Professional SportsThe Big New Game in Town

 

Read “The Business of Sports” by Jennifer Ko Craft

With its $1.8 billion budget, the spectacular new Allegiant Stadium — home of the NFL’s Raiders beginning in 2020 — is the biggest, highest profile construction project in Las Vegas in recent memory.

But for all the economic benefits of the construction, the new stadium is merely the beginning of a powerful wave of business activity linked to the NFL team.

In fact, the new stadium and the Raiders’ move to Las Vegas is just the latest manifestation of a decadelong blossoming of professional sports in Nevada.

From the excitement generated by the Stanley Cup run of hockey’s Vegas Golden Knights (VGK) in 2018 to the crowds that flock to Triple-A baseball and professional soccer games in Reno and Las Vegas and women’s basketball in Las Vegas, professional sports teams have grown into important elements in the state’s economy.

They’re drawing visitors to the state, providing thousands of jobs and creating new business opportunities for suppliers of everything from hot dogs to office equipment.

Economic Boost

Just take a look at Allegiant Stadium. Once the 11,000 construction workers on the project complete their work in mid-2020, the stadium, on 62 acres along Interstate 15 just west of Mandalay Bay, is expected to host 46 events a year. That includes 10 Raiders games and six UNLV football games as well as events ranging from soccer and rugby games to concerts and motor sports.

Researchers at Applied Analysis, a Las Vegas economic consulting firm, project the stadium will generate an annual economic impact of about $620 million. That includes $367 million in economic activity directly attributable to the stadium. Another $253 million in activity will be generated as the dollars attributable to the stadium ripple through the economy of Southern Nevada.

About 6,000 new jobs will be created, the Applied Analysis researchers estimate, including 4,100 new jobs at the stadium itself and nearly 2,000 at other businesses that benefit from the stadium’s operation.

The Raiders games and all the other events at the new stadium are projected to provide an important boost to the hospitality industry, drawing new dollars from out-of-towners into the Southern Nevada economy.

Allegiant Stadium is expected to draw 450,000 new visitors each year, the Applied Analysis study finds, resulting in 708,000 additional room nights in casino-hotels and other lodging properties.

In its economic analysis before the Raiders decided to move, Applied Analysis estimated that 25 percent of the crowds at the new stadium would be drawn to Las Vegas exclusively for NFL games. That doesn’t count out-of-town visitors who arrive for a vacation or a business meeting and decide to catch a Raiders game while they’re here.

That estimate may prove to be conservative, says Jeremy Aguero, a principal of Applied Analysis.

He points to the sale of “personal seat licenses” (PSL) by the Raiders. (Those licenses essentially provide the right to buy season tickets.) So far, he says, fifty percent of PSL sales have been to nonNevadans.

At the start of this year, sales of personal seat licenses stood at $157.3 million — 54.2 percent of the $290 million they’re expected to generate to finance stadium construction. Sales of sponsorships also are running ahead of projections, says Aguero.

The region’s economy gets a boost, too, from the corporate headquarters operations of professional teams.

The Raiders began work in January on a three-story office building and training facility in Henderson. That construction, which was budgeted at more than $75 million, will provide a home for at least 200 professionals and office workers who support the team’s 53-man roster.

Other teams, too, are creating dozens of jobs. The Vegas Golden Knights’ corporate office in Summerlin, for instance, employs about 160 fulltime staff members — everyone from accountants to Zamboni drivers — along with 150 part-time and seasonal employees.

On any of the team’s 45 game nights, another 1,000 people are at work taking tickets, providing security, selling concessions and handling innumerable other behind-the-scenes jobs.

In Reno, the organization that operates both the Reno Aces baseball team and the Reno 1868 Football Club (FC) soccer team employs about 53 people full-time. Another 400 work on game days at Greater Nevada Field, says Eric Edelstein, president of both teams. He estimates the team’s direct payroll at $5 million a year.

The Las Vegas Aviators, the Triple-A baseball affiliate of the Oakland As, employs about 50 in its headquarters, along with another 500 on game nights at the new Las Vegas Ballpark.

