This summer, the NHL expanded for the first time in more than 15 years, awarding a franchise to Las Vegas. Granted, while hockey is a religion in Canada, it barely moves the needle in the United States, save for cities such as Detroit, Boston and a few others with rich hockey traditions.
Even so, the NHL’s willingness to place a team in Vegas was an important moment, not just for the city but possibly the entire professional sports landscape. For years, various leagues were tied to Las Vegas, ginning up expansion rumors, particularly after the NBA held its annual all-star weekend festivities there in 2007, but nothing ever came of such rumblings. One reason was the financial crisis. Perhaps no other city exemplified the lending excesses and economic troubles that led to the housing collapse quite like Las Vegas.
Even more important was the notion, unfounded or not, that the presence of legalized sports wagering would jeopardize the integrity of games played there. No sports commissioner wanted any part of a gambling scandal. By expanding there, though, the NHL served notice that such concerns can be easily overcome (if not entirely misplaced), paving the way more leagues to consider Las Vegas.
All of which brings us to last month, when the Nevada Senate approved a deal to provide public financing for a proposed football stadium in Las Vegas in an effort to lure the Oakland Raiders away from the Bay Area.
The fortunes of Las Vegas have always been cyclical. Years past, it was a mob-run gambling destination, glorified by the Rat Pack and other Hollywood stars. Then, during the 1970s and 80s, it became Sin City, a seedy, everything-goes bazaar of semi-lawlessness.
From there, the casinos attempted to soften their image, building more family friendly properties like The Mirage, Excalibur and Treasure Island. Now, it’s all about appealing to the young and the beautiful, explaining the explosion of nightclubs, pool lounges and high-end restaurants, but those ventures aren’t big money makers. Gambling is, and revenues haven’t fully recovered since the financial crisis.
The arrival of the NFL, therefore, could represent Las Vegas’s next cycle, prompting a much-needed new era of development and job growth, infusing the city with new life and bringing some good news to casino and resort operators. Wynn Resorts, Las Vegas Sands and MGM have all struggled to find their footing in recent years. Wynn has been hit especially hard, losing two-thirds of its pre-crisis valuation. Boyd Gaming, which caters to locals, has done better, but it, too, would benefit enormously from having an NFL team in its backyard.
Of course, many are skeptical of a potential Raiders move to Las Vegas. Some doubt the economic promise, questioning whether new stadiums produce a net gain for local economies, citing studies showing such projects typically lead to different consumer spending patterns, not more spending overall. Las Vegas, however, would probably be one of the exceptions, since its economy is so heavily reliant on outside dollars and entertainment.
Also, it’s hard to ignore success stories like the NBA’s Thunder, which relocated to Oklahoma City in 2008. Last year, the city estimated that each home game produced a benefit of $1.5 million. And on a much grander scale, consider AT&T Stadium in Arlington, Texas.
The complex is a huge part of the Dallas ecosystem, having played host to the Super Bowl, the College Football Playoff, WrestleMania, the NCAA Men’s Final Four, boxing, international soccer, the Cotton Bowl, countless big-time musical acts and Dallas Cowboys games. If a jewel like that gets built near the Strip, it’s only a matter of time before similar events come Vegas, which translates into new casino projects, new businesses and new jobs.
Think that’s an exaggeration? The economic impact of the Floyd Mayweather-Manny Pacquiao super fight last year was more than $150 million, according to a Las Vegas Visitors Authority estimate. A state-of-the-art stadium in Las Vegas hosting high-profile events could be like having a couple mini Mayweather-Pacquiao fights per month.
Naturally, there is also some uncertainty about whether a relatively small-sized market like Las Vegas could support both an NHL and NFL franchise. Doubters point out that it’s the 40th largest television market in the country, according to Neilsen, a steep drop off from the San Francisco-Oakland-San Jose region, which is the sixth largest. Ordinarily, that would be a significant concern, especially with NFL ratings showing declines this year.
But it ignores the fact that Las Vegas is one of the best football viewing markets in the country, consistently ranking in the top ten for prime time telecasts. Armed with a team of their own, viewership in the area would become even stronger.
Moreover, the Raiders consistently rank near the bottom of the league in local television ratings, due in part to the fact that it shares the Bay Area with the more popular San Francisco Forty Niners. So even though there are far fewer people in Las Vegas, the number of eyeballs fixed to Raiders games could actually go up.
Whether the Raiders ultimately end up in Las Vegas is far from certain. A number of procedural obstacles remain before that can become a reality. But despite the noise, there shouldn’t be any question whether Las Vegas could support a team. It easily could, and the city and its big businesses would flourish with the NFL.
Ross Gerber is CEO and president of Santa Monica, Calif-based Gerber Kawasaki, an investment advisory with approximately $465 million in assets under advisement. Clients and employees of Gerber Kawasaki own positions in LVS, WYNN and MGM. Readers shouldn’t buy anything without doing their own research.
By: Ross Gerber
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which course of action may be appropriate for you, consult your financial advisor. No strategy assures success or protects against loss.
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