Las Vegas Sun

November 23, 2014

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Six questions about the finances behind Las Vegas’ bid for a Major League Soccer stadium

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Rendering of the proposed MLS stadium in downtown Las Vegas.

For the first time Thursday, Las Vegas officials will ask residents:

What do you think about helping pay for a new Major League Soccer stadium?

The city's first public hearing on the financial plan for the estimated $201 million stadium is scheduled for 5:30 p.m. Thursday at City Hall.

The city canceled a briefing with downtown casino executives July 31 and called off a public hearing planned for Monday. As of Tuesday afternoon, city officials said the Thursday hearing still was expected to happen.

The City Council is scheduled to vote on the financing plan Aug. 20.

For several weeks, city leaders and the stadium developers — Findlay Sports & Entertainment of Las Vegas and Cordish Cos. of Baltimore — have been negotiating the details behind closed doors.

Justin Findlay, managing partner of Findlay Sports & Entertainment, took a break from those negotiations Monday to talk with the Sun. He declined to discuss the financial details, saying it was premature, but he did elaborate on other parts of the bid.

Public meeting

The public will get its first look at how the city and developers plan to fund the stadium at a meeting at 5:30 p.m. Thursday at City Hall, 495 S. Main St. The meeting will be televised live on the city's cable channel (KCLV channel 2).

What we know so far

In July, the two sides were working to fill a $29 million funding gap, according to a July 22 city memo obtained by the Sun.

The memo also showed that taxpayers' share of the stadium costs would be 74 percent and the developers 26 percent. At the time, city leaders said they expected the final proposal to be closer to a 50-50 split.

Findlay said the financial details have changed since the July 22 memo, but he declined to explain the changes. The city and Findlay plan to release an updated financial plan before Thursday's meeting.

The stadium would be in Symphony Park, across the railroad tracks and one block away from the Fremont Street Experience.

Even if the City Council approves the stadium deal, Findlay and Cordish must persuade MLS to give Las Vegas a team and pay a franchise fee that has ranged between $40 million and $100 million.

Based on interviews with Findlay, downtown hotel owner Derek Stevens and sports business experts, here are six questions about the stadium plan:

Who profits if the stadium succeeds? Who takes the risk if it fails?

In its July 22 memo, city leaders provided some outlines on how much risk they were willing to take.

They said all the risk of operating the stadium must be carried by the developers. The city also said it did not want to tap its general fund, which is used to pay for core services, including police, fire and parks. But Las Vegas said it would offer to back some of the stadium's debt as long as the city was the first to be paid back.

“You hear snippets in the media that talk about an absolute failure,” Findlay said. “I would take the other side of it. Soccer and MLS are very successful … especially with a model that’s in a downtown stadium.”

The deal would carry significant risk for the developers. They must put up $44 million in equity and cover the franchise fee and other costs associated with landing the team.

Asked about profits, Findlay declined to talk about how much he or his partners would make. He said those figures were private.

How many tickets do they need to sell to make the stadium finances work?

Findlay said his project assumed the team would draw the league average of 17,000 fans per game paying an average ticket price of $25.

By comparison, the biggest game in Las Vegas for decades has been the UNLV men's basketball team. But even when they win, the Rebels have a hard time selling out the 18,500-seat Thomas & Mack Center.

So who will fill a 24,000-seat soccer stadium?

Findlay said he hoped roughly 30 percent of the fans would be Hispanic and between 10 percent and 20 percent would be tourists.

“If Las Vegas would play against Seattle, Portland, Los Angeles and Colorado, you’re going to get a good influence of visitors,” said Stevens, owner of the D Las Vegas. “And the one advantage Las Vegas has over other cities is it is Las Vegas.”

Jaime Hernandez, manager of the Las Vegas Soccer Store on Charleston Avenue, agreed that Hispanic soccer fans would purchase tickets.

“Right now, people here more support teams from Mexico,” he said. “But if they’re going to have a Las Vegas team, everybody will get involved with that and support it.”

How many events can the stadium attract to pay off the construction costs?

The key to the financial plan is a series of bonds, or mortgages, that would be repaid, in part, by rent paid by the people who use the stadium. The more events the stadium stages, the more money the city and developers will have to pay off the debt.

The 17 home games on the regular season schedule won't be enough to cover that debt alone.

Findlay said he expected the stadium to host events for downtown casinos, international soccer matches, the annual Las Vegas Helldorado celebration and other field sports, such as rugby and cricket.

Will the city ask Las Vegas hotels to help pay for the stadium?

A new tax on hotel rooms will be a tough sell for downtown hotel owners.

For 20 years, they've paid a room tax to pay off the bond that funded the Fremont Street Experience. The tax expires in 2015.

Stevens said the tax has been bad for the downtown hotel business. “It has been one of the biggest detriments to the growth of Fremont Street for 19 years,” Stevens said. “It just puts downtown hotels at a disadvantage."

Findlay said he agreed that a room tax was out of the question.

How do the developers plan to build out land around the stadium?

In its July 22 memo, the city said it wanted Cordish and Findlay to commit to building on land around the stadium. Cordish is well-known for developing entertainment or “live” districts in other cities.

Stevens said the city already had a live district with the Fremont Street Experience and didn't need more competition. “A live district would put every casino against it pretty quickly,” he said.

Stevens said the developers told him they would not build a live district.

In his interview with the Sun, Findlay said a live district was not currently planned.

But he added: “It’s possible eventually. It is important to the city that that area down there develops, and we want it to develop, too.”

How will the city link the Fremont Street Experience to the stadium?

Everyone agrees that the stadium would need a way to move pedestrians from downtown to the stadium. But the July 22 memo didn't describe how they planned to pay for the link, most likely a bridge just north of the Plaza.

“That discussion is still forthcoming, but everybody is in consensus that connectivity is a real critical issue,” Stevens said.

How much does a bridge cost? By comparison, a pedestrian bridge built in 2013 to connect the City Hall parking garage on Main Street to Symphony Park cost $4.5 million.

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