Wrote this in 2005 ... On Las Vegas's attempt to lure a pro sports team
By Scott Soshnick
April 20 (Bloomberg) -- Las Vegas Mayor Oscar Goodman showed up uninvited at Major League Baseball's winter meeting last December with a sales pitch to remember -- and an entourage baseball officials won't soon forget. Accompanying Goodman, 65, to the gathering in Anaheim, California, were an Elvis impersonator and a pair of showgirls in full regalia, including feathered headdresses and, as the mayor put it, ``tattoos in all the right spots.''
A trial lawyer whose clients included the late Mafia chieftain Meyer Lansky, Goodman crashed the gathering so he could promise anyone who'd listen -- most notably baseball Commissioner Bud Selig -- that Las Vegas is ready for big-time sports and committed to doing whatever is necessary to land a team.
There are impediments to the mayor's plan, including the professional leagues' aversion to sports betting and some casino operators' vow to derail any proposal that includes taxpayer subsidies for a franchise.
Landing a team, Goodman says, would boost the bottom line for hotels and casinos. The franchise, he says, would bolster tourism, filling restaurants and lounges at a time when gaming-related revenue is waning.
Goodman's pitch focuses on the current population and construction boom in Las Vegas, where some 30 residential, retail and commercial development projects are in the works.
Nevada's population grew 66 percent in the 1990s -- more than any other state. The Las Vegas area has 1.8 million residents, up 20 percent from 2001, and the city receives about 38 million visitors a year.
In November, MGM Mirage, the No. 3 U.S. casino company, unveiled plans for a $4 billion project that will include condominiums, stores and restaurants on Las Vegas Boulevard, the four-mile, casino-lined stretch commonly referred to as the Strip.
Donald Trump is among the developers paying as much as $20 million an acre on the Strip, about seven times what a similar parcel commanded five years ago, says David Atwell, president of Las Vegas-based Resort Properties of America.
Las Vegas also lured an undisclosed investment from five-time National Basketball Association Most Valuable Player Michael Jordan, who is partnering with closely held Diversified Real Estate Concepts Inc. in the $600 million Aqua Blue Hotel and Resort.
`Not a Podunk Town'
``It's not a Podunk town anymore,'' says Marty Burger, executive vice president of New York-based The Related Cos., which has an exclusive contract to develop 118 city-owned acres in downtown Las Vegas, including a performing arts center that he likened to New York's Lincoln Center.
The Related Cos. is allocating a piece of that property for a sports stadium, Burger says.
Even so, Las Vegas is hardly a lock to land a pro sports team. For one thing, the city is 51st among U.S. television markets. Memphis, at No. 44, is currently the smallest TV market among the 30 NBA teams.
Smaller markets usually mean lower TV ratings, which translate into diminished rights fees from broadcast networks such as Walt Disney Co.'s ESPN or News Corp.'s Fox.
More important, if a team were to relocate to Las Vegas, the casinos would have to remove wagering on that club's particular league from their sports books. Those books handled $1.9 billion in wagers in 2003, the most recent year for which statistics are available from Las Vegas Sports Consultants.
``Las Vegas ranks with any other city in terms of its potential,'' NBA Commissioner David Stern says. ``For us, the only issue is the elimination of basketball from the gambling line.''
The NBA is negotiating with Goodman to stage its All-Star game in Las Vegas as early as 2007, which would mark the first time the league has played its midseason showcase in a city that isn't home to a team.
The no-gambling requirement probably nixes a Las Vegas team from the National Football League, which accounts for about 44 percent of total sports betting in the city, says Kenny White, chief operating officer of Las Vegas Sports Consultants, which helps casinos set their betting lines.
The NBA and college basketball account for 26 percent, while baseball stands at 20 percent, White says.
``The NBA will be the one to have the courage to do it first,'' says Mark Lazarus, president of Turner Entertainment Group, a unit of New York-based Time Warner Inc., the world's largest media company.
Nevada's legalized betting on sports doesn't deter the National Association of Stock Car Auto Racing, or Nascar, from staging a premier event in Las Vegas. The sports books accepted bets on a March 9 race that drew more than 150,000 spectators to Las Vegas Motor Speedway.
