08 January 2006

Courting Vegas

I've put off writing much about Las Vegas since this blog's inception. This is not because of any opinion about whether Vegas is a viable relocation candidate or not. Instead, real information about Sin City's plans has been scarce. Now that the Marlins are in active discussions with potential relocation candidates including Vegas, some details are starting to come out that give a better picture of what's happening inside the head of flamboyant Las Vegas mayor Oscar Goodman.

Political Landscape
Before I get into the details, it's important to understand the relationship between the City of Las Vegas and Clark County. The City is the county seat and all of the county's administration offices are downtown. However, most of what visitors see when they visit Las Vegas isn't technically within Vegas city limits. The section of the Strip that holds all of the enormous new casinos is part of an unincorporated section of Clark County called Paradise. Despite this, all of the businesses within this section have Las Vegas addresses. This is due to rules set up decades ago to encourage development on the Strip without the taxation associated with setting up in the City. In return, Clark County funded and built some impressive amounts of infrastructure for that area and has tons of cash to build and maintain its schools and other services.

Goodman officially presides over the City's portion of the Strip, which includes older casinos such Binion's, where the World Series of Poker is played. This is considered downtown Las Vegas, and in the past it has suffered, living in the shadow of its glitzier neighbor to the south. Tens of millions have been poured into redevelopment over the past two decades to improve the image of downtown. The biggest project so far has been the Fremont Street Experience, a huge overhead light show that serves to visually connect numerous businesses along the street. The area has managed to lose its dingy reputation, but it's difficult to keep up with billions of private dollars being invested in the construction and renovation of the big casinos down the street.

Inside the city limits, downtown is basically defined by a redevelopment zone, first created in 1986 and expanded twice since then. The creation of such a zone is crucial to raising funds for various public works and public-private projects. Public funds for such projects can be raised without a referendum, and in some cases eminent domain can be used. Below are an aerial view of downtown and a map of the redevelopment zone (in tan/brown), with the dotted line at the bottom representing the southern city limit.

The green section above is a 61-acre parcel called Union Park. It isn't actually a park. Instead, it's an empty tract of land that fills Goodman's dreams. There are various models of what this blank slate will look like throughout City Hall. Plans currently call for an Alzheimer's research center, which will break ground in a month or so. City Hall may move there. High-rise condominium development is scheduled for the block in conjunction with ground-level retail, a performing arts center, and public space in a sort of self-contained village concept. The new World Market Center furniture showcase and exhibition space had its first phase opened last year to resounding success. It sits kitty corner to the southwest, and expansion is planned for the area just to the west of Union Park.

Goodman's vision wouldn't be complete without a ballpark. One variant of his plan has the ballpark on 18 acres of Union Park. Goodman hasn't revealed how exactly the ballpark would be financed except to say that it has to be done creatively. Some redevelopment funds can be made available, but probably not for an entire ballpark. Since Las Vegas is not known for its pleasant desert summers, any ballpark would have to have a retractable dome, adding $100 million to its cost. That could push the cost to $400-500 million even if the land were thrown in for free. It's possible that a ballpark could be an extension of the World Market Center or some other flexible convention space, now that technology is available to move a natural grass field either on rollers (Arizona Cardinals new Glendale, AZ stadium) or in pieces (Millenium Stadium in Cardiff, Wales). A typical field covers nearly 4 acres (160,000 square feet), making it a potentially compelling, wide open (no columns) exhibition space with plenty of amenities attached (clubs, restaurants, suites). This is all speculation, of course, but it makes sense for a city bent on dominating the convention market. Having the space available would also help pay the bills during the baseball offseason.

In September a large national developer, Related Cos., backed out of a deal to build condos at Union Park. Related is focusing on the Las Ramblas project, which is fronted by George Clooney among others. Vegas is experiencing a high-rise condo-building boom, so it wasn't long before numerous other builders stepped to the plate. The eventual "winner" was Newland Communities of San Diego. Newland has an option to buy up to 7.6 acres of land at Union Park, with the ballpark's 18 acres potentially available for other development if a pro sports team is not negotiating with Vegas on a stadium deal in one year. This is all contingent upon Newland breaking ground in the next year on its development work. Other land in the area could be made available outside Union Park, but that may require more complex dealing, especially if casinos become directly involved by providing land near the Strip. This development is extremely important because it's the first time that Goodman has played the deadline card. Over the past several years MLB frequently used Vegas as its #1 relocation target. Vegas was considering a compelling candidate for the Expos until it became clear that moving to DC would provide MLB significantly more money than a move to Vegas or Portland. Goodman's tired of allowing Vegas to play the mistress; he evidently wants a real commitment from MLB. We'll see if MLB responds in kind or is a mere tease.

