The business of sports continues to get bigger in Las Vegas, which now goes by the moniker of “Sports and Entertainment Capital of the World.” that’s changing the perspective of the city and bringing visitors with it.
The ante will be upped yet again this week when the world will descend upon the Strip when the Las Vegas Grand Prix comes to town and brings an estimated $1.3 billion economic impact.
Steve Hill, CEO of the Las Vegas Convention and Visitors Authority who helped make it happen, told business leaders at recent NAIOP Southern Nevada event that it will bring in about $100 million in tax revenue that includes gaming, hotel tax and sales tax. Hill said he knows it’s difficult for people “to connect the dots when they are sitting in traffic” caused by the construction ahead of the F1 race that will be televised Saturday night, but assured people it will get better with future renditions of the race over the next decade.
The race is being held on a weekend in what used to be the second toughest weekend in town, Hill said. The difference is it’s going from the 51st weekend to the best weekend and changes everything about November for the city, he added.
“Formula One in Las Vegas will be the biggest event in the world in 2023,” Hill said. “There’s nothing like it and not only is the event great for Las Vegas, but it will ensure that we have the best November we’ve ever had in the city, and maybe big enough to ensure the biggest quarter we’ve ever had. The spotlight that will be on Las Vegas can’t be matched, particularly on an international viewership standpoint. There will be 100-million plus people around the world watching the spectacle of Formula One cars coming down Las Vegas Boulevard.”
Hill said the $1.3 billion in economic impact is the incremental difference between what that weekend would have been without Formula One and what it will be with it.
There’s been a lot of talk about falling room rates and ticket prices heading into the race, but the Wall Street analysts, casino consultants and others said the race is more about the high rollers the race attracts more than anything that will boost casino bottom lines that ultimately goes back to employees via the agreements casinos have struck with union workers. The worldwide marketing of the race is also expected to lure in more visitors to the city in the future.
“There’s no place like Las Vegas, now,” Hill said. “What we’re trying to accomplish is to create further separation so they think about Las Vegas and everything else. You can have these events around the world. The Super Bowl is a great game in Phoenix and Los Angeles, but what Las Vegas brings to an event or to a show and why (conventions) have higher attendance when they come here is that the experience around the event is so much more rich and much more intense. You have the opportunity to do three, four or five things on that day rather than just that event. That’s what sets Las Vegas apart and we’re just trying to make that separation greater.”
Bringing sports to Las Vegas with the Golden Knights, Raiders, Aces and A’s has not only changed the view the sports world has of Las Vegas but has caused people to start thinking about the city even more, Hill said.
“It has changed the brand for the city,” Hill said. “When we market there’s about a quarter of the population that doesn’t have much interest in what we have to say or coming to Las Vegas. Because of sports, when the NFL says you’re OK; and Major League Baseball says you’re OK; and the NHL says you’re OK, people start to change their mind about the city as we have matured. The offerings are broad. You can get everything you could get 20 and 40 years ago, but we added to that. If you’re an Atlanta Falcons fan and not necessarily think about Las Vegas, but when they’re playing the Raiders it’s caused people to come. Once they experience what we have here, they want to come back. Being able to eat into 25 percent is a really valuable thing because there’s not many things that will allow you to do that. Sports and big live entertainment are the two things that we’ve seen that really cause folks to reconsider.”
Hill said sports isn’t the “final frontier” of cracking that 25 percent, but it’s what’s making a difference at this time. People ask him what’s next but Hill said he doesn’t know. It’s others who come up with the ideas and the LVCVA facilitates them, he said.
“I know sports have a pretty long run in Las Vegas and are making a huge difference,” Hill said. “If you look at what you can do on any weekend or any given night in Las Vegas, it’s remarkable and that has legs. For some unknown amount of time, we’re going to ride that wave. It’s working great.”
SPORTS ISN’T THE ONLY ATTRACTION IN TOWN.
Hill lauded the opening of the Sphere entertainment venue and added that there’s not that many single options for people saying they’re coming to Las Vegas. The Sphere is now one of those options.
“Most people come because they’re going to have a great weekend or great week for a trade show but from a leisure perspective the Sphere is a draw to Las Vegas in and of itself,” Hill said. “It is one of the best marketing opportunities you can find because every thing you put up there goes viral. It costs a fair amount to advertise on the Sphere, but the coverage you get in earned media is unbeatable at this point. That combination makes the Sphere a fantastic addition to the city.”
THE BUSINESS OF SPORTS
As for the Super Bowl, Hill said their goal is for the NFL to want to be in Las Vegas every year and that when the league goes to another city that they’re disappointed.
“They did say we would be in the rotation, and that rotation is six or seven cities, and they will plug in an additional one to that,” Hill said. “We would like them back in four to five years, but it’s probably an every six to seven-year cycle. We know we’re going to knock their socks off.”
Hill talked about the relocation of the Oakland A’s to Las Vegas with plans to build a $1.5 billion and partially publicly funded stadium on the Tropicana Las Vegas resort site on the Strip.
