Casino giant MGM/Mirage and arena giant AEG broke ground today on a $375 million arena in Las Vegas. The new venue, which is being designed by Populous, will have a maximum capacity of 20,000 and is expected to open in spring of 2016.
The site of the arena is a back parking lot between the New York New York and Monte Carlo casinos, both of which are already MGM properties. Upon completion, the as-yet unnamed arena will replace the MGM Grand Garden Arena on the other side of the Strip as Las Vegas’s flagship arena.
There’s no shortage of large venues in Vegas, with the Grand Garden Arena at 16,800 seats. The Mandalay Bay Events Center, also an MGM property, has a capacity of 12,000. The largest venue in the area has long been UNLV’s Thomas & Mack Center, which holds 19,500 for concerts. Orleans Arena’s capacity is 9,500. Concert halls at The Palms and the Hard Rock support 4,000 or so. Vegas mayor Carolyn Goodman supports an arena in downtown Las Vegas, but with the new arena coming on line there’s more than enough capacity. Both that project and the UNLV Now! arena/stadium combo require a significant amount of public funding, and could lose support over time. Thomas & Mack is expected to undergo $60 million in renovations to support the National Finals Rodeo, a longtime tenant that signed a 10-year extension to stay in the city (not necessarily at the arena).
For now, AEG and MGM have discounted any possibility of luring a pro sports franchise from either the NBA or NHL, preferring to have maximum scheduling flexibility for concerts and marquee events. It’s a similar model to what AEG is doing in Kansas City, though the big difference there is that KC is paying the debt service on Sprint Center, while AEG is merely paying rent – not enough to pay off the debt service.
The fate of the Grand Garden Arena appears uncertain, as it would naturally compete with the new arena for events. Lacking in premium facilities, the old arena was rather spartan. The big concerts, boxing and MMA events will definitely move across the street. Perhaps MGM will take the opportunity to downsize Grand Garden or add some premium features, though there’s already significant competition for such facilities in the market. AEG, which has the Grammys as a key anchor event for Staples Center, could have one or more signature events for the Las Vegas arena, such as the Billboard Music Awards or other award shows. The X-Games just left a lengthy commitment to Los Angeles, and will be held in Austin this year. Residencies for artists seem unlikely, as those are usually better for smaller venues directly attached to casinos.
At $375 million for construction cost, this arena will come in much lower than the planned arenas in Sacramento and San Francisco. It goes to show how budget-conscious companies can be when they’re building their own venues.