Casino Paradox
The table below shows Clark County's 35 largest employers as of Q2 2005. It should come as no surprise that casinos make up almost 70% of the list. Public entities cover almost all of the rest.

The State of Nevada has been pushing hard to bring in other industries with mixed degrees of success. Nevada has several advantages over California when it comes to taxes and incorporation, but so far the corporate exodus from California predicted when the dot-com crash and recession hit hasn't really happened. Southern Nevada's explosive growth means that it's just a matter of time before it starts to innovate and land other industries. Casinos still have the lion's share of potential corporate interest for a ballpark, and judging from the number of San Diego-area casinos that had suites at Petco Park (all of them), selling suites and club seats to casinos would be like shooting fish in a barrel. The casinos would in turn comp their high rollers and dignitaries in their suites, writing it off as the cost of doing business and adding it to their portfolio of available entertainment.

As interested as the casinos may be, some major gaming interests have expressed displeasure at the idea of a ballpark being built with public money. Their argument is that they invest their own money in their facilities without expecting handouts. They also pay taxes, an idea that has been lost in the recent era of stadium building, with PILOTs (payments in lieu of taxes) often used as a method to help finance construction. Goodman said in a recent USA Today article, "Major League Baseball needs us more than we need them." That's only half of the story. While the Marlins, A's, and Twins are less moneymaking franchises than some others with new ballparks, it's not as if MLB is hemorrhaging red ink by allowing them to operate. The other half of the Vegas story is this: The casinos don't need baseball, but baseball in Vegas definitely needs casinos. Goodman's posturing aside; it's obvious that he wants to get a MLB team to earn Vegas its Major League City merit badge.

Sports Betting
The argument about gambling poisoning pro sports may have made sense twenty years ago, but it doesn't today. Professional players and teams make such astronomical amounts of money that it doesn't make sense for them to risk their livelihoods to shave points or throw games. Still, MLB reeks of the stench of the nearly century-old Black Sox scandal and Pete Rose's addictions. It would make sense for MLB to distance itself as much as possible to avoid the appearance of impropriety. However, a gray area already exists by virtue of Indian casinos buying suites in states where they operate. Who actually operates those casinos? The big corporate gaming interests, of course. Sure, the jobs and some money go to the tribes, but it's the gaming industry that provides the know-how and capital. It wouldn't be too difficult to connect the dots.
Nevada is the only state in the union with legalized betting on sports. With all of the intertwined money and the encroachment of gaming interests closer to major metropolitan areas, at some point the bellyaching may all become moot. The pro sports each want the casinos to take their respective leagues off the sports books to eliminate any concern about impropriety. That's a hard sell considering that the industry makes billions every year on sports betting. Would they simply agree to kill a revenue source just to improve the image of their hometown? The casinos already provide image to spare and Vegas really doesn't need any help in that department.

Where are the fans?

We know that Oscar Goodman is a fan. An influential fan, too, as the recent visits by Marlins officials to Vegas indicate. But where are the prospective seat fillers - the hardcore and casual fans who are expected to regularly go to games by buying season tickets? The answer to this question isn't clear. Vegas's growth puts the metro at 1.8 million residents and climbing. That's not exactly huge since it's only as big as Santa Clara County and smaller than the combined East Bay (Alameda/Contra Costa Counties). Many of the area's transplants work in the gaming industry, which presents two problems. Many of the jobs are low-paying, leaving a large part of the population out of the preferred demographic. Since Vegas is a 24/7 city, one-third of the place is working at all times, further reducing the pool of potential fans. Sparse attendance at AAA Las Vegas 51’s games is cited as a negative, but the experience there is nothing compared to a game in an air-conditioned, retractable dome stadium.