Even the startup Las Vegas Lights FC, a soccer team in its second year, employs 50 people — including 23 players who work on 10-month contracts.

The economic impact of the teams extends far beyond their payrolls to include a network of suppliers.

Ancillary Business

“We’re just like a normal business. Our product just happens to be world-class athletes on the playing field,” says Edelstein. “Like any business, we spend a lot on office technology, copiers, paper towels and janitorial supplies.”

Of course, not every normal business rents llamas from a local petting zoo. But that’s one of the supplier relationships developed by the Las Vegas Lights Football Club, whose fans love the team’s llama mascots.

The Aviators rely heavily on local vendors throughout their operations.

“Local first,” says Don Logan, president and chief operations officer of the team. “Any business that’s smart will do that.”

Fans clearly like the products the team delivers.

Professional Sports Catering, the subsidiary of Levy that serves Las Vegas Ballpark, says the ballpark’s food and beverage sales are higher than those at several Major League Baseball stadiums.

Hotels and restaurants feel some of the most direct economic benefits delivered by professional teams.

Typically, Edelstein says, at least 20 percent of the crowd at any pro sports event comes from out of town. That means the Reno Aces, which draw an average of roughly 4,800 fans to each of their 70 home games, generate more than 67,000 visits from out-of-towners during the course of a baseball season.

In Las Vegas, Logan says Aviators’ games also draw a heavy contingent of visiting scouts, many of whom stay at the nearby Red Rock Casino Resort. Visiting teams and their traveling parties also fill hotel beds.

Building Community

Kerry Bubolz, president of VGK, believes the value provided to the community and the state by his NHL organization and other professional teams can’t be captured in purely economic terms.

Instead, he points to the web of personal relationships that arise among fans who sit together at a game or watch a televised game in a sports bar. Communities become stronger through those shared experiences.

“I call it the ‘golden thread,’” Bubolz says. “And I believe it’s a really powerful thing.”

Then, too, he says the mere presence of teams such as the Vegas Golden Knights and Raiders makes an important statement about Las Vegas.

“We’re now a major league town,” Bubolz says. “That puts us in a very elite group of cities in the United States.”

The message, he adds, is not lost on corporate site-selection consultants whose clients want their offices to be located in top-tier cities.

Aguero notes the arrival of NFL and NHL franchises in Nevada and the strengthening of other professional sports franchises built on a long-established base of sports business in the state.

He notes that the state has a long history of hosting professional sports events — boxing and UFC fights, NASCAR races, the National Finals Rodeo, championship bowling.

“This isn’t a phenomenon that happened overnight,” he says.

That means that teams such as the Raiders and Vegas Golden Knights saw a city with the skills to produce top entertainment around sports events and the ability to finance and build the stadiums and other infrastructure that professional teams need.

Injections of fresh capital also have strengthened the region’s professional sports profile.

The Las Vegas Aviators, for instance, have been boosted by new ownership, a new name, a winning record and the brand new $150 million Las Vegas Ballpark in Summerlin.

As the 2019 season was winding down, the Aviators’ total home attendance was at the top among the nation’s 30 Triple-A baseball teams. The average attendance of more than 9,200 included 43 sellouts.

Logan says the new stadium drew fans from across the Las Vegas Valley looking for a family-friendly night out. With ticket prices starting well under $20, free parking and easy freeway access, Logan says the team provides an affordable entertainment option.

The new ownership group — a joint venture of Howard Hughes Corp. and individual investors — invested heavily in the team after buying it in 2013.

The new stadium, recognized as Ballpark of the Year by BaseballParks.com this year, allowed the team to move from Cashman Stadium. The Las Vegas Convention and Visitors Authority ponied up $80 million in a 20-year deal for naming rights to the ballpark.

The Aviators’ new name — they’d previously been the Las Vegas 51s since 2001 — also reflected the team’s new focus.

MGM Resorts, meanwhile, invested in the region’s professional sports sector with its 2017 acquisition and relocation of the Women’s National Basketball Association (WNBA) franchise that previously played in San Antonio.

