’s new arena on Saturday for some reason — possibly because AEG, owner of the Kings, is building it, or possibly just because it was Saturday and they needed to fill space — and there are two main reasons to click through:

  • A promise of a link to a time-lapse construction video, though all I could find was a webcam of what the arena looks like right now and a video of the groundbreaking that mostly featured a woman in a bikini and a giant shovel.
  • This wonderfully glass-half-full observation, buried in the final paragraph: “Selling hockey in Las Vegas will present challenges in a city built on gambling and lofty dreams, especially after the novelty of a new franchise wears off, and other professional sports leagues are sure to monitor this venture closely. Las Vegas has always been good at reinventing itself, and transforming itself into a hockey city might be its boldest experiment yet.”

Translation: Hockey in the desert hasn’t worked well before, and Las Vegas is a heck of a lot smaller than Phoenix, but Vegas has shown a propensity for just tearing stuff down that doesn’t work and building new stuff, so sure, why not give it a try? I’m still a bit puzzled why AEG is going ahead with funding a $350 million arena with its own money when it’s only projecting at best 140 events a year at the place, and 200 is the more typical breakeven point, but hey, it’s not my money. So long as they don’t ask for a bailout if and when it doesn’t work, that is.

Vegas, Quebec now frontrunners for NHL expansion teams, because nobody else bothered to bid

Official bids to own an NHL expansion franchise (assuming the NHL actually expands) were due yesterday, and of the several motley candidates, only two ended up submitting an actual bid, along with a $2 million non-refundable deposit: The Bill Foley/Maloof brothers group in Las Vegas, and Canadian telecom company Quebecor in Quebec City.

If the neo-Quebec Nordiques and Las Vegas Black Knights (that’s seriously what they’re considering calling the team — one can only hope their team motto will be “Tis but a flesh wound!“) happen, it will be because the NHL thinks it can get $500 million apiece in expansion fees, which would be worth the roughly $20 million a year in TV revenues the other teams would have to give up to each of the new franchises. Neither city would be a guaranteed success — Quebec probably has a better shot, if only because people actually watch hockey there, but they’d both be among the NHL’s smallest markets — but then, if there were an obvious expansion market, it would already have a team by now.

There was one bigger market considering a bid, or actually two bids: Seattle, where both Chris Hansen and Ray Bartoszek were reportedly interested in teams for their prospective arenas in downtown Seattle and suburban Tukwila. Neither ended up bidding, though, which would leave Seattle looking at being the home for a relocated team at some point, assuming either Hansen or Bartoszek is really that interested in the NHL.

And that, ultimately, is what the NHL would be giving up here, even more than a sliver of TV revenues: leverage. Right now, cities undergoing arena battles face a slew of marginally believable bogeymen where their team could be said to be relocating to if they don’t agree to demands. If Vegas and Quebec get new teams, the league would pretty much be down to Seattle as a threat, and while one city will certainly suffice for this (look at what the NFL has done with L.A.), it’s less than ideal.

All of which is to say that Glendale officials should probably feel comfortable taking a hard line with the Arizona Coyotes owners in their lease battle. There’s reportedly been some progress in those talks, but if the worst-case scenario ends up being that the Coyotes might move back to a new arena in Phoenix, leaving that city stuck with how to keep afloat a money-losing franchise with subsidies, that’s the kind of chance that Glendale should feel comfortable taking.

UPDATE: Deadspin thinks that this is going to hurt the NHL’s leverage in getting the highest price for expansion teams, since now they can’t get a bidding war going. I’m less sure — the league can still refuse to assign any new teams at all if it doesn’t get what it wants — but this certainly doesn’t help the NHL’s racket, let’s put it that way.

No, the NBA doesn’t need to move the Bucks so it can make $1 billion

Today in bad journalistic math, we present an article by Business Insider’s Cork Gaines, which proposes that the NBA has a vested interest in the Milwaukee Bucks arena plan failing, since it would allow the league to take over the team and profit off of rising franchise values in the wake of its new TV deal:

If the Bucks fail to get a new arena approved, the NBA will buy back the Bucks and then turn around and sell it to the highest bidder in either Seattle or Las Vegas for as much as $1.6 billion. That would be a cool $1 billion profit for the other 29 NBA owners.

Another scenario would allow Edens and Lasry to keep the team and move it to Seattle (or Las Vegas) after paying the NBA a relocation fee, likely in the hundreds of millions of dollars. Under this scenario, the other NBA owners still get a hefty pay day and Bucks owners get to keep an NBA team in a new arena that is still worth more than the total amount they paid in 2014.