Goodman's argument is that some percentage of his city's 40 million visitors will see a baseball game there. How much? One percent? Five? It sounds like a flawed premise, especially when you consider that the vast majority of visitors already come from markets with major league baseball. The argument may have worked a decade ago, when Vegas was still in its "family" phase and trying to attract everyone regardless of income level. These days, Vegas has decidedly gone with a more upmarket approach with the ultra-lux casinos like Wynn Las Vegas, with higher-class entertainment and restaurants. Many visitors come from Southern California (27% according to some estimates), the Bay Area, New York, and Chicago. Those markets are already saturated with major league baseball. There's a potential niche in Goodman's approach in that for instance, a Chicago-based businessman and lifelong Cubs fan might be attending a convention in Vegas while the Cubs are in town for the weekend, prompting him to grab tickets. Even that is a crapshoot because of schedule incompatibilities. Some stadium junkies like me would go just to check out the ballpark, but that's typically a one-shot deal and the novelty will fade very quickly.

My biggest concern for Vegas is that it lacks a grassroots organization, like the Oregon Stadium Campaign or Baseball San Jose. These groups are vital for many reasons, including the fact that they automatically gauge and foster support. By conducting petition drives and surveys, they can quickly assess the public's interest in baseball from hardcore and casual fans, families and corporations. They can raise money for pro-stadium ad campaigns should a stadium come to a vote. They often are comprised of numerous local civic and business leaders who can put their considerable weight behind a campaign by supporting it. Most importantly, these groups can keep the issue in the forefront of the region's consciousness. It could be argued that Goodman is filling this role now, but what if he runs for Nevada's available U.S. Senate seat or for the governorship this spring? Suddenly there will be a vacuum with little in place to fill it as Goodman spends much of his time campaigning for a different office. Perhaps Hall-of-Famer Reggie Jackson, who lives in Vegas and has long advocated bringing a team to Sin City, could become the face of the effort. That could work in terms of rallying public support, but it may backfire when dealing with MLB, whose club-like mentality may not have any interest in making room for an outspoken maverick like Reggie.

The clock is ticking for Vegas. If it's going to happen, MLB will have to do the proverbial "sh*t or get off the pot." The mayor isn't messing around anymore. He's playing for keeps. That should concern fans of the A's and Marlins, since both of their leases are going to end soon and there's no telling what Goodman will do to make a deal with MLB. There are major challenges with the MLB-to-Vegas effort, but as I've said before, it's all about the deal. Wolff's aborted baseball village concept may not be feasible in the Bay Area due to its size, but could it be done in Vegas? We can argue until we're blue in the face about one the viability of baseball in Las Vegas, but if something were to occur to give a team and MLB a sweetheart deal, it may be impossible for baseball to say no. That would prove that the more things change in Sin City, the more they stay the same, eh? Then again, there's little reason to believe that Vegas has a ton of cash lying around somewhere just waiting to be spent on a stadium. Once real financial details are available, look for an analysis here. Until then, the mayor has some pretty models to play with.


Georob said...

Outstanding work. I can't wait to see your piece on Portland. (hint: it rains too much)

What I can't understand about Las Vegas is if it's such a potentially strong market, why hasn't another pro sport gone there already? Particularly the NBA, given the success of UNLV's program. A basketball arena would be less expensive to build, require less seats to fill, for fewer dates. It would also be more attractive to the upper-end clientele(particularly if they signed some marquee Michael Jordan-type players ,while also giving Mayor Goodman his "major league merit badge".

We hear much speculation about how strong baseball is(or isn't) financially. But should we end up seeing Bud Selig agreeable to entering an untested major league market based largely upon a "sweetheart deal the owners couldn't refuse", it may speak volumes about the current state of Major League Baseball.

Like you said, baseball needs the casinos more than the casinos need baseball.

Anonymous said...

I am really pulling for the Marlins to go to Las Vegas. It seems to me to be the only realistic market capable of supporting a MLB franchise. Portland may have dreams, and I as sure they will eventually reach a density that allows for a team, but I think they are several years away. If Vegas is effectively taken off the table for the A's, that means they will remain in the bay area. It doesn't really bother me if they leave Oakland, I just want them to remain in the bay area. As much as I hate saying it, Oakland hasn't exactly proven itself friendly to baseball over the years. Even now, when the threat of the A's leaving has never been more immenent, the city and the local fans don't take them seriously. The Raiders fiasco should have taught them something. The sad thing is, if the A's do leave and yet remain in the Bay, then Oakland will NEVER get another team.

steeplechase3k said...

