AEG and MGM Resorts released renderings yesterday of their planned $350 million Las Vegas arena, and don’t you just love how they used it for product placement for MGM’s IHeartRadio Music Festival? Synergy!
Anyway, once you’re done looking at the pretty pictures, the big question remains how this sucker is going to be paid for. AEG and MGM continue to insist that it will be built entirely with private funds, though they’ve also been comparing it to Kansas City’s AEG-managed Sprint Center, which got tons of public subsidies. AEG turns a tidy profit on that building, but Kansas City is losing money hand over fist, so it’s hard to see how they’ll make money if they have to pay the full freight here — especially if they’re only looking at 100 or so concerts and such per year, which is only about half the industry-standard breakeven point.
This is Las Vegas, though, so it’s possible somebody has a way to make this make money, whether by installing slot machines at the concession stands or what. Construction is supposedly going to start in April or May (with the arena to open by 2016), so we should know more before then about whether AEG and MGM will be asking for any hidden subsidies.
That MGM/AEG arena in Las Vegas that was first rumored back in March to be announced soon? It’s actually happening, or at least the announcement has actually happened: The two companies announced yesterday that they’re moving ahead with building a $350 million, 20,000-seat arena on the Strip, to be completed by spring 2016. And unlike the Caesars Entertainment arena plan that was killed last year, MGM and AEG claim this one will be built using entirely private money.
Whether that’s true or how it will work — especially without an NBA or NHL team as an anchor tenant — remains to be seen: The arena’s project manager says the model is Sprint Center in Kansas City, which despite being jam-packed with concert booking still doesn’t come close to repaying all the public money that that city pumped into it. I guess it’s conceivable that Las Vegas draws enough tourists with money burning a hole in their pockets that MGM can make money by selling tons of tickets to tons of events, a la the Brooklyn Nets‘ Barclays Center (though that has an NBA team to fill 41 nights, plus soon an NHL team to fill another 41). Or maybe it’ll be a loss leader to get people into MGM’s casinos. Who really knows — when it comes to Vegas economics … I was going to say “all bets are off,” but that’s probably not the right wording.
You can officially stick a fork in Chris Milam’s insane plan to build multiple stadiums and arenas near Las Vegas, which turned into an insane plan just to get the land and built who knows what, as the Bureau of Land Management has terminated the sale of 480 acres of federal land that Milam was seeking. And it only took six months after Milam backed out of his stadium plans, claiming his Chinese lenders who make surveillance equipment had nixed the deal, four months after the city of Henderson sued Milam for fraud, and two months after Milam settled the suit by passing the land purchase on to his lenders and agreeing to be banned from doing business with the city. Because, you know, you don’t want to rush into anything.
Las Vegas will now have to console itself with MGM’s arena plan, and UNLV’s football stadium plan, and probably a couple of other stadium or arena plans that I’m forgetting, maybe some of these. Because there’s nothing that the nation’s 40th largest TV market (just behind Grand Rapids-Kalamazoo!) needs more than some new sports facilities for all the major-league teams that it doesn’t have.
In all the excitement over everything else, I neglected to mention that there’s yet another arena plan in Las Vegas:
MGM Resorts International and AEG have agreed to join forces to pursue building a 20,000-seat, privately-funded indoor arena on land between New York-New York and the Monte Carlo.
We’ve heard similar talk before from AEG, so we’ll see whether this actually happens, let alone whether “privately-funded” comes to pass. But at least this helps explain why MGM has been hating on everybody else’s stadium/arena plans of late.
I’ve been sadly neglecting Chris Milam’s insane scheme to build $2 billion worth of stadiums and arenas near Las Vegas — and in case you think that’s not enough to warrant the moniker “insane,” recall that he planned to fund this by borrowing $650 million at 20% interest from “a Chinese company that makes surveillance equipment” — especially after he declared that building that many stadiums wasn’t actually viable, but he’d be happy to use the land he was given for commercial and residential development. But the latest developments just cry out for attention:
- The U.S. Bureau of Land Management chief who approved the sale of 480 acres of federal land to Milam for his project is business partners with a Milam consultant who “stands to make more than $1 million in a success fee if the BLM transfers the land to Milam on Wednesday,” according to the Las Vegas Review-Journal. And just in case that wasn’t enough conflict of interest for you, the consultant in question, Michael Ford, also helped the city of Henderson, where the Milam megalopolis would be built, to prepare its public notice for the deal.
- Milam, meanwhile, is currently in court defending himself against city charges that he only proposed the ridiculous sports plan as a bait and switch so he could get hold of the federal land. Nothing could be further from the truth, Milam insisted in court papers yesterday: Rather, the problem was that the Chinese spy company wouldn’t lend him his money unless he had a pro sports team, so it was the Sacramento Kings’ fault for refusing to promise to move there. (A Henderson city spokesperson replied to the Review-Journal via email that “at no time did they inform the City that financing fell through because of their failure to lure the Kings” and “Milam never informed the City that the Chinese financing had fallen through.”)
So, lotsa crazy, but no actual stadiums, not anymore. But at least Las Vegas can still look forward to its $800 million UNLV football stadium to be funded by a new sales tax district.