Nascar spokesman Jim Hunter says those involved in the sport are instructed not to place bets. ``To date, gambling has not been an issue,'' he says. ``The gaming industry certainly supports the races because it fills up their hotels and casinos.''
Nascar reprimanded one of its drivers, Brendan Gaughan, who admitted to betting on himself to win a race in 2003. ``We're confident he's not going to be betting on himself in the future,'' Hunter says. Gaughan, who won the race that he bet on, declined to comment.
Gambling issues aside, Jerry Colangelo, NBA Board of Governors chairman, who in April sold the Phoenix Suns for a record $401 million, says it's only a matter of time before a pro team moves to Vegas.
Baseball or Hockey
He predicts either a basketball or hockey team will be a likely candidate because the city's demographics mesh better with those sports.
Jeremy Jacobs, owner of the National Hockey League's Boston Bruins, also sees a pro team in the town's future. ``Whoever is going will be immensely successful because the entertainment industry will support it,'' he says.
Though casino owners have traditionally opposed any venture that encourages customers to stop feeding quarters into their slot machines, that opposition might be loosening because gambling revenue is falling.
MGM Mirage President James Murren says about 44 percent of his company's revenue comes from gaming, down from 65 percent a decade ago, and the percentage will probably dip to 35 percent within the next 10 years.
Nongambling revenue, meanwhile, is rising. The average visitor to Las Vegas last year spent $182.59 on food and drink, $264.38 on accommodations, $80.18 shopping and $37.82 on shows for a total of $564.97, according to the Las Vegas Convention and Visitors Authority.
By comparison, 87 percent of visitors who gambled had a budget of $500, meaning that's the most they were willing to lose.
``What's clear is there's a significant diversification in tourism activities,'' says Keith Schwer, director of the Center for Business and Economic Research at the University of Nevada, Las Vegas. ``The offerings have moved well beyond blackjack and poker.''
Joe Maloof, whose family owns the Palms Casino Hotel in Las Vegas and the NBA's Sacramento Kings, is part of a new breed of casino owners who look beyond gambling for revenue.
In March, the Maloofs announced plans for a $600 million condominium project, and they removed the NBA betting line from their sports book as a league-imposed condition on their ownership of the Palms -- known as much for its nightclubs and restaurants as its high-limit gaming tables.
The issue that will determine whether Las Vegas lands a team, Maloof says, is what kind of stadium-financing plan the city offers potential owners of a franchise. For a team to be viable, the city would have to pay for at least 85 percent of a new facility, he says.
Otherwise, the owner wouldn't be able to pay the debt on the building as well as fund the team's payroll, Maloof says. Because Las Vegas isn't a big TV market, a team owner wouldn't reap much revenue from its local broadcast contract, putting the club at a competitive disadvantage, Maloof says.
``If Vegas isn't ready to turn over a state-of-the-art arena, then it doesn't deserve a team,'' he says.
It's common for sports franchise owners to demand tax breaks and other inducements from municipalities. The District of Columbia, for example, approved a $584 million stadium-funding plan for baseball's Nationals, formerly the Montreal Expos, who are currently owned by Major League Baseball.
The plan allows the district to issue revenue bonds to cover the cost of the new stadium. The bonds would be repaid over 30 years partly by revenue from a new tax on area businesses.
Terrence Lanni, chief executive officer of MGM Mirage, which is 58 percent controlled by billionaire Kirk Kerkorian, says he would work to torpedo any sports team deal that included tax relief or public funding.
``We've invested $9 billion in this state, and we haven't gotten anything, nor have we asked for anything,'' he says. ``I'm definitely opposed to it if they're giving subsidies.''
No taxpayer money would be used to construct a sports arena, according to Goodman. Rather, the development of the real estate around the stadium or arena -- as well as a naming rights agreement -- would cover the cost, he says.
A sports facility in Las Vegas would reap as much as $5 million a year from a naming-rights agreement, says Don Hinchey of the Bonham Group, a Denver-based consulting firm that has secured a number of arena sponsor contracts.
Goodman says his preference is to land a baseball team, which he says would especially help casinos. The sport's 162-game season, along with its three- and four-game series format, would lure travelers looking for a long-weekend getaway, filling hotel rooms, restaurants and gaming tables, he says.
