EDITORIAL: Publicly funded arena a bad idea
Las Vegas is a big-league town without a big-league team. But the city is so confident that sports would jump-start Symphony Park’s development that it’s willing to spend public money on an arena to lure at least one franchise downtown.
It’s a risk the City Council can’t afford to take.
For the past three years, the city of Las Vegas has worked with Baltimore-based Cordish Companies to develop a downtown arena suitable for professional sports. Today, the City Council will vote on a four-month extension to its negotiating agreement with Cordish to try to tie up the final details of a $390 million arena proposal.
Under the plan, the city would cover $239 million in costs and Cordish would contribute $151 million. The city’s share would be funded by $187 million in bonds, to be repaid by arena revenues, $3 million from a sales tax-funded tourism improvement district and about $50 million from sources yet to be determined.
Even if no competing arena projects were on the drawing board, this would be a perilous proposal. But this plan is not the valley’s only arena proposal. In fact, MGM Resorts International and entertainment giant AEG announced last year that they would build a privately funded, $350 million, 20,000-seat arena on the Strip. It’s expected to break ground this year and open in 2016. Building a new, publicly backed arena that would directly compete with private venues is bad public policy.
Yes, Las Vegas is an incomparable entertainment market, with five medium-to-large arenas already operating on or close to the south Strip. Yes, none of those venues — not even a renovated Thomas &Mack Center — meets the standards of modern arenas in other markets. But the MGM-AEG arena would fill that void — at no cost to the public.
And once that project opens, would a downtown arena be able to attract enough top-notch performances to repay the bonds issued to build it? That’s questionable, regardless of whether the arena attracts National Hockey League and National Basketball Association teams, as Cordish hopes. Big-league teams would demand a huge cut of arena revenues as a condition of moving there. If arena revenues are not sufficient to repay the bonds, what are the ramifications for city services? And what if the MGM-AEG arena lands a team as a tenant as the downtown arena is still being built?
Once completed, the city would own the downtown arena, not Cordish. That’s certainly more favorable than spending public money and handing the keys to the developer. And city officials wisely killed a proposed downtown taxing district to cover some of the costs. But undercutting privately owned arenas, which help support thousands of local jobs, is a deal breaker. This valley became the entertainment capital of the world without major league sports. “If we build it, they will come” is too much of a gamble in this fragile economy.
The council should thank Cordish for its efforts and come up with a new plan — one that doesn’t involve public funding of a redundant arena.