Anyone see the logical flaw here? (No, not that someone would pay $1.6 billion to put an NBA team in Las Vegas — we’ll get to that in a moment.) Come on, it’ll come to you. Let’s take a look at the chart that Business Insider included in its article (based on Forbes’ franchise value estimates), maybe that will help:

01-713-1Got it yet? Here’s the key: Those soaring franchise values are for all 30 NBA teams, including the Bucks. That means that even if the Bucks sit right where they are, they’re worth a whole lot more than they were a year earlier, thanks to the league’s new $24 billion TV deal that is already driving player salaries skywards.

Yes, since the NBA’s buyback agreement for the Bucks is fixed at $575 million, that’s an opportunity for the league to make some easy cash if it can get the franchise at a bargain price and then resell it. (This is assuming that the other 29 owners would actually go ahead with scarfing up the current Bucks owners’ equity for themselves, which seems like the kind of thing billionaires don’t do in polite company, but we’d see.) But if you’re including “let Edens and Lasry keep the team for a fee and move it to Las Vegas” in your scenarios, you also have to include “let Edens and Lasry keep the team for a fee and keep it in Milwaukee,” which could potentially be even more lucrative, given the nearly half-billion dollars in subsidies on the table, even if they don’t manage to get approved this year.

Meanwhile, $1.6 billion for a Seattle team, let alone a Las Vegas team, is completely insane, new arena or no. Keep in mind that the Atlanta Hawks, a team in a market bigger than either Seattle or certainly Las Vegas, were just sold for $730 million, a figure that had Forbes itself suggesting that sports franchise values have already peaked. And then take a look at the Forbes NBA valuation estimates: Only five teams are valued at $1.6 billion or higher, and all of them play in New York, Los Angeles, Chicago, or Boston. The nearest markets in size to Seattle are Phoenix ($910 million) and Minneapolis ($625 million), and neither of those teams would be saddled with tens of millions in annual arena debt payments like a Chris Hansen-owned team would be in Seattle. So any potential sale payday here is probably closer to $100 million than $1 billion.

Anyway, all this is no doubt raising temperatures in the Wisconsin state legislature, where Senate Majority Leader Scott Fitzgerald has started suggesting that a ticket surcharge could play a role in a revised Bucks arena funding plan. That’s potentially good news for Wisconsin taxpayers — ticket surcharges mostly end up coming out of team owners’ pockets, since it means they can’t raise ticket prices as high as they would otherwise without pricing themselves out of the market — but without any details it’s hard to say by how much, and Fitzgerald didn’t provide any. The Wisconsin legislature can be called back into session at any time to deal with this, so with no deal close at hand, best prepare yourself for a long, hot summer of this stuff — “window is closing” rhetoric or not, $457 million in cash and tax breaks is too rich a potential offer for either the Bucks owners or the NBA to turn their noses up at.

Bucks exec threatens move to “Vegas or Seattle,” er, that is, NBA would move team, yeah, those guys

Ooooh, he said it!

At an informational hearing held by the state Legislature’s Joint Finance Committee, [Milwaukee Bucks president Peter] Feigin said the Bucks owners’ purchase agreement for the team includes a provision that construction of a new arena start in 2015. If that does not occur, he said the NBA will buy back the team for a $25 million profit and move them to “Las Vegas or Seattle.”…

“The window is closing,” Feigin said. “We can’t wait months, even weeks to start the public process.”

This, of course, has been the threat behind the arena demands of Feigin’s bosses, Bucks owners Marc Lasry and Wes Edens, ever since they bought the team early last year with the provision that the NBA could buy it back and move it if there was no deal in place for a new arena by 2017. (Whether this meant a new arena in place by 2017 or a deal in place by 2017 has been a topic of some debate, though Lasry himself seemed to indicate it was the latter.) But this is, I’m pretty certain, the first time that a Bucks exec has come out and said “Approve this deal now or the NBA shoots this team,” and absolutely the first time that anyone has dared name specific cities, which comes awfully close to a straight-out threat by the owners, even if the NBA is still cast in the role of the big bad.

