Should Las Vegas Be Funding New Sports Stadiums?
Earlier this week, there was a rumor floating around LasVegas that the Rio casino property might be purchased by an investor, demolished, and replaced by a new Major League Baseball stadium. Some locals even speculated the Anaheim Angels could be headed across the Cal-Nev border and might “play ball” here as early as 2021.
When I first came across this social media gossip that Las Vegas — which has roughly the population of Louisville, Kentucky — might construct not just one, but two billion dollar sports arenas, I couldn’t believe it. Seems like a misplaced sense of priorities. After all, we rank 49th in the nation (as a state) in public education and lag behind in virtually every quality-of-life metric. And now, there’s talk about building two brand new stadiums? Actually, the number is three stadiums if you count the new minor league ballpark currently going up in Downtown Summerlin. Oh wait, the actual number is four stadiums — since there’s a new NHL hockey arena, which opened a little more than a year ago. That’s FOUR stadiums!
That’s too many stadiums!
During the past week, I’ve given more thought than I should to the controversial issue of public financing of sports stadiums. In the past, I’ve been strongly opposed to what I consider not just a blatant waste of taxpayer dollars, but welfare for the super-rich. Most pro sports franchises are worth hundreds of millions of dollars, if not billions. The fatcats who own sports teams (most of whom inherited their wealth — Exhibit A: Oakland-soon-to-be Las Vegas Raiders owner Mark Davis, son of the late Al Davis) should pay for their own toys, including building their own sports arenas. It’s like asking us to pay for their mansions and pack them with caviar.
My previous opinion on this was backed by multiple economic studies, almost all of which reveal that new sports arenas simply aren’t worth the cost. Most sports facilities fail to generate anywhere near the financial windfalls forecasted by supporters. In some cases, new stadiums have been disastrous for local taxpayers and small businesses in the surrounding area.
So, why might I be abandoning my former position and (shudder!) now be in favor of supporting the construction of new stadiums in Las Vegas, paid for — at least in part — by taxpayers?
The reason I’m re-thinking my position is simple: Las Vegas is in trouble and needs to hit the reset button.
I know, that statement sounds like hyperbole. After all, visitors come here from all over the world — 42 million last year alone. Look around the city, especially on The Strip. I don’t see too few people. I see too many people!
But crowded sidewalks don’t tell the whole story. Actually, overall revenues are down and the number of visitors declined during the first six months of 2018 versus the previous year [READ MORE HERE]. Alarms bells should be ringing, loudly, because many insist that this is as good as it gets since this is a booming economy, right now. What happens when things flatten out, or worse — a recession hits?
What’s crystal clear is this: Fewer people are gambling and those who do gamble are gambling less. I attended the annual G2E Conference last week where we learned that gambling constitutes only about a quarter of total casino revenues (20 years ago, it was half), the lowest fraction of profits ever. Moreover, gambling revenues declined 6 percent, last year. This arrow is likely to continue spiraling downward given all available trends and demographics. Oh, and there will be more mouths to feed very soon. Another 10,000 hotel rooms will open on The Strip over the next two years, and that’s not including the Fountainbleau. That means Las Vegas will need several thousand more visitors daily just to keep up.
So, what’s happening? Las Vegas is less and less about gambling and more and more about doing other things — like shopping, dining, shows, nightclubs, and other forms of entertainment. The Strip isn’t defined by blackjack tables anymore. We’re a giant shopping mall packed with overpriced restaurants.
Consumer resentment against the contemporary “Las Vegas experience” appears to be growing. This is perhaps the greatest danger we face. If tourists come to Las Vegas and they don’t have a good time, that’s disastrous. First, they aren’t likely to return. Second, they’re likely to share their frustrations with family and friends and on social media. It’s already happening.
The problem appears to be a growing perception among visitors that Las Vegas doesn’t offer much value anymore. The free shows are all gone. Now, tourists (and locals) are getting nickel and dimed to death. $18 to park a car. Outrageous resort fees. Charging hotel guests to use the pool or the workout room. $17 cocktails. Why come to Las Vegas when the casino back home offers a better bang for the buck?
Incredibly, the clueless corporate stiffs who now run this town have everything upside down. They’re trying to make up for declining profits by squeezing the very customers who are the most loyal — gamblers. Winning bettors are getting barred in sportsbooks. Gaming tables are paying worse odds. Slot machines and video poker pay less and less. Poker rooms are closing down. Gambling is dead in this town.
Unless something changes drastically, the future is even bleaker for gambling, and for Las Vegas. Young people don’t gamble as much as their parents and grandparents. They’re interested in other things — like pool parties, fancy nightclubs, music, and even outdoor activities. Back in the 1970’s every 30-year old guy wanted to try and beat the house at blackjack. Now, they want a line pass at Hakkasan.
So, where do sports stadiums fit into all this?
If Las Vegas doesn’t want to end up like the Mall of America and just another cookie-cutter version of sun-baked Phoenix, then this city needs to invest heavily in mass infrastructure improvements, including projects that will make it enticing to everyone, not just now, but 20 years from now. It’s about doing what’s necessary to maintain our lofty status as the world’s top tourist destination in 2030, 2040, 2050, and beyond. Stadiums don’t just attract major sporting events. Giant stadiums are essential to hold mega-concerts and other attractions. Sports arenas could fill a niche that, whether we like it or not, has become an essential component of all world-class cities.
Casinos are passe. Two-thirds of states now have casinos, and some are just as big as anything seen in Las Vegas. So, continuing down the same path that worked 50 years ago is shallow and shortsighted. It might also be economically suicidal.
I haven’t looked at the financials. I recognize the numbers might be cost-prohibitive. Building 2, 3, or 4 stadiums seems crazy. But before dismissing the notion outright, we must recognize there are compelling reasons in support of the idea, which must be considered.
Las Vegas isn’t like other cities. We don’t share the demographics or diversification of Kansas City or Atlanta. This city is still based primarily on one thing — and that’s tourism. Our future prosperity will depend on maintaining a steady pipeline of visitors from all over the world who leave happy and want to return, hopefully, many times. Part of the solution to adjusting to shifting interests in mass entertainment is constructing new things that will bring lots of people here. And that means investing in structures that will attract tourists throughout the year, including stadiums.