Renamed the Las Vegas Aces, the women’s professional basketball team averaged attendance of 5,200 during its first year of play at Mandalay Bay Events Center. Attendance in the current season is running about 4,700 per game.

Its front-office staff of 20 is particularly proud of its community engagement, says Christine Monjer, its assistant general manager.

Its ‘Lace Up’ mentorship program, for instance, provides three local high school girls basketball teams with access to Aces players, programming about financial literacy and college recruiting, and mentorship opportunities throughout the year.

Changing Demographics

Professional soccer is getting a boost from the changing demographics of Nevada. The decision to launch the Reno 1868 Football Club in 2017 was driven largely by the changing demographics of Reno, says Edelstein. The team’s owners saw a city that was quickly becoming younger and more ethnically diverse.

The decision paid off as attendance at Reno 1868 FC home games — an average of about 4,800 fans — is nearly identical to the average crowd at one of the baseball team’s home games.

Now in their second year, soccer’s Las Vegas Lights have seen their average attendance grow by about 1,500 a game. The team plays its home games at 9,334-seat Cashman Field near downtown Las Vegas.

“We haven’t had a sophomore slump,” says Brett Lashbrook, the team’s owner and chief executive officer. “It’s really encouraging.”

Two factors, he says, play a big role in the new team’s acceptance. The kids who played soccer in youth leagues 30 years ago have grown up, they know the game, and they enjoy professional soccer. At the same time, the growing diversity of the Las Vegas market has drawn thousands of people who grew up playing soccer in their homelands.

While the growing diversity of the Las Vegas population provides ready-made fans for soccer, they’re demanding fans.

“They know the game,” says Lashbrook. “We’ve got to put a good product on the field.”

The Experience

Lashbrook says the soccer club, which plays in the United Soccer Championship League (USL), has carved out a niche for itself as a highly entertaining option for budget-minded families, almost all of them local residents. Ticket prices start at $10 with beers starting at $6.

The team’s mascot, Cash the Soccer Rocker, tears around the field on a Harley Davidson. Players earn casino chips for top performances. Fans wave flags, and smoke bombs celebrate goals.

“We can’t guarantee a win, but we can guarantee a smile and a good time,” says Lashbrook. “We provide a nice, affordable night out for a family.”

Edelstein says entertainment value is critical to the success of any professional sports team.

“No competition is greater than the couch in everyone’s home,” says Edelstein. “We’ve got to create an experience that gets people up off their couch.”

The blossoming of professional sports teams in Nevada may have accompanied the state’s recovery from the Great Recession that began a decade ago, but Aguero says economic cycles probably aren’t much of a factor to teams making long-term commitments to markets in Nevada.

“They are sports teams. But they are also businesses,” says Aguero. “These teams are very aware that the economy of Las Vegas is going to have ebbs and flows.”

During the Great Recession, the Las Vegas Aviators organization — then known as the 51s — was able to tighten its operations enough to remain profitable despite the loss of some sponsors. Then, as now, the key has been affordable family entertainment, Logan says.

Then, too, Las Vegas has a long love affair with baseball.

Current major league stars such as Bryce Harper and Kris Bryant are part of a long list of top players who have come from Southern Nevada.

“This is a baseball town,” says Logan. “We’ve got the best of the best coming out of this market.”

And the best of the best among professional players are giving Nevada teams a close look when it’s time to sign a new contract.

Nevada’s freedom from personal income taxes provides an important sales point for team executives — at least those that are paying multi-million salaries and bonuses to recruit star players.

“It affects the story that we’re telling to free agents and their agents,” says Bubolz. “We try to make sure that players and their agents understand its value, along with a winning culture, good weather, and excellent facilities.”

Equally important, he says the state’s attractive tax environment helps professional teams attract top business talent for their front office operations.

Despite the growth of professional sports in the state, some executives think the state’s growing population and status as an international visitor destination would have supported teams years earlier if not for leagues’ worries about association with legalized betting.

“We’re just catching up,” says the Lights’ Lashbrook. “Las Vegas always has been the entertainment capital of the world. Now we’re the sports and entertainment capital.”

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