If it rains too much in Portland, then I guess all of these MLB cities should get roof on their stadium really quickly or else they'll never survive.

Detroit, Boston, Pittsburgh, Texas, Cleveland, St. Louis, Baltimore, NY, Chicago, DC, Cincinnatti, Philedelphia, Atlanta, Kansas City, and Miami. Because every one of those markets has an open air stadium, and gets more rain in the baseball season (Apr-Oct) that Portland.

And Vegas is the only market capeable of supporting MLB? Portland has .4 million more people, and far more people in the surrounding area (but outside of the greater metro area). Vegas is goring faster than Portland, but Portland is still in the top 10 (I think) in growth.

Marine Layer said...

Let's not turn this into a Portland weather thread. If and when I write a similar piece on Portland, I won't spend more than a paragraph on the weather because it's a red herring. During the summer, it's often warmer in Portland than it is in Oakland. If Portland doesn't get a team, weather will not be the reason why.

jrbh said...

I was up in Seattle visiting during one of those times when the whole debate over the retractable roof heated up yet again, and the Seattle P-I quoted a weather study commissioned by MLB.

What they looked into was precip levels from April 1 to Sept. 30, 1 pm to 4 pm and 7 pm to 10 pm.

The five driest cities in the majors were, of course, the California cities: LA, SF, Oakland, Anaheim and San Diego.

Next driest was Seattle.

The weather problem in Portland wouldn't be rain. It would be the same as it is in Oakland, cold nights, especially early in the season.

The Cactus Leaguer said...

Great work ML. This is the first piece I have seen that had even a shred of insight as to what a stadium site/funding scenario in LV might look like (beyond the ill-fated Paris parking lot scheme from a couple years ago).

Georob - hint: Portland's mayor and Jerry Brown are two peas in a pod (at this point, anyway).

Marine Layer said...

The LV Sun article I cited doesn't specify that a MLB team has to move to the Union Park site. It could be any pro sports franchise, which is important. It makes sense for Goodman to keep his options open though that deadline will make a run at either a NFL or NHL franchise unlikely. The NBA is the most likely candidate if it's not baseball.

Anonymous said...

Where are your stats on Portland as compared to Vegas? I don't doubt your word, but I would be interested to see who has the greater population density within 30 miles of any proposed stadium site. I know one of the knocks on Vegas is that there is much more to do and baseball would face stiffer competition for entertainment dollars. I disagree. I think this will enhance a teams attendance. Fact is, Vegas, the entire city, is geared toward "entertainment". The majority of it is gambling related. People get tired of doing the same thing and will quickly fill an alternative venue. Every dollar there is generated by or related to entertainment. MLB could only benefit by merely "being" in that type of environment.

The Cactus Leaguer said...

Anonymous - ask 10 people about population stats and you'll get 10 different answers. I work with the stadium campaign group in Portland so I speak from experience on this.

"Official" 2004 US Census estimates put Portland metro at about 2.1 million, and Vegas at just over 1.8 million. However, Portland's newest estimates exclude the 350k which are based 45 miles south (Marion County, where the state capitol is located). Vegas, on the other hand, includes about 200k from Mohave County, Arizona, based about 100 miles from Las Vegas with a stop on the Hoover Dam in between.

Why is Marion County now excluded and Mohave County included? Because the metro areas are based on commuting patterns. After the 2000 census, there were just enough people who stopped commuting to Portland from Salem that they took Salem off of Portland's population count (even though the reality is that tens of thousands of people make this 30-45 minute commute up I-5 every day). Mohave County, on the other hand, has zero industry and most people have low paying jobs with crazy schedules in Vegas casinos (no slam against Mohave County intended, but many of them live in trailer parks or lower income housing) --- not exactly MLB's demographic.

So the reality is that Portland is over 2.4 million and growing at solid, consistent, 15-20% clip each decade, while Vegas is ostensibly at 1.6 million, growing rapidly, and running out of land, water, etc.

eddie736 said...

