JOINT VENTURE: Arena plan unveiled - News

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Aug. 23, 2007
Copyright © Las Vegas Review-Journal

JOINT VENTURE: Arena plan unveiled

Harrah's, AEG to build facility for NHL, NBA

By ARNOLD M. KNIGHTLY
REVIEW-JOURNAL

AEG CEO Tim Leiweke, left, Harrah's Entertainment CEO Gary Loveman, center, and Clark County Commissioner Rory Reid announce an agreement to develop a sports and entertainment arena off the Strip capable of housing an NBA or NHL team.
Photos by Clint Karlsen.

Harrah's Entertainment CEO Gary Loveman, right, and AEG CEO Tim Leiweke speak before a news conference Wednesday announcing an agreement to develop an arena off the Strip.

Click image for enlargement.

Plans unveiled Wednesday outline a new sports and entertainment arena off the Strip, a facility to be built without taxpayer dollars jointly by Harrah's Entertainment and AEG, the biggest worldwide player in sports facilities and events.

The $500 million arena is to be built about a block off the Strip behind Bally's and Paris Las Vegas, officials for Harrah's and Los Angeles-based Anschutz Entertainment Group said during a news conference at Bally's.

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The 20,000-seat arena to be built on 10 acres owned by Harrah's will be funded privately by both companies. In a joint venture, AEG will develop, build and manage the arena for Harrah's.

"I'm 100 percent for being in a position where taxpayers are not at risk," AEG Chief Executive Officer and President Tim Leiweke said. "Harrah's presented us with the best opportunity."

AEG and Harrah's said they have funding for the project and will not have to rely on the volatile credit market.

"We have never announced a deal and not built," Leiweke said. "We'll save our bluffing for the tables downstairs."

The announcement was made by Leiweke, Harrah's Chairman and CEO Gary Loveman and Clark County Commission Chairman Rory Reid.

Reid said it was important that the arena be developed privately while addressing the issue of the 24-year-old Thomas & Mack Center and other older venues.

"Las Vegas has always been able to compete as the entertainment mecca of the world," Reid said. "To continue, we need a new and superior arena."

The new arena must be available to the entire community, Leiweke added, not just visitors filling the 200,000-hotel rooms within "comfortable" walking distance of the facility.

Plans are to break ground in June and open by September 2010.

The arena still needs to receive approval from the county. A traffic study of the area also will be necessary.

The arena will be built to National Basketball Association and National Hockey League standards so it can be home to one of their franchises.

Although no team has agreed to move into the arena, AEG officials said they have had discussions with an undisclosed investment group interested in bringing a sports team to the city.

Leiweke said he hopes the arena could lure a team from both leagues, much like Staples Center, which has the NBA's Lakers and Clippers and the NHL's Kings. AEG built and operates Staples Centers.

Leiweke, however, said the arena would be profitable even without a professional sports serving as its anchor.

The developers said they expect the new arena to become the premier venue for sporting events, concerts and special events in the city.

It will be the third large arena along the Strip.

MGM Mirage has the 16,000-seat MGM Grand Garden Arena and the 12,000-seat Mandalay Bay Events Center.

"We are not here to put any existing facilities out of business," Leiweke said, adding that the new state-of-the-art facility probably will draw some events away from the other venues.

AEG, an entertainment and sports presentation company, operates 50 venues worldwide, including Staples Center and The O2 in London.

The site for the arena is part of 34.5 undeveloped acres along Koval Lane from Flamingo Road to Harmon Avenue that Harrah's had assembled for future development.

Reid, along with Las Vegas Mayor Oscar Goodman, was among the area officials that announced the formation of an arena task force in April 2006 to look into the need for a new arena. A report issued late last year said a new arena was needed to keep the Las Vegas market competitive.

The report, paid for by the city and county, put the cost for a new arena at $404 million, including at least $11 million in public financing.

Pat Christenson, arena task force chairman and president of Las Vegas Events, said he was pleased by Harrah's and AEG's announcement, especially because no tax dollars will be used in the construction and operation.

"I don't know how it could be any better," Christenson said. "You have the top sports and events producer in the world."

The arena proposal comes just a month after plans were announced for a new arena that would be built in downtown Las Vegas as part of a $10.5 billion development by Michigan-based REI Neon/Warburg Pincus.

Goodman said the downtown project would not be affected by the latest proposal.

"I spoke to Mr. (REI Group President) John Weaver this morning, and it's business as usual," Goodman said.

REI does not have a construction plan nor has a financing plan been announced.

Later Wednesday, Goodman said he supports the off-Strip arena proposal although he believes downtown will ultimately be the better place for an NBA franchise.

Loveman said there is no plan for the arena to have a gaming component.

