An arena financed by AEG and MGM Grand is tentatively to be built on this parking lot behind the New York-New York Hotel.
After several road blocks and false starts, AEG appears to be closer than ever to building a world-class arena near the Las Vegas Strip as part of a new privately financed joint venture with MGM Resorts International.
“What’s new is that this is the farthest along that we’ve been with this project,” said AEG Vice Chairman Ted Fikre, who also serves as AEG’s Chief Legal and Development Officer. “We and MGM have committed to fund the equity needed to make this happen — in the past, the arena project was predicated on a business plan with a significant contingency and even contemplated a flow of public money,” he said. “This time we’re not relying on public money and we have a business plan that doesn’t rely on an anchor tenant.
Construction on the $350-million arena should start next summer on land that MGM Resorts owns between the New York-New York and Monte Carlo resorts. Completion is expected by spring 2016.
Venue architecture firm Populous is the lead designer on the project, and Senior Principal Chris Carver explained the company planned to rethink the way the event industry looks at premium seating and hospitality areas for entertainment and sports events, drawing from the high-end bottle service and concierge service of Las Vegas’ best hotels.
Without a tenant team, the new arena will be open to hosting a bevy of international award shows, championship sporting events and special concert runs, with a clientele demanding a venue experience “that will redefine amenities and premium offerings tailored to the demanding Las Vegas market,” Carver said.
Fikre said MGM Resorts and AEG will augment their equity contributions with private third-party financing from lenders and investment banks. Naming rights are on the table.
The arena is expected to be a centerpiece of an outdoor pedestrian mall featuring restaurants and retail shops stretching from Las Vegas Boulevard to Frank Sinatra Drive, visible from Interstate 15.
“Part of what makes this site unique is that it's right off the strip and very attractive to out of town businesses looking to stage close to world-class hotels and casinos,” Fikre said. “There are many large events that come to town, and even if the event is not at the arena, there are so many opportunities for ancillary events.”
The fate of a similar arena proposal by casino company Caesars Entertainment Corp. on land it owns on the other side of Las Vegas Boulevard, remains unknown. And an earlier proposal by AEG to build an arena with gaming company Harrah’s is officially dead, although the proposal had been considered shelved by many in Vegas for some time.
"Once you've got spectators going through the turnstiles the race will be over," said David Schwartz, director of the Center for Gaming Research at the University of Nevada, Las Vegas. "But this definitely looks promising. Not only is MGM buying into it, but also an outside company that knows arena management."
AEG and MGM are still working on designs with firm Populous and needs to get approval for several entitlements and permits to build the arena. Fikre said construction on the ground can begin once AEG has selected a contractor and closed financing on the project.
"I think it’s an exciting new project in Las Vegas," said Daren Libonati, an independent entertainment executive formerly with Justice Entertainment Group. Libonati helped open the the last major arena built in Sin City — Thomas & Mack Center on the campus of the University of Nevada, Las Vegas.
"At the time people laughed at the idea that an arena could make any sense in Las Vegas," Libonati said. "We couldn't get acts like Neil Diamond to play the Strip because the attitude was that artists went to Vegas to retire. Eventually the old model of entertainment began to change and now most hotels on the Strip have changed the way they look at the entertainment experience."
Libonati said the project "is creating more diversity under the MGM umbrella while providing more opportunity to the marketplace. They can now maximize square footage of their other two arenas (the MGM Grand Garden and the Mandalay Bay Events Center — and run three concurrent large events at the same time. Big conventions today are increasingly looking for arenas to use for large keynote presentations."
Interviewed for this article: Ted Fikre, (213) 763-7700; Chris Carver, (816) 221-1500; Daren Libonati, (702) 813-5345