Who would rest from gambling in Las Vegas to see an NBA team strut their stuff on the court or watch a pro hockey squad face off on the ice?
Two big companies -- Vegas mainstay MGM Resorts International (NYSE:MGM) and privately held sports/entertainment purveyor Anschutz Entertainment Group (AEG) -- are placing their bets on you. They're building a multipurpose arena with an emphasis on sports close to the city's Strip and plan to open the facility in April 2016.
But considering there are no pro teams anywhere near Las Vegas, let's explore the odds of acquiring one.
If you build it ...
The provisionally named Las Vegas Arena is going to be sized for the big leagues.
The facility is being constructed to the specifications of both the NBA and the National Hockey League, and will have capacity for up to 20,000 spectators. As expected of any arena project these days, it will feature numerous amenities for free-spending VIPs, 50 suites, and roughly 1,850 "club" and "event level club" seats.
Such venues aren't cheap to build. This one will cost $375 million, with the two firms each ponying up $75 million, and borrowing the remainder from a lending consortium captained by Bank of America.
Even for a deep-pocketed operator of mammoth casino resorts (MGM) and the company behind some of the most high-profile entertainment venues in the country (AEG), that's a lot of scratch.
... they might come
No one builds a facility that large -- and to professional league specs -- without hoping for such a team as a tenant. Unfortunately, Las Vegas lacks one at the moment.
Yet if any municipality has a chance for landing a sports franchise at that level, it's Sin City. It's one of the largest municipal areas in the country, and draws millions of visitors every year (nearly 40 million in 2013, to be more precise). Its numbers eclipse those of many smaller cities currently home to pro clubs.
Since sports teams are prohibitively expensive to run, they occasionally end up on the block. Earlier this year, the NBA sold the Los Angeles Clippers to ex-Microsoft CEO Steve Ballmer. Not long before that, the Milwaukee Bucks and the NHL's Phoenix (now Arizona) Coyotes also changed hands.
Sooner or later, another team will hang out a FOR SALE sign. There has also been speculation that the NHL is hungry for expansion.
AEG already owns the NHL's reigning champs, the Los Angeles Kings, and has stakes in numerous clubs across several different sports. As such, it would be a natural candidate to either buy an established team and move it to Vegas or make a bid for an expansion franchise.
Alternatively, local interests -- perhaps encouraged by AEG/MGM's determined lobbying -- could make a purchase.
Fighting for an audience
Until that happens, the two firms will have to rely on other big-crowd events at the venue. Mixed martial-arts league UFC is hoping to put on six of its events there every year. And since the arena is located in one of the grandest entertainment destinations in the world, it's a natural spot for anything that falls under the category of mass-market fun -- concerts, boxing cards, monster truck shows, etc.
But Vegas being Vegas, of course, there are numerous other entertainment palaces -- like the arena, many on or near the Strip -- that could conceivably host such offerings. MGM/AEG's people will have to sell those sleek, state-of-the-market amenities hard in order to win that kind of business, which is not an easy task in such a well-supplied market.
A pro sports franchise, if it's any good, shouldn't have trouble filling many of those 20,000 seats for the 40 or so home games it'll play. That's a lot of dates and potentially a lot of tickets. No wonder MGM and AEG are angling for that kind of lucrative tenant.
Eric Volkman has no position in any stocks mentioned. The Motley Fool recommends Apple, Bank of America, Google (A shares), Google (C shares), and Netflix. The Motley Fool owns shares of Apple, Bank of America, Google (A shares), Google (C shares), Microsoft, and Netflix. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.