March 12, 2010

Chicago businessman claims seat scheme can fund Vegas arena

The guy behind Las Vegas' abortive 2004 bid to woo the Montreal Expos is back on the scene, this time with a new financing plan for the city's proposed arena. The brainstorm of Lou Weisbach — a Chicago-based Democratic fundraiser and marketing businessman who previously tried to buy the Cubs, is to sell luxury boxes and personal seat licenses, but with a twist: Instead of paying their license fees up front, they'd pay for them over time, like a home mortgage. (This is actually how most luxury box deals already work, but never mind that for now.) Weisbach calls the concept "Equity Seat Rights," and notes that it's been used by the University of Kansas and UC-Berkeley to help finance expansions of their college football stadiums.

Leaving aside that from a stadium builder's perspective, it doesn't really matter whether your funders give you the money up front or over time (any more than a home seller cares much whether a buyer is paying cash or taking out a loan), could this actually work? The projected cost of building an arena is at least $400 million, not counting land. Weisbach says that by selling 1,000 PSLs — oops, ESRs — plus 150 suites, he could make the project work with no public money.

The big question here is what he could get for the suites: If they were to go for a quarter-million per year apiece, which is the low end at L.A.'s Staples Center (which has four pro sports teams to the Las Vegas arena's zero), that would indeed cover most of his construction costs, regardless of whether the ESRs sold. If the price were lower, not so much. And that's assuming that they all sell — it's going to be dicey, to say the least, to get people and corporations to pay top dollar to seats at an arena with no guarantee of what team if any will even play there.

Add in that Vegas' baseball stadium plan also initially was proposed to be taxpayer-free, but then turned out not to be, and there's plenty of room for skepticism here. Though in the Las Vegas Sun article on Weisbach's plan, it was called "a common-sense approach" by Chad Wilkins, a consultant who ... erm, works for Weisbach. But if you can't trust a consultant to a marketing guru, who can you trust?