Not building arena could be costly

Tax money has a funny way of inflicting amnesia.

Much like the independent old-timers who protested health care legislation with signs that said, “Keep your government hands off my Medicare,” MGM Mirage officials are apoplectic over the possibility that public money could be used in the construction of a new 20,000-seat arena on the Strip.

The gaming giant’s representatives are forcefully reminding county leaders that they never asked for tax dollars for their hotel arenas, so commissioners had better not support public funding for a competing entertainment venue, especially when resorts are just starting to recover from the recession’s three-year beat-down.

“MGM Mirage is vehemently opposed to taxpayer funding for a new arena,” said Commissioner Steve Sisolak, who asked county staff to provide overviews of arena proposals — all of which have a public funding component — during Tuesday’s commission meeting. “I’ve had, like, six calls from them saying as much.”

But MGM Mirage — and every other Nevada gaming company, for that matter — isn’t clean enough to denounce anyone seeking a spot at the trough. Not when the Las Vegas Convention and Visitors Authority will spend more than $113 million in room taxes marketing and advertising the city this fiscal year, and an additional $76 million operating convention space.

Room taxes work a lot like a federal entitlement — when someone else is paying the bill, it’s easy to forget how much you benefit.

MGM Mirage’s stance ignores the undeniable truth that is driving Tuesday’s commission discussion: Unless Las Vegas constructs a state-of-the-art arena that trumps the urban palaces built in other big cities, the valley not only will lose many of the special events counted on to fill Strip hotel rooms, but it won’t be able to attract comparable replacements.

And the casino companies don’t have the hundreds of millions of dollars needed to construct one.

“The Thomas & Mack Center is 27 years old. It’s outdated to be the showcase arena of the entertainment capital of the world,” said Chris Milam of International Development Management, the Texas firm behind one of the arena proposals.

Milam’s sentiment is backed up by a convention and visitors authority study released just a few years ago. It’s also acknowledged by UNLV, which operates the Thomas & Mack Center. University officials know the National Finals Rodeo and the Professional Bull Riders World Finals now have better options than the college basketball arena and can’t be counted on to stay much longer.

“We understand a new arena is coming,” said Gerry Bomotti, UNLV’s senior vice president for finance and business. “We understand it’s in the long-term interests of this community.”

However, it’s also in the long-term interests of the community to not get stuck with a huge bill for the project.

In that regard, Milam’s proposed Silver State Arena, which would be built on the site of the closed Wet ‘n’ Wild water park, is easily the best choice. The $750 million arena would require $125 million in public financing, provided through existing redevelopment zone property taxes that were seized by county commissioners last year in response to plunging revenues.

About 85 percent of the project would be privately financed, when new arenas around America have been, on average, 85 percent publicly financed.

Last week, Milam said he would write the county a check to cover the first two years of bond payments, coinciding with the arena’s construction, so commissioners don’t have to make an additional $9 million to $10 million in budget cuts in redirecting the redevelopment funds toward their intended purpose. Once the arena is open, Milam says, the tax collections from new economic activity will more than make the county and other taxing authorities whole.

Compare that with the proposal from the nonprofit Las Vegas Arena Foundation, which would build on land behind the Imperial Palace donated by Harrah’s. The foundation, led by political figures including former County Commissioner Bruce Woodbury and former county managers Thom Reilly and Pat Shalmy, wants to finance construction with a new sales tax district in the resort corridor. Voters would have to approve an advisory question in November, then the 2011 Legislature would have to approve jacking the Strip’s sales tax rate toward 9 percent.

If the commission is going to act on this issue, Milam’s proposal is a no-brainer. It’s a shovel-ready technological marvel. It doesn’t require a tax increase or the blessing of voters and lawmakers. Land, loans, labor and materials might never come cheaper. Thousands of construction workers would be back on the job within months, and the arena’s planned 2012 opening might come soon enough to keep the bull riders and the rodeo in town for at least another decade.

But commissioners must apply skepticism — and the concerns of MGM Mirage — to the promises of event bookings and increased tax collections. If this economy has taught us anything, it’s that nothing is guaranteed. Will a new arena really draw dozens of new events, like neutral-site NBA, NHL and NCAA contests, or compel a professional sports franchise to relocate here? Or will it merely retain current schedules — and cannibalize existing arenas in the process?

Contrary to what everyone is saying about the need to “replace” the Thomas & Mack Center, Bomotti says UNLV has no plans to close the arena under any circumstance. The university depends on arena revenues to subsidize the athletic department, and will merely adjust its business plan to compensate for lost bookings.

Commissioners know Las Vegas is damned if they don’t take a big step toward arena construction this week.

They also know that, thanks to MGM Mirage’s political clout, they’re probably damned if they do.

Glenn Cook ( is a Review-Journal editorial writer.

News Headlines
Local Spotlight
Home Front Page Footer Listing
You May Like

You May Like