So how real is the threat? The buyback clause is obviously there for a reason, and Seattle is both a TV market twice Milwaukee’s size and the home of a guy willing to both build a $500 million new arena and pay $625 million, plus relocation fees, for an NBA team to play in it. (Las Vegas is a tiny market, and its main association with the NBA is of an All-Star Game that everyone involved would seemingly rather forget.) That would represent a $50 million profit for the NBA if it bought the team off Lasry and Edens for $575 million (which would in turn be a $25 million profit for Lasry and Edens), and if that’s a crazy amount of money for Chris Hansen to be putting up for a team and arena — or more accurately, for an as-yet-unidentified Steve Ballmer 2.0 to be putting up — that would be Hansen’s problem, not the NBA’s.

On the other hand, this is the same decision that the NBA faced two years ago with the Sacramento Kings, and the league decided then to give Sacramento some more rope to get an arena deal finalized, even though that deal wasn’t any more approved at the time than Milwaukee’s is now. Plus, that was before Chris Hansen was revealed to have secretly funded a petition drive to keep the Kings from getting their Sacramento arena, which undoubtedly didn’t win any friends in NBA offices.

Still, that isn’t going to stop the NBA from using Seattle as a threat, because that’s what it’s there for. As to whether it would go ahead and consummate a deal if its bluff is called by the Wisconsin legislature — that’s a tougher guess, but I’d recommend putting your money on Milwaukee getting at least a couple more drop-dead deadlines if this one doesn’t work.

NHL to take expansion bids from Vegas, Quebec, Seattle, etc. because MONEYYYYYY

The NHL is taking bids on expansion franchises starting July 6, which doesn’t necessarily mean it’s going to expand, but does mean it’s testing the waters. And given the price tag, it’s easy to see why:

That’s kind of aggressive, considering that Forbes estimates the average NHL team to be worth $490 million, and given the markets we’d be talking about here (more on that in a minute), these teams would be below average. But then, the magazine’s team value figures always seem to lag a bit behind actual sale prices — as Forbes notes, there’s a bit of a bubble thanks to the fact that “Wall Street guys like Joshua Harris (New Jersey Devils) and Andrew Barroway (trying to buy a controlling interest in the Arizona Coyotes) are willing to pay a lot of money for hockey teams that lose money.” (It also doesn’t hurt that they can get huge tax breaks on their purchase price.)

The next question, obviously, is where, and everybody from Deadspin to the New York Times is assuming that one of the cities will be Las Vegas. This seems pretty daft from here — Las Vegas would be the second-smallest NHL TV market (ahead of only Buffalo), it’s in the middle of the Sun Belt where hockey franchises go to die, and it has a relatively poor permanent population. (A proposed Vegas team has managed to get $150 deposits on 11,500 season tickets, though those are refundable if there’s no team starting in 2016.) But it does have a new arena going up, and those things are guaranteed gold mines, right?

If Vegas were one team, the other would likely be either Quebec (where telecom giant Quebecor is almost certain to throw its hat in the ring) or Seattle (which has interest but still no solid NHL arena plan). Quebec would actually be the smallest media market in the NHL (smaller than Flint, Michigan!), but it’s in Canada, so maybe that compensates? Also, new arena!

If nothing else, all this means that Glendale should probably feel relatively secure in playing hardball with the Coyotes owners over their lease, since the NHL is unlikely to encourage the team to move to a new city if that would jeopardize a half-billion dollars in expansion fees. And with that, let’s go look as some photos of the under-construction Las Vegas arena:

Yeah, that, um, looks like an arena. With two levels of luxury suites, which I guess is standard these days, but makes for just awful views from the top deck. But hey, not like anyone’s likely to be sitting up there anyway, amirite?

NY Post says NHL is going to give a Vegas expansion team to the Maloofs, BWAHAHAHA

The NHL gets lots of crap for being the league that lets people buy teams without bothering to check if they actually have the money to pay for them, and this is only likely to add to its legend: Yesterday’s New York Post reported that the NHL has already approved an ownership group for a not-yet-approved Las Vegas expansion team, and part of that group is the Maloof brothers. Yes, the Maloof brothers who campaigned against their own arena referendum in Sacramento, who threatened to move the Kings to Anaheim and Virginia Beach and Las Vegas before being forced to acknowledge that all those things weren’t happening, who had to be all but forcibly removed by the NBA in order to bring in an ownership group that the city of Sacramento would actually deign to give arena subsidies to. The ones who ESPN the Magazine ranked as the worst owners in all of pro sports. Those guys.

There’s still no timetable for a Vegas team, or any clear idea where it would play (though lord, will they have plenty of options), or really any confirmation of this beyond the unsourced Post report. But it looks like if and when the NHL expands, it’s extremely likely that we will have the Maloofs to kick around again. Rejoice, people.