Okay, that’s one of Las Vegas’ umpteen stadium and arena plans down, anyway: The Nevada Supreme Court has booted Ceasars Entertainment’s $500 million arena proposal from the November ballot, ruling that the qualifying petitions were invalid because they didn’t say where the arena would be built. Under state law, the whole referendum — which would have set up a sales tax surcharge district around the arena and given the money to Caesars to pay construction costs — now has to go back to the drawing board.
One reason the court ruled that the petitions were confusing, ironically, is that Vegas has so many other arena plans being proposed that it was worried voters would be confused about just what the heck they were signing up for. Nothing new on any of them for the moment, but it’s only a matter of time before Chris Milam decides he needs to get his name in the paper again.
Yesterday’s Las Vegas Sun has a rundown of the various stadium and arena proposals simmering in that city, and their current status. The summary:
- The Cordish Companies, which signed a deal with the Las Vegas city council in 2010 to build a $412 million arena and entertainment complex, still hasn’t come up with a financing plan, and “did not respond to requests to update progress on the proposal.”
- Caesars Entertainment has its own plan for a $500 million arena, which it wants to pay for by establishing a special taxing district with a 0.9% sales tax surcharge in a three-mile radius around the arena, and getting the taxes kicked back to pay for the new facility. A statewide referendum to approve the plan is on the November ballot, but the state supreme court is set to rule on whether the petitioning process was invalid because the petitions didn’t specify where the arena (and the tax district) would go.
- UNLV and Majestic Realty say they’re moving ahead with their $2 billion UNLV Now project, which includes a 50,000-seat domed football stadium, student housing, and a “retail district.” UNLV property is currently exempt from sales taxes; to pay for the construction, the university wants to be allowed to levy sales taxes in the new stadium district, and keep the money itself. A bill in the state legislature to allow this is expected to be considered in early 2013.
- Chris Milam is still pushing for his latest development plan, which would build three stadiums and an arena — plus what looks like either a tennis stadium or a chafing dish — in nearby Henderson. Milam says he will borrow $650 million at 20% interest from “a Chinese company that makes surveillance equipment,” plus Henderson would sell construction bonds, and after that it gets hazy. The Sun doesn’t say whether Milam is still looking to get property and sales taxes kicked back to help pay for his project.
Of the four, the Sun predicts that the UNLV proposal has the best chance of passage, and an accompanying editorial endorses the plan as well, writing: “The stadium would elevate the sports program, distinguish the campus and boost the Southern Nevada economy. What’s not to like?” Well, a party pooper could point out that if the UNLV development gets some students spending money in a retail strip with taxes that go to the university, instead of off-campus where their sales taxes would go to the state, that’s a public cost. But the Sun says that the UNLV plan “faces no organized opposition,” so guess no one wants to poop the party.
The funding bill for a Las Vegas arena, or a Las Vegas stadium, or a Las Vegas arena/stadium/floor wax was declared officially dead last night by the bill’s sponsors:
Asked if any elements of the various public financing measures presented to lawmakers would survive, former state Sen. Terry Care answered: “It’ll be the surprise of my lifetime if it does.”
Care was the chief lobbyist for Texas developer Christopher Milam, who had proposed building a $1.9 billion project including a ballpark, arena and stadium near Interstate 15 and Russell Road.
“It was a difficult bill to begin with,” Care said.
Dead, of course, is a relative term when it comes to sports subsidy bills, so it’s always possible that some of these proposals will be revived in the next legislative session. That’s not until 2013, though — Nevada legislators take alternate years off, presumably so they can spend them at the craps tables — unless the governor calls them into special session before then. Quebec, you can breathe one-third easier now.
It’s getting late early out there in Nevada, as the state assembly adjourns tomorrow, leaving little time to hash out the details of the complicated arena tax-increment financing bill that three developers are seeking to take advantage of (and a fourth is seeking to have amended so it can get in the running).
So far, legislators seem wary — “it is kind of hard to get all these bills like this at the last minute and often extremely difficult to get them through,” said state senator Sheila Leslie — but that’s not necessarily a major obstacle: “Typically, agreements are not made until the end,” local AFL-CIO official and former state legislator Danny Thompson told the Las Vegas Review-Journal. “That is the way this place works.”
Of course, the Nevada legislature has been called into special session five times in the last six years, so as we’re seeing in Minnesota, it ain’t over even when it’s over.
Las Vegas still has more arena and stadium plans than you can shake a stick at, but pretty much all of them have one thing in common: They’d use tax increment financing, the much-derided financing scheme that kicks back property taxes (and sometimes other taxes) to help a developer pay off construction costs. And now there’s a bill in the Nevada legislature to create a TIF district for an arena (or a stadium or something), introduced as only the Nevada legislature can:
This is the murky way some policy gets made in the final days at the Legislature: No agenda, no formal meeting on the bill. The “fiscal notes” meant to tell lawmakers and taxpayers the potential cost of a bill to the public were not available. Instead, lawmakers gathered to the side of the Senate Chambers – “behind the bar” – as press and lobbyists tried to listen in.
Sen. Ben Kieckhefer, R-Reno, and Sen. Barbara Cegavske, R-Las Vegas, voted against introducing the bill.
“I have no idea what it means,” Kieckhefer said. “I’ve had six different lobbyists tell me it means six different things.”
Potential beneficiaries include Chris Milam’s proposed $1.95 billion sportsplex, the old Cordish plan, and, well, pretty much anything. No word yet on the bill’s likely fate, probably because legislators are still reading it to figure out what the heck it means — not that that’s stopped anyone before.