Should Las Vegas build an arena for a pro sports team?
Easy answer: Definitely not. It’s not the government’s job to pick the winners and losers in the economy. And yes, professional sports is fundamentally a business.
Better question: Should a private individual build an arena in Las Vegas for a pro sports team without government financing?
Answer: I don’t know. It’s not my money and I don’t know if it would be a good investment. But if, as the Las Vegas Sun reports, a private developer wants to build one without government money or bonds, more power to them. And yes, I’d love to go watch a privately financed professional sports team. (Personal preference, in order: NBA, NFL – which would be first but for the cost and potential blackouts – MLB, Ultimate Frisbee, NHL)
While working with Mayor Oscar Goodman six years ago to finance a baseball stadium and lure the Expos to it, he [Lou Weisbach, CEO of Stadium Capital Financing Group] came up with a stadium financing plan that The Wall Street Journal dubbed a “sports mortgage.”
Weisbach’s financing plan works like this:
His company sells seating and luxury boxes in much the same way developers sell homes.
The buyers are able to finance their purchased seats over several decades, similar to a home mortgage. They, of course, retain the right to later sell their seats for a profit or transfer them to another owner.
“As the value of tickets goes up, that would create value in that seat,” Weisbach said.
Last year, the University of Kansas and University of California, Berkeley, used the “Equity Seat Right” system to pay for expansions and renovations of their football stadiums.
“It would be great to be able to help facilitate an arena in the place where this idea was born,” Weisbach said, referring to Las Vegas.
At Berkeley, 3,000 seats were put up for sale, with the most expensive going for $175,000 to $200,000, financed over 50 years. Other seats were sold for as little as $40,000 over a 40-year term.
In September, Berkeley reported getting commitments from buyers for 2,000 seats…
The two arena plans, as proposed, would require the Clark County Commission to sign off on the sale of bonds or a hike in the sales tax to pay for the projects. But Weisbach’s plan, because it doesn’t require public financing, would require little say from the commission, beyond zoning and other planning-related issues…
Still, some are sure to point to Southern Nevada’s experience with the financially troubled monorail. It was built with private money and might end up being bailed out by taxpayers.
Commissioner Chris Giunchigliani expressed skepticism that an arena could truly be financed without public assistance, saying the “devil is in the details.”
Taxpayer assistance, she noted, isn’t always “a direct dollar” thing. Even if no upfront investment is required, taxpayers could end up paying for it on the back end through dwindling tax collections, tax exemptions or being on the hook for debt if the plan doesn’t work.
“In this business climate, we first need to have a survey of whether Southern Nevadans even want an arena and would use it,” she said.
In response to such questions, Weisbach was firm: “No taxpayer help. None.”
I’m glad Commissioner Giunchigliani is skeptical, because some businesses try to pull a bait and switch when it comes to rejecting and then accepting government handouts. But if it turns out that Weisbach really means, “No taxpayer help. None,” then more power to him.
And since they’d be using private dollars, we shouldn’t have any say in the matter, anyway (beyond the planning issues noted above).