“We anticipate a vote for that on Nov. 16, and hope that Major League Baseball will authorize that move and it’s full-speed ahead,” Hill said.
Hill described the need for public funding for stadiums in mid-markets because there isn’t the level of corporate support in buying luxury boxes as there is in a major market. He said the A’s will have the smallest media rights contract of any team in MLB because of the size of the market, which he expects to be in the $40 million to $50 million range.
“The stadium being in Las Vegas will be great because it brings the A’s but we also know it’s important for other events that are going to matter from an economic generation, job generation and tax generation,” Hill said.
The value of the Las Vegas Raiders has increased from $1 billion to $6 billion five years later, Hill said. Allegiant was expected to draw 450,000 visitors a year to Raiders games, but that’s turned into 850,000, Hill said. The A’s are expected to bring 405,000 visitors for 81 games — a figure that has been chastised by opponents of public funding.
When it comes to the NBA and the planned $1 billion arena on Las Vegas Boulevard across from the Las Vegas South Premium Outlets, Hill said he remains excited about the prospect. Former president of AEG that built T-Mobile Arena in Las Vegas and the Staples Center in Los Angeles, Tim Leiweke, chairman and CEO of the Oak View Group, a sports entertainment venue development, advisory and investment firm, is behind a $10 billion project that includes a casino and entertainment district.
“Tim Leiweke is maybe the smartest person in this field in the United States,” Hill said. “He is an exceptional guy. When he says something is a good idea, you better think twice about disagreeing with him. His experience is all of the fields that lead up to this. He’s built arenas all around the country. He just took over the operations of the McCormick Center in Chicago. We’re fortunate to have him here. I appreciate his statement about not needing public money, but I wouldn’t recommend (public) money be put into a competitive arena. We have T-Mobile and other arenas in town.
Las Vegas had 6.6 million (convention) visitors in 2019 because of meetings or trade shows and will approach that this year and clear it next year, Hill said. The goal is not to get back to where they were in 2019 but surpass it because during the pandemic Las Vegas added 3.5 million square feet of convention space to the 11.5 million already in place, Hill said.
In 2019 before the pandemic the city welcomed 42.5 million visitors, overall. It is expected to draw about 40 million visitors this year.
“Our goal is 8.3 million (convention) visitors, which is proportional to the square footage,” Hill said. “One of the issues is that leisure travelers have performed so strongly during the recovery from COVID that they are providing competition to meeting visitors during the week. Finding room blocks for meetings has become somewhat more difficult because leisure travelers are so enamored with Las Vegas and coming back.”
Once the renovation of the Las Vegas Convention Center is completed — McCormick Center in Chicago is 2.6 million square feet while Las Vegas’ center is 2.55 million square feet, Hill said. Orlando has 2.1 million square feet.
Trade shows rarely move, and Hill said they’re after the growth in the industry of new shows. For example, shows on artificial intelligence will only grow in the future.
The $3.8 billion Fontainebleau Las Vegas resort opens Dec. 13 on the north end of the Strip adjacent to the West Hall of the Las Vegas Convention Center. Hill called it a great project and beautiful facility.
The 67-story resort will have 3,644 luxury hotel rooms and 421 suites. The casino measures 150,000 square feet with 1,300 slot machines and 128 table games. The resort will have a second floor of retail while the third floor will house the pool deck, which measures 6 acres with seven pool experiences.There’s a 56,000-square-foot salon and spa and 14,000-square-foot fitness center. The resort will have a 35,000-square-foot day club and 50,000-square-foot nightclub, and the resort will have a theater stage.
Hill said when he started with the LVCVA in 2018 there was fatigue around parking fees and resort fees and that Las Vegas hadn’t opened new resorts in a decade. Las Vegas has since added Circa Las Vegas and Resorts World Las Vegas and Durango Station opened in December in the southwest valley.
“When we open those new venues that really helps continue to provide a reason for our fans to come back,” Hill said. “The fact that there was a 60-story hulking blue empty structure in our city next to the convention center, the difference from going from that to having that building open is really a bigger deal from starting from scratch four years ago and building a building. The connection to the convention center is attractive to our customers. We have not had nearly as much connection as we have now, and the fact it is a walkable facility and is complementary to what we do is going to be beneficial.”
When the Fontainebleau opens, Las Vegas will be at 156,000 rooms, the most of any city in the U.S by 20,000 to 30,000, Hill said. Four cities around the world can match that or have more, and three are in China and one is in Dubai.
“We lead the United States in that category, and that’s important to us,” Hill said. “Frankly, for the city to remain vibrant and the industry to remain vibrant, it needs to grow at least at a reasonable pace. What we’re really trying to do is drive demand for Las Vegas to the point it allows projects to pencil because it’s hard now.
“(Billionaire entrepreneur) Tilman Fertitta is going to build from the ground up (on the south Strip). Resorts World was a $1.25 million a key (each room). If you want to build a competitive property now it’s going to be $1.5 million to $1.7 million a key, you’re going to need real demand for the entire suite of your offerings in order for a project like that to work. You need 88 percent occupancy and room rates to support it, and that is what we feel our job is.”