Another outstanding article, ML. It was very thorough and complete. As a lifelong A's fan and Las Vegas resident (I was born and raised in the Sierra Nevada foothills) I feel compelled to respond to some of the comments.

First of all, the successful days of the UNLV basketball program are a distant memory. The team is no longer a national powerhouse, and the local sports fans, fickle at best, won't return until they are. Until then, the season-ticket holder base has dwindled to about 30% of the Thomas & Mack Arena capacity, and plenty of tickets are available at the door. There are rumblings that they will close off many sections of the upper deck to reduce operating costs. (Sound familiar?) At any rate, that should give pause to anybody trying to move in an MLB team with a mediocre roster.

Second of all, people don't "get tired of doing the same thing" (gambling) here; they simply run out of money. If anything else were true, the companies would not be racing to build the next billion-dollar property. But if you do bust your bankroll, the casinos already have plenty of other ways (upscale shopping, mega-nightclubs, extravagant stageshows, four-star restaurants) to max out your credit cards. The casinos will not let their customers run off to the ballpark for 3-4 hours without a fight, not even on a mid-summer Thursday evening.

And by the way, this doesn't just apply to the Strip and downtown casinos that cater to the tourists; the "local" casinos (the Stations and Coast properties) are pulling out all the stops to make sure their customers don't stray too far away from the slot machines either.

Finally, the casinos will never agree to take baseball (or any other pro sport) off the boards in the sports books. It's an absolute deal-breaker. They might be convinced to drop action on the local team, but not the whole sport entirely. That will never be negotiable.

Baseball may need the casinos, but the casinos don't WANT baseball. And the casinos do not report to the mayor.

Anonymous said...

Those are great points Eddie, but I have been in Vegas to do a little gambling. I do get bored with it after a while and wouldn't mind taking a four hour break to catch a game. Especially if it's indoors and air conditioned. I know I speak as a stat of one, but I can't help but feel that others would be of the same mind. I think the gambling issue has been adressed very succincly already. Petco suites are completely owned by gambling interests, and MLB doesn't seem to have a problem with their money. The salaries of the players today vs 1918 pretty much eliminates potential scandals of old. When push comes to shove, I don't see any pro sport making much of an issue of it. Vegas appears to be a target of choice for the Marlins, so a lot of this is now a moot point. I sincerly hope they do go to Vegas. I don't think that Portland has a realistic shot at a team quite yet. Maybe I'm just kidding myself and grabbing at straws that keep the A's local.....can't really hold that against me can you? And really, Vegas has an image that is out in front of the public, Portland really doesn't it. Not to the degree that Vegas does at any rate.

Marine Layer said...

Thanks for the kudos, all.

For the pro sports it's an issue of perception. Having a clean image is invaluable to the leagues and getting close to Vegas threatens that. Nevermind that steroids or crime have already sullied their reputations - at least the gambling link is something they can directly control. It's a very difficult decision to make and as long as the leagues are making good money for their owners (Selig hasn't been shy in boasting MLB's financial sturdiness), there isn't a need to move to Vegas.

Anonymous said...

Great article. As, a Vegas native that has relocated to Oakland, I can only think of one obstacle that hasn't been discussed: Las Vegas is a transient town. Though more people move there every year than anywhere else, more people also LEAVE the area than anywhere else. A good portion of Las Vegas is made up of transplants from Southern California who moved after the real estate market crashed and the CA economy went sour. Now that the real estate marked has boomed and the CA economy has improved, many are moving back. Building a hardcore fan base could be a problem when a great deal of the population already has ties to another team or is not planning on putting down roots in the city. This latter item is the main reason why the arts and culture scene has failed to flourish despite the jump in population.


Georob said...

I know we dont want dwell on Portland here, but I promise not to get into meteorology.

Portland is only 173 miles from Seattle, with a good deal of its metropolitan area within Washington State(though perhaps not officially). Technically, a Portland team doesn't invade the Mariners territory, but I have to think that Seattle's fan base covers the whole state, if not the whole Pacific Northwest(and since Ichiro, Japan too)

I'm sure Bug Selig remembers all too well that other Seattle team that lasted only one season(He should, after all he BOUGHT IT and moved it to Milwaukee) Now, much has changed since the Seattle Pilots; but MLB wants to be sure just how strong the Mariners really are before they let baseball into Portland.