A downtown arena is a can’t-miss business opportunity.
At least that’s what a consultant concludes about a city proposal to partially fund and own an arena in Symphony Park.
The $400 million arena could generate about $21 million in profit annually, according to the internal report obtained by VEGAS INC.
Not everyone agrees, however. Las Vegas Councilman Bob Beers questioned the report.
“All consultants start their engagement by asking their client what they’d like to conclude,” he said.
The arena proposal was unveiled last week. On Wednesday, the City Council is expected to vote on whether to extend an exclusive negotiating agreement with the Cordish Cos., the arena's developer.
Cordish would contribute $151 million to the project; the city would contribute $240 million collected in part through a tax on downtown businesses and $190 million in city-backed bonds. The city would own the arena and be first in line to collect revenue to pay off its debt.
The city and Cordish have been locked into an exclusive agreement for three years that prevented the city from talking to other businesses interested in the Symphony Park property. If it isn't extended, that agreement ends Jan. 27.
Some business owners already are questioning financing the arena, however, because part of the financing plan includes a $52 million special tax on downtown businesses.
Questions also are expected concerning Cordish’s emergence as a gaming company. On its website, the company describes itself as “one of the leading real estate development companies and most successful operators of entertainment districts and casinos in the world.”
(Update: At a meeting between city officials and downtown business operators today, the city eliminated any references to "gaming," and agreed to eliminate the "special improvement district" that would tax downtown businesses by $52 million. "But there will still be $52 million in public funding of some sort," said one person who was in the meeting.)
Maryland Live, Maryland’s largest casino, which opened in 2012 and is operated by Cordish, generated $586 million in gambling revenue last year, The Washington Post reported.
While state and local governments in Nevada support gaming interests indirectly — downtown casinos, for instance, fund the Fremont Street Experience — direct support is rare.
Meanwhile, MGM Resorts International and AEG are expected to start construction later this year on a $350 million arena without public support. UNLV also is looking into building a 55,000-seat stadium on campus.
Gordon Absher, MGM Resorts' vice president of public affairs, said his company "built two arenas with our own money, and we think it's inappropriate to use public funding, even if it is in the form of bonding capacity" to help build a private arena.
According to the city’s report, the downtown arena would have no resident professional basketball or hockey team and instead would host 139 events yearly, including:
• 30 concerts
• 30 family events
• 30 conventions
• 15 sporting events
• Nine arena football games
• 10 rodeos, including the National Finals Rodeo
• 15 boxing and/or UFC events
Luxury and “bunker” suites, which are more elaborate than luxury suites, play big in the arena's revenue scenario. The report assumes 50 luxury suites would be sold annually at $125,000 each, six bunker suites would be sold for $250,000, and 10 event suites would go for $178,750. The arena also would sell 1,500 “club seats” at $1,500 each.
Naming rights would generate $6 million annually, and parking would net about $4 million a year.
Beers took the report with a grain of salt.
Cordish “doesn’t appear to have even one signed contract for a corporate box," he said. "That’s typically a key funding point for operations. We don’t have any of those, we don’t have a sports team, and we have a consultancy study that says we have revenue to pay everything. But it says, basically, we’ll take all of the Thomas & Mack’s business at current rates.
“I’m a little concerned that the revenue model is not realistic.”
City Manager Betsy Fretwell has stressed that Wednesday’s vote doesn't mean an arena will be built but rather just gives the city and Cordish four more months to work out details.