AEG & MGM start $375 million Vegas arena

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.

AEG-MGM arena as seen from across I-15

AEG-MGM arena as seen from across I-15

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.

12 thoughts on “AEG & MGM start $375 million Vegas arena

  1. When you have no permanent athletic club as a tenant (and probably never will), you absolutely have to be budget-conscious.

  2. They won’t lack for a tenant forever. Vegas is about to become to the NBA and NHL what LA is to the NFL. The bogey man.

  3. Kansas City has been that already for years. They opened a state-of-the-art arena in 2007 with expectations of an NHL or NBA tenant and still don’t have one. Before getting their new arena in Pittsburgh, the Penguins were sure to have a talk with the Kansas City arena folks.

  4. Vegas land is pretty cheap, especially compared to the bay area. In addition to that, there’s far less bureaucracy involved which also lowers the cost. I doubt the $375 build cost is entirely being a matter of being cost conscious. It is, after all, Vegas.

  5. @dmoas – Sure, but the W’s arena could cost nearly $1 billion when it’s completed. That isn’t all land or even higher priced labor or materials costs.

  6. Vegas resident chiming in here:

    –That land, if it were for sale, would not be cheap. It’s a block away from the Strip at one of the three busiest intersections. MGM absorbed it as part of the Mandalay Resorts merger, along with what is now City Center/Aria. Pre-recession, it was something like $38 million an acre.

    –Las Vegas will never be more than a bargaining chip for NBA/NHL teams looking to extort new venues from their current towns. There’s no corporate support for a major sports franchise here, and not enough rich residents to pony up for pricey tickets or regional sports networks.

    –Grand Garden and Mandalay Events Center have been strictly “four-wall” venues for years – – that is, they only charge for rent and services from the event promoters, and don’t get a cut of ticket revenue. It will be interesting to see how MGM and AEG divvy up the revenue with the promoters now.

    –The Thomas & Mack makes their whole year on NFR. If that event moves to the new arena, certainly the new UNLV project is dead, and the T&M itself will find it a lot harder to keep the lights on.

    –The parking at the new place is going to suck. It’s tough over there already.

  7. I just saw a few years into the future. I was at the Grand Garden Arena with my insane mother in law. The arena was converted for weekly Tagalog Catholic mass. Oh, and the A’s were still at the Coliseum.

  8. The Sharks need to play the outdoor game at Levi’s stadium. It’s in the south bay (not pee-stinking SF) – also the gnats organization won’t get a dime – besides Levi’s is much more appropriate for a hockey rink than phone booth park is.

  9. But ATT Park will be easier to sell out and it gives the NHL a precious chance to broadcast from Frisco for a day. The inconvenience of ATT Park, its being misshapen for hockey and the Giants blocking San Jose from getting MLB will be disregarded.

  10. @pjk – the giants organization up their usual b.s. – very typical of that organization.

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