Also, a Las Vegas team that featured a Japanese star such as Hideki Matsui of the New York Yankees or Ichiro Suzuki of the Seattle Mariners would help lure Asian gamblers, Goodman says.
Foreign visitors made up 9 percent of the city's total last year, according to the 2004 Las Vegas Perspective, a market analysis.
``You get yourself a Matsui, or some young phenom with an Asian background, and people will come from all over the world,'' Goodman says.
Los Angeles Dodgers
Minor-league baseball hasn't been a home run for Las Vegas, which for the past 23 years has been home to the Pacific Coast League's 51s, the Triple-A affiliate of the Los Angeles Dodgers.
The team, named for Area 51, the military base that has become a popular symbol of the alleged U.S. coverup of unidentified flying objects, drew an average of 4,319 fans for its 71 home games last season, ranking 13th of 16 teams in the PCL. The team's stadium holds 9,334.
Lagging numbers aside, Don Logan, the team's president and general manager, says big-league baseball would be a winner. ``If the Cubs were coming in, the hotels could market to their Chicago customers,'' Logan says. ``They could get people to stay at the property and eat, drink and be merry. The games would be a part of it.''
Las Vegas's chance of getting a baseball team anytime soon was hurt by the relocation of the Nationals, who, as the Expos, spent the previous 36 years in Montreal.
``I'm not overly optimistic about getting a team there,'' said Bob DuPuy, Major League Baseball's CEO. ``We still have the Nationals to digest.''
World Series Champions
Florida Marlins President David Samson was among the team's executives who met with Goodman in December to gauge the mayor's interest in landing the 2003 World Series champions if they can't get a new stadium in South Florida.
In February, the Marlins reached an agreement in principle with Miami officials on a plan for a $420 million ballpark. Steve Copses, a spokesman for Samson, referred questions about Las Vegas to Major League Baseball.
If Las Vegas is able to land a baseball team, it likely would be an existing club that relocates rather than an expansion team, Goodman says, declining to discuss which teams might change cities.
The mayor, a Democrat who was elected in 1999, says he's wiser after previous talks with professional sports teams, some of which used his largesse to extract concessions from their incumbent cities. ``I'm not going to play the fool,'' he says.
In December, Goodman met with baseball Hall-of-Famer and former New York Yankees slugger Reggie Jackson, who is the point man for an investor group hoping to bring a team to the desert.
Jackson, 58, who is a special adviser with the Yankees, says he's met with baseball officials and has been told that his group, which includes Las Vegas Sun Editor Brian Greenspun, is next in line for a team.
``There's a great deal of excitement of people in Las Vegas wanting to be recognized as a major-league city,'' says Jackson, who is known as ``Mr. October'' for his slugging prowess in the World Series.
The city's exuberance for procuring a team was clear during Goodman's Jan. 11 state-of-the-city address. The crowd's most raucous response followed the segment of the mayor's speech devoted to landing a big-league team.
``Just imagine Reggie Jackson, No. 44, Mr. October, being the first African-American owner of a baseball team, which would be situated in our city,'' Goodman said. ``Wouldn't that be a feather in our cap?''
As for Goodman's splashy entrance at the baseball meeting in December, he says making a spectacle was a calculated risk that appears to have worked out.
Former Dodgers Manager Tommy Lasorda was the first to wrap his arms around Goodman, and embraces followed from Jack McKeon, who guided the Marlins to the World Series championship in 2003, and Dusty Baker, the toothpick-gnawing manager of the Chicago Cubs.
``By the time I got through being hugged by three of baseball's legends, everyone wanted to listen to why I was there,'' the mayor says. ``I could've been looked at as a fool or a clown or a genius -- and I got lucky.''
As for Las Vegas someday becoming home to an NBA team, at least one of the league's stars with roots in the city is skeptical about a team landing in a town where point spreads are as popular as buffets. ``It'll never happen,'' says Shawn Marion of the NBA's Suns, who attended UNLV. ``There's too much gambling.''
At the same time, Las Vegas is already a popular destination among professional athletes. Jalen Rose of the NBA's Toronto Raptors, for example, includes Las Vegas among his top five NBA cities -- even though it doesn't have a team. Not yet, anyway.