AEG has been looking to build an arena in Las Vegas for the past two years. AEG operates the Colosseum at Caesars Palace where Celine Dion performs. AEG had been interested in the downtown arena project until company officials decided to pursue a facility away from downtown.

Leiweke said he talked to various developers, including other gaming companies, before deciding to partner with Harrah's.

"If this arena was built too far from the Strip, if it's not within walking distance of the major developments and hotel rooms, quite frankly we would have missed the opportunity," Leiweke said.

One of the keys to the success of the new arena will be working with other gaming companies to bring events to the new facility, he said.

If the arena was able to bring in a professional sports franchise, Leiweke said, companies such as Wynn Resorts Ltd., MGM Mirage, Las Vegas Sands Corp, Boyd Gaming Corp and others might buy luxury suites and ticket packages to support the franchise.

Darren Libonati, director of the Thomas & Mack, said the arena can be successful if AEG can market the new arena to people other than Strip customers.

"If AEG manages as a neutral operator," he said, "the sky is the limit as to what they can attract."

He said the Thomas & Mack has a contract with the National Finals Rodeo through 2014, but promoters have the ability to opt out at any time.

The announcement comes with Harrah's in the middle of getting regulatory approval of a $17.1 billion buyout by private equity firms Texas Pacific Group and Apollo Management.

This is the third large capital investment project by the company since May.

In May, the company announced plans for a $704 million Margaritaville Casino & Resort in Biloxi, Miss. It was followed in July by the announcement of a $1 billion expansion and renovation of Caesars Palace on the Strip.

All three projects had to be approved by the pending ownership group.

Harrah's Entertainment stock increased 52 cents, up 0.61 percent, to close at $85.55 Wednesday on the New York Stock Exchange.

