(Chuck Muth) – Jim Murren has been in the news a lot lately, pontificating and venturing his personal opinions on a host of issues, including the presidential race and the proposed Las Vegas stadium. So let’s take a look at him a little closer…
Murren is chairman and CEO of MGM Resorts International. He’s a business executive whose background is as a Wall Street securities analyst. He is not an entrepreneur who risked his own money and started his own businesses like, for example, Steve Wynn of Wynn Resorts or Sheldon Adelson of the Las Vegas Sands.
Or Donald Trump.
Maybe that explains Murren’s very controversial decision to bring PAID PARKING to the Las Vegas Strip last year. That was clearly a “bean counter” move by a business manager, not a business owner, to fund his new T-Mobile arena on the backs of tourists.
Politically he claims to be a Republican, but has never been known to actively support the Nevada or Clark County Republican parties or its associated clubs.
To the contrary, Murren was prominently featured in 2010 as a member of “Republicans for Reid” – a group of Republicans who supported Democrat U.S. Sen. Harry Reid’s re-election campaign.
And this month Murren publicly announced that he was supporting liberal Democrat Hillary Clinton for president.
For some reason, the acronym “RINO” (Republican in Name Only) keeps popping into my head. I wonder why?
But let’s get to the Las Vegas stadium issue…
There are two competing tourism-related projects currently on the drawing board under consideration by the Southern Nevada Tourism Infrastructure Committee (SNTIC).
One is to spend $1.4 billion of room tax money – paid almost 100% by tourists – to expand the existing taxpayer-subsidized Las Vegas Convention Center, which competes at below market rates with private Las Vegas convention facilities operated by a variety of Las Vegas resorts and hotels.
The second project – a modern 65,000-seat domed multi-purpose stadium – proposes spending $750 million of room tax money as essentially a loan towards the construction cost for this public-private venture. I say “loan” because, unlike the convention center project, the stadium project proposes to pay the taxpayers back from stadium revenues over the coming years.
The stadium project would only go forward if the Oakland Raiders football team seeks and obtains permission from the NFL to move the franchise to Las Vegas – which is the only way this project makes financial sense.
And while some are suggesting the public funding level should be less, I understand the proposed level is what the NFL wants to see to show sufficient public support for the relocation. So even if the funding formula was changed to include a smaller public share, that might cause the league to reject the Raiders’ move.
And again, without the Raiders, the project is dead.
Lastly, there is no competing stadium facility in Las Vegas other than the outdated, 40-year-old Sam Boyd Stadium where UNLV football games are currently played. If we want bigger and better entertainment events other than the Raiders – and we should – the Sam Boyd has to be replaced and located closer to the Strip.
The proposed stadium project could be funded individually without raising the existing room tax if the convention center expansion is shelved.
But to pay for the convention center expansion, the room tax would have to be raised 0.5 percentage points to 12%.
So, in an either/or situation the stadium project would not raise the room tax but the convention center expansion would.
Naturally, as often happens when politicians and special interests get involved, many are trying to have their cake and eat it, too. They’re proposing to raise the room tax a full percentage point to pay for BOTH projects rather than make the tough decision to fund only one of them.
By the way, NFL teams seeking relocation don’t happen very often. Realistically, it’s now or never if Las Vegas wants to get an NFL team. Because if we don’t take the Raiders now while the Raiders are willing to move, who knows when, if ever, such an opportunity will present itself again.
On the other hand, the convention center has the option of delaying its expansion project, or raising its rates to market levels to fund it.
So here’s the problem…
While Murren says he doesn’t object to the idea of building a new, world-class domed stadium, he – for whatever reason – says the convention center expansion is a “must have” while the stadium is a “nice to have.”
Adelson, owner of the Las Vegas Sands convention center, as well as the Venetian and Palazzo mega-resorts on the Strip, disagrees.
Adelson is one of the private partners seeking to develop the stadium facility, along with Majestic Realty and the Oakland Raiders – all of which are putting up the lion’s share of the funding for the estimated $2 billion project and will be on the hook for any cost overruns.
In an article written by Richard Velotta and published by the Las Vegas Review-Journal on Tuesday, Adelson said that based on his experience, “a stadium in Las Vegas is a must-have and the convention center expansion is not even a nice-to-have.”
Velotta’s story continues…
“Adelson said major conventions and trade shows would stay in Las Vegas even if the convention center is not expanded. Las Vegas Convention and Visitors Authority executives have said the city will lose convention business to other cities if the expansion plan is rejected.
“No shows are going to leave Las Vegas for another city,” Adelson said. “I’ve personally spoken to organizers, including the ones referenced by the LVCVA, and only one said his show could fit in another city – but he had no intention of even considering that.
“Additionally, the likelihood of attracting new shows remains extremely unlikely,” he said. “Many of the shows the LVCVA has targeted to bring to Las Vegas want to come during times early in the year when all of the hotel rooms in town are already booked with existing conventions.”
I think most people will find Adelson’s arguments far more compelling than Murren’s.
But my guess is SNTIC is going to punt the ball. It will finalize and recommend a funding package for the convention center expansion, as well as a separate funding package for the stadium. Then the governor will call a special session of the Legislature to finalize the deal.
It’d be nice to think legislators will make the tough either/or decision to fund one of the two projects – and make the right decision to fund the stadium.
But we’re not exactly talking about profiles in political courage here. After all, these same 63 people just shoved a ginormous $1.4 billion tax hike down our throats last year instead of making the tough decisions to cut unnecessary, non-critical government spending.
The only solace is that this time Las Vegas tourists will be getting the shaft instead of us.
Somehow that doesn’t exactly give me the warm-and-fuzzies.
(Mr. Muth is president of Citizen Outreach, which, in the interest of disclosure, has received financial support from the Las Vegas Sands over the years)