In 2004, when Las Vegas had perhaps its closest brush with landing a professional sports team as the city pursued baseballs Montreal Expos a Chicago businessman hatched a plan to finance a stadium here without public money.
Las Vegas, of course, lost that big league bid and a lock on the National League East cellar to the nations capital. But the businessman behind it, Lou Weisbach, CEO of Stadium Capital Financing Group, a subsidiary of Morgan Stanley, hasnt given up on the town or his financing plan, which he says has since been implemented successfully elsewhere.
I believe theres a need for a new arena, a state-of-the-art arena which would draw the best concerts and best events to Las Vegas, Weisbach said Tuesday. Ultimately, it would lead to a professional sports team Las Vegas would already have had a professional baseball team if it had a stadium.
Weisbach again focused on Las Vegas last week, after hearing two developers are pushing competing proposals to build arenas on the Strip one behind Harrahs Imperial Palace; the other just south of the Sahara.
Clark County commissioners were careful to keep their distance from the proposals when they surfaced. The reason: With price tags between $488 million and $752 million, both would require some form of public funding, an unpopular prospect at a time when the county is looking at a growing budget shortfall.
Weisbach, however, believes he has a solution to pay for either of the projects without taxpayer money.
While working with Mayor Oscar Goodman six years ago to finance a baseball stadium and lure the Expos to it, he came up with a stadium financing plan that The Wall Street Journal dubbed a sports mortgage.
Weisbachs financing plan works like this:
His company sells seating and luxury boxes in much the same way developers sell homes.
The buyers are able to finance their purchased seats over several decades, similar to a home mortgage. They, of course, retain the right to later sell their seats for a profit or transfer them to another owner.
As the value of tickets goes
up, that would create value in that seat, Weisbach said.
Last year, the University of Kansas and University of California, Berkeley, used the Equity Seat Right system to pay for expansions and renovations of their football stadiums.
It would be great to be able to help facilitate an arena in the place where this idea was born, Weisbach said, referring to Las Vegas.
At Berkeley, 3,000 seats were put up for sale, with the most expensive going for $175,000 to $200,000, financed over 50 years. Other seats were sold for as little as $40,000 over a 40-year term.
In September, Berkeley reported getting commitments from buyers for 2,000 seats.
Weisbach estimates an arena on the Strip would need to sell 1,000 seats, with the majority of the money coming from the sale of 150 or so luxury suites.
The two arena plans, as proposed, would require the Clark County Commission to sign off on the sale of bonds or a hike in the sales tax to pay for the projects. But Weisbachs plan, because it doesnt require public financing, would require little say from the commission, beyond zoning and other planning-related issues.
Chad Wilkins, a consultant representing Weisbachs group, laid out one proposals primary selling points. In todays struggling economy, this is a mechanism by which investment can be generated without public cost, to say nothing of the hundreds of jobs it would create, Wilkins said. Its a common-sense approach.
Still, some are sure to point to Southern Nevadas experience with the financially troubled monorail. It was built with private money and might end up being bailed out by taxpayers.
Commissioner Chris Giunchigliani expressed skepticism that an arena could truly be financed without public assistance, saying the devil is in the details.
Taxpayer assistance, she noted, isnt always a direct dollar thing. Even if no upfront investment is required, taxpayers could end up paying for it on the back end through dwindling tax collections, tax exemptions or being on the hook for debt if the plan doesnt work.
In this business climate, we first need to have a survey of whether Southern Nevadans even want an arena and would use it, she said.
In response to such questions, Weisbach was firm: No taxpayer help. None.
Commissioner Steve Sisolak, however, was open-minded, saying that maybe this will turn that dream into a reality.
If taxpayer dollars arent at risk, its definitely worth exploring. It would bring needed jobs and potential business to Clark County it could be a win all the way around. Im not seeing the downside right now.
Joe Schoenmann can be reachedat 455-6175 or at joe.schoenmann@lasvegassun.com.
Copyright 2010 Las Vegas Sun
