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September 22, 2014

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Expert says look for final cost of new stadium or arena to exceed sticker price

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The proposed Silver State Arena may never happen.

With price tags ranging from hundreds of millions of dollars to upwards of $2 billion, the costs of building any of several proposed stadium projects in the Las Vegas Valley will be staggering.

But even the high sticker prices aren’t likely to account for all the costs of building such a facility, said Daniel Rascher, president of the consulting firm SportsEconomics.

“The initial budget is usually lower than it will end up being. People don’t want it to seem too big when going before the public,” Rascher said.

A range of costs, from infrastructure to long-term maintenance, can drive the overall price of stadiums higher than the figure presented to the public, Rascher said.

“I’ve hardly ever seen a stadium or arena come in on budget. One of the hidden costs is it always ends up costing more than everybody thinks,” he said.

In an attempt to limit their reliance on public dollars, some of the proposed Las Vegas-area stadiums would use tools like tax-increment financing districts, which capture sales tax or property tax revenue and recycle it to cover the costs of construction.

Joel Maxcy, a professor and sports economist at Temple University’s Sports Industry Research Center, said special taxing districts often rely on speculative projections for how much revenue they will generate, and any shortfall can fall on the broader public.

“They’re almost always based on speculation. You’ll have a stadium, and that will increase property taxes, and the difference will be used to pay off the bonds,” he said. “That’s the lure of a revenue bond in these situations. But if it doesn’t come through, the taxpayers are on the hook for it.”

Infrastructure costs, such as adding highway exits, rerouting surface streets or installing sewer lines, also can be left out of a project’s total cost.

“These are things people don’t always think about,” Maxcy said. “Even when they say it’s going to be 100 percent privately financed, there’s almost always going to be some infrastructure costs ... and depending on the location, those can be fairly significant.”

Maintenance and renovations needed to keep a stadium up-to-date over the course of its multidecade lifespan also add up, Rascher said, and it’s important governments and developers agree on who’s responsible for covering those costs. At some point, every stadium will have to be torn down, Rascher said, another cost many fail to account for in their infancy.

Regardless of some of the hidden costs, Rascher said he thinks a new stadium or arena would have the potential to be successful in Las Vegas.

“It seems like there’s enough casinos, there’s enough retail. As far as having a diverse mix of entertainment options, an arena could make sense,” he said.

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  1. The union loafers alone will add 30% to the cost. I hope they never build it-let the loafers run out of UI, and chase them out of town. With their overpaid union bosses. Remember the story of the union glazer who got a job in the good old days, and he had kids aged 6, 5, 4, 3, 2 and one on the way? Good, go back to where you came from. Or work for 8 bucks an hour trimming trees.

  2. I still say it's okay to build it.

    But you are NOT going to reach into my pocket to pay for it.

    As a taxpayer, the only way I want the money I pay for taxes to go towards an arena is if I get a share towards owning it.

    Suffice it to say, I'm against this thing from the beginning. For a couple of reasons.

    Many, many times in the past, people in Las Vegas have tried their best to get any kind of professional sports team to relocate to Las Vegas. And it has failed. Abysmally. The main reason cited for rejection is the fact there is gambling in Las Vegas. No pro sports team wants their team associated, even geographically, with gambling. Doesn't sound fair. But it is what it is.

    So, you build an arena, it will be sitting idle for a large portion of the year.

    There simply isn't enough concerts, rodeos, etc. to financially support having an arena.

    You build it, it will be a big bright yellow lemon sitting there collecting dust; with the final decision to turn it into a big flower pot or something later.

    I'm against this crap. ESPECIALLY if you try to make me pay for it, while I get absolutely nothing out of the whole deal. All so some other high falooting casino consortium can make money off of me. They do nothing for me now. Why should I do something for them?

    Build the arena. But pay for it your own damn self. Leave me out of the equation. I'm tired of these elaborate shell games played upon the unsuspecting population of Las Vegas all the time. You want this thing? PAY FOR IT OUT OF YOUR OWN POCKET!

  3. I think the stadium picture looks pertty good. The argument about a sports team not wanting to associate with a city that has gambling is running out of gas fast. Look at all the other cities now that have professional sports and gambling. Miami is one to name right off the bat. I'm ajainst using public money without an exact dollar amount that it will cost. . A one time payment of say 100-200 dollars per home-owner would be fair. . Although that would be a one time fee and no other monies can be asked for. I would do that. Maybe a stadium will not directly affect you, except indirectly it will if we were to get the right team. Also, the building costs would have to be realistic, which makes it hard with the unions. I'm not ajainst fair pay, I'm ajainst abuse of the piggy bank and greed. I have my 100-200. Let's build it :-)

  4. Apparently some of the commentators here don't live in Las vegas. or they have not yet made it past the corner of their block...

    We do not need a professional sports team for a new stadium to work. That would actually work against us. Since we are a neutral city, many sporting events come here.

    With a larger arena than Thomas and mack, we would attract many other shows and events that pass us by because of the space limitations.

    Unless you build in in BFE Henderson, than nobody will use it. Near the Strip or Downtown would be the only logical and economically viable locations.

  5. Colin - The new motto is "Build it and They Will Pay".

    Look at this rendition and ask, is it for Ice Hockey? Basketball? Rugby? Soccer? Baseball? Football? Or will Gladiators be fighting Lions? Lions are cool, Gladiators suck.

    It certainly doesn't look like Baseball or Football. If it is built on University Property, the Public is in line for the bill and Majestic Realty will walk off with the Trophy every time.

  6. This thing looks more like a water treatment tank to remove nitrates from waste water. What happened to the 'thousands of living units for students and faculty'? Or are those going to be FEMA trailers situated in multilevel parking garages located in Henderson?

  7. Newbee,

    This is as good an idea as the monorail......
    they well build it in the wrong place,
    it won't be big enough for pro sports,
    and it well be to big for local use.

    I agreeMr/Mrs. Newbee that the stadium