I understand it would be very easy to vilify MGM Resorts International for its behavior regarding Strip arenas. Here’s a company that acts aggressively to prevent anybody else from being able to build an arena project, but then turns around and proudly announces its own 20,000-seat venue?
But there’s no hypocrisy in MGM’s actions.
First, a brief history: The company fought aggressively against a Caesars Entertainment-backed project that would have seen an arena project built on land behind the Imperial Palace. A group formed to challenge the initiative petition circulated by the company was largely backed by MGM, as was a lawsuit that ultimately killed the project.
But MGM never argued that an arena shouldn’t be built on the Strip. Instead, the company argued that it shouldn’t be built with the help of public tax money. (Caesars envisioned creating a special taxing district on the Strip to raise money for its ill-fated proposal.)
“Our state has vastly more significant needs than taking tax money to build a stadium on someone’s land,” argued Alan Feldman, senior vice president of public affairs for MGM Resorts International, in 2011.
His objections are understandable: MGM properties are host to the Strip’s largest existing arenas, the MGM Grand Garden (17,000 seats) and the Mandalay Bay Events Center (12,000 seats), both of which were built without the use of tax subsidies. Opposing a special taxing district that would help a competitor makes no business sense for MGM, which wants to protect its investment. And, as MGM said at the time, Caesars could simply have invested the money to build an arena on its Imperial Palace land without a tax subsidy and there would be little MGM could do about it.
Caesars officials argued during the stadium debate that MGM’s stance was short-sighted and parochial, and that the city needed a larger venue to attract professional sports and keep longstanding events such as National Finals Rodeo, which is held in the 19,000-seat Thomas & Mack at UNLV.
MGM may have moderated its position somewhat in recent days: The company was an initial supporter of the UNLVNow project, which aims to build a huge sports stadium on the campus. The company pledged money to the venue, notwithstanding the fact that its backers were said to be seeking a sales-tax increment district to fund the project, in part.
(The difference: The Caesears district would have imposed an additional sales tax along the Strip, increasing the 8.1-percent levy by 0.9 percentage points to 9 percent. The UNLVNow idea would simply take the increase in sales tax revenue generated by its project and redirect those funds into the project, without changing the overall rate.)
But MGM recently backed out of its commitment to the UNLV project, which would have 60,000 seats, saying it was too expensive. From the Review-Journal‘s account:
“We cannot support the current UNLVNow concept, as it has grown too expensive for our community to support,” MGM Resorts said in a statement. “We continue to support an on-campus stadium for UNLV that is appropriately configured and responsibly financed. We remain committed to working with the university and others in the community to refine an appropriate plan.”
It should be noted that the statement came after UNLV stadium backers had mused aloud about asking for a special room-tax levy to help finance the project, on top of the tax-increment district and donations collected from Strip casinos, which would undoubtedly benefit from major-league sports in Las Vegas.
Again, in MGM parlance, “responsibly financed” means no tax money, at least not in the form of room tax.
Lest you ascribe the company’s motives entirely to stifling competition, the proposed 20,000-seat MGM arena and the 60,000-seat UNLV project are very different creatures, with very different markets. Unless the UNLV proposal is radically downsized — and that may yet happen — the two venues wouldn’t necessarily compete for the same events.
There’s usually no shortage of self-serving hypocrisy in casino-on-casino violence in Las Vegas, but this time, MGM’s hands are cleaner than usual.