Picking up where we left off yesterday, we conclude this epic overview of the convention and event business in Las Vegas, and its ever-increasing real estate requirements.
While Sheldon Adelson's proposed stadium would have no precedent and no competitors in Las Vegas, his planned, 17,500-seat concert hall would fall squarely into the same range as the Thomas & Mack Arena (19,522 seats), T-Mobile Arena (20,000) and MGM Grand Garden Arena (16,800), with Mandalay Bay Events Center relatively far back at a mere 12,000 seats.
The market for these venues – especially given their comparable size – is not inelastic, even though some serve different purposes better than others. For instance, T-Mobile Arena is designed with basketball and hockey in mind. Although Las Vegas already hosts the Pac-12, Mountain West, West Coast Conference, and Western Athletic Conference roundball tournaments, there's hope that the NCAA will revoke its ban on holding championship events in Sin City, due to the presence of sports betting. Still, college hockey is also expected to be a major draw.
MGM's other arenas will attempt to stave off cannibalization by exploring new markets. An electronic-sports tournament recently played to capacity at Mandalay Bay and the growing popularity of such events could see it moved to one of MGM's bigger arenas. T-Mobile has its own maw to feed, with at least 260 open dates a year. MGM is counting on monster concerts like an upcoming George Strait residency to help fill the schedule. Having an entertainment promoter (Anschutz Entertainment Group) as co-owner of the venue doesn't hurt, either.
"Our goal is to get to 100 events at T-Mobile and have no impact on our other buildings," MGM Senior Vice President of Entertainment Rick Arpin told the Las Vegas Review-Journal. Arpin expects a near-term, 20 percent dropoff at MGM Grand Garden and Mandalay Bay, followed by a yearlong right-sizing of the market. "It’s very hard for existing arenas not to feel the pinch of a new arena, especially because the new arena is invariably more modern and comfortable," said Smith College professor of economics Andrew Zimbalist, when queried by the R-J.
MGM is also counting on T-Mobile to drive new visitation to Las Vegas. "We own 30 percent of the hotel rooms on the Strip, but hopefully this benefits everyone," Arpin said. Boyd Gaming shares this outlook. "We do not anticipate any adverse impact. To the contrary, we view these expansions as complementary to our existing business in Las Vegas," said spokesman David Strow.
He added, "projects like the proposed Convention Center expansion, the T-Mobile Arena and the Las Vegas Sands venue help make Las Vegas a more attractive destination than ever, and will draw more visitors to this market. And as one of the area’s largest resort operators, we believe we will continue to be quite successful capturing our fair share of new business and new events – both at The Orleans, and at our properties throughout the Las Vegas Valley."
As for the Thomas & Mack, a venerable 33 years old and a couple of miles off the Strip, it's lost one big event to T-Mobile already, the Professional Bull Riders' Built Ford Tough World Finals Rodeo. (Yes, that's actually its name.) However, the Thomas & Mack's anchor event, the National Finals Rodeo, is staying put and MGM is taking some of the credit for keeping it there, and is keying the kickoff of the Strait residency to coincide with NFR. But making the Thomas & Mack competitive over the long haul, despite a recent, $73 million upgrade, may be tough. As one observer noted, "The last thing you want to do is put UNLV in a position where they have to go to students or donors and ask to raise revenue. It’s a nonstarter. You can’t raise that kind of money from students."
So, to summarize, when it comes to new arenas in Las Vegas, it's a case of building it and hoping they will come. But where convention centers are concerned, they're already coming and the community is just trying to keep up with the Joneses.
