The NHL vote on adding another expansion team on Wednesday, and indications are that Las Vegas will be the team's new home. It's the largest city in the U.S. without a major sports franchise and leagues have been circling for years, looking for an opportunity.
MGM Resorts (NYSE:MGM) created the right conditions this year when it completed T-Mobile Arena, which would become the home of the proposed hockey team. Hockey may be a strange fit for the middle of the desert, but it could also be a nice boon for the Strip as another entertainment attraction in the city.
How the NHL and Las Vegas could fit together
As Las Vegas has moved from a gambling-centric city to a place where people go for entertainment, there have been dozens of new attractions added. Cirque du Soleil, boxing matches, fountain shows, roller coasters, and day clubs are just a few of the ways gaming companies have expanded beyond the casino floor. And the key to keeping each going is having thousands of people streaming through the city day after day.
What hockey could do is bring 17,500 people to The Strip at least 41 nights per year for home games. Some fans might be local and some may be from out of town, but having foot traffic on the Las Vegas Strip is good for everyone.
The advantage for MGM Resorts is that it controls all of the resorts in close proximity to the arena. New York-New York, CityCenter, and MGM Grand will likely draw incrementally more people to their hotels as well as the casinos, restaurants, and shops. That means a boost for the company if the arena is filled with NHL fans. And this is on top of all of the other concerts and events that will take place at T-Mobile Arena.
As the other large real estate owner in Las Vegas, Caesars Entertainment (NASDAQ:CZR) could be the next biggest beneficiary, with properties that could take advantage of the extra foot traffic. The question is: How much benefit would it be?
But is Vegas a hockey town?
In theory, having 17,500 people spending money at NHL games is a good thing, but that's assuming 17,500 people show up. Las Vegas isn't a natural hockey town for locals and I'm not sure visitors will want to watch a hockey game indoors when they have other options in close proximity on the Las Vegas Strip.
Having more entertainment options in the city can only be a good thing for gaming companies, but the team's success will depend on people coming out to games.
MGM would be the big winner from the NHL in Las Vegas
There's almost no downside for MGM Resorts if the NHL does decide to come to Las Vegas. It would be incremental revenue for the arena and neighboring resorts and adds another entertainment option for guests. It's not a reason to buy the stock on its own, but it could create a tailwind for the company in its hometown.