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Please enter your name Name: Please enter your email Email: Please enter a comment COMMENTS : (word count limit is 300) You have reached the maximum number of words allowed Current Word Count: Note: Comments made by reporters and editors of the Las Vegas Review-Journal are presented with a yellow background. Michael wrote on August 29, 2007 10:21 PM: Something else that makes this a good location is that with it right next to the LV Monorail, one could get on the Monorail at any stop and take the 3 or 4 minute trip to get to the Ballys/Paris station and then with a to be built bridge you could walk directly over to the stadium. chris wrote on August 24, 2007 11:09 AM: what the hell are you talking about J.Watts!!! The all star weekend was a major event that took place over a week! And if you research, the All Star event attracts that crowd no matter what city they hold it in! Its a mojor event! A regular season NBA game on a weeknight or even a weekend does not bring that element...! man you must never go out or travel.. I bet your even too shook to go to a grocery store at night cause you scared of the dark parking lot!! Last time I checked many major cities have profesional teams and huge sports arenas, and that isnt anything out of the ordinaly. If their was this major correlation between professional sports in major cities and gangs, crime, prostituion, thugs and teenagers running rampant dont you think every major crime infested city would dump their pro teams...... Also last time I checked LA, NY, NJ, Philly, Chicago etc all have worse crime problems than LV and I dont see them getting rid or their highly successful, marketable and profitable pro teams.... come on dude, grow up be a man!! J.Watts wrote on August 23, 2007 11:27 PM: I can foresee a crime spree like no other. A ton of people with CASH from casinos just walking to/from an arena. Tons of thugs and drug dealers cruising around on 40" wheels. Prostitutes and their pimps salivating at the mouth, believing that this arena will just bring in more back-alley business. Did you hear about the prostitutes thriving on All-Star weekend? That was just ONE weekend. Imagine that weekend EVERY weekend during a particular season. Vegas is just asking for trouble. When we put a lid on shootings inside of these HIGHLY SECURE casinos, then we should worry about MASSIVE parking lots full of expensive cars waiting to be robbed. It's like a ton of zebras with broken legs at a watering hole with the lions just sitting in the weeds...waiting. People are so concerned about MAKING a buck, they dont think about public safety. Not all of us are rich. Some of us make our money off robbing innocent bystanders that don't know any better. This is just a watering hole for the lions to gather around... I wish you all well at the events. I would hate to hear that someone that read this post ended up robbed by a group of 17 year olds that had NO intention of seeing a team play. They were just there to rob to the people that could AFFORD tickets to get inside... J.Watts wrote on August 23, 2007 11:26 PM: I can foresee a crime spree like no other. A ton of people with CASH from casinos just walking to/from an arena. Tons of thugs and drug dealers cruising around on 40" wheels. Prostitutes and their pimps salivating at the mouth, believing that this arena will just bring in more back-alley business. Did you hear about the prostitutes thriving on All-Star weekend? That was just ONE weekend. Imagine that weekend EVERY weekend during a particular season. Vegas is just asking for trouble. When we put a lid on shootings inside of these HIGHLY SECURE casinos, then we should worry about MASSIVE parking lots full of expensive cars waiting to be robbed. It's like a ton of zebras with broken legs at a watering hole with the lions just sitting in the weeds...waiting. People are so concerned about MAKING a buck, they dont think about public safety. Not all of us are rich. Some of us make our money off robbing innocent bystanders that don't know any better. This is just a watering hole for the lions to gather around... I wish you all well at the events. I would hate to hear that someone that read this post ended up robbed by a group of 17 year olds that had NO intention of seeing a team play. They were just there to rob to the people that could AFFORD tickets to get inside... Rick wrote on August 23, 2007 07:58 PM: I see no reason to fight THIS proposal. It's being paid for by private money. Let Harrahs worry about cost over-runs and other construction problems. I'd rather fight the downtown stadium that we KNOW will end up costing the public massive money, most of which will go into private hands. Traffic and security problems will have to be addressed no matter what. One problem I can foresee is extraordinarily high ticket prices and comp tickets for high-rollers. This can hurt public support for local teams. Another problem is that cities usually get an economic bump from professional teams. Restaurants and bars that are local see increases in business. We know Harrahs is going to do its best to keep all ancillary business for itself (After all, they are in business to maximize profits). Aside from some new service sector jobs and entertainment tax (Harrahs will work to minimize this - despite what Hewitt, the Harahs cheerleader, says) what's in it for the city? ron wrote on August 23, 2007 06:25 PM: Let's fight this proposal. We don't need a pro team here and locals have more exciting things to do than to support one. We certainly don't need another disaster like the NBA all-star weekend. Besides, traffic is already terrible in that area... adding more lanes does not solve the problem. Lee Yarbrough wrote on August 23, 2007 05:29 PM: The Tomas & Mack Center has a Maximum seating capacity is 19,522 for boxing and 18,776 for basketball and is 24 years old. Many events will not go there because of the age of the center. Only two Casinos have big indoor arenas as stated in the article and both are smaller then 20,000 seats. There are some very small arenas in town but most events will not go there because of their size. Sam Boyd is a Stadium, not an indoor arena. Most people do not want to sit out in 115 degree heat to watch a band or game. The company building the arena is privately owned and is using no tax payer money to build it. They also know what size arena they need in Vegas so they can make money with it. In building the arena they will also have to redo the roads in that area. The casinos and arenas are the ones that pay most of the taxes with gaming and entertainment taxes in Clark county. Those taxes pay for the roads, the schools and most other things in this valley. Those pocket books you are worried about are the ones that pay the taxes and expenses of this county so that you don't have to. john MB wrote on August 23, 2007 04:37 PM: well connie... actually the Thomas and Mack only holds about 16,000. And a 20,000 to 22,000 seat arena is the norm for NBA specifications. Its been determined by the NBA that anything larger would end up losing money due to it being harder to fill. Once this trend was noticed then most develpers did away with the large capacity and focused more on amenities, luxury and service.... tha NBA already said the T&M wasnt up to par and wouldnt return their. As for this city supporting a NBA franchise, of course we people would! I think many are underestimating the true Las Vegas sports fan. You are asking the wrong people, ask a sports guy would he love an NBA franchise here! Vegas does support the Rebel Basketball tradition, and when anything NBA comes to town (lakers games, summer league games, Team USA basketball etc...) Vegas is there. Also having an NBA team here regularly would deffanetly not bring that same All Star weekend element to this town. A simple local NBA game on a tuesday night at 8pm would not attract thugs, pimps, hoes, hangers on, wanna-be's etc.. the all star game was a major event that took place over a week! and any place were their is an event like that you get that same element of people atrracted. Not just Vegas. Connie wrote on August 23, 2007 03:27 PM: If they are going to try and build a new arena, and hope to attract a professional team, Then may I suggest, making it larger than 20,000 seats. the Thomas and Mack holds that many and Sam Boyd Stadium holds even more. Build the parking structures under ground so they will have more room for the venue. My personal feeling is, we do not need a new arena, we have one at almost every casino already. There are many other things our city needs other than another event center. Better roads, more school books, more teachers, etc. etc. Oh yeah, Everyone here is from somewhere else, so there won't be any loyalty to a pro team. And lets not forget all the major crime related problems we had when the NBA was here for 3 days for the AllStar game!! I don't want that happening every time there is a professional game played here. Protect our city NOT the pocket books of those who will make money from this deal! Neal wrote on August 23, 2007 02:32 PM: Koval used to be faster driving alternative to Las Vegas Boulevard, but it keeps getting busier as more projects are fiinshed (i.e. Wynn). The traffic from this project will force me even further away from the strip.I guess Harrahs thinks that most people don't mind spending 30 minutes to get from the Flamingo to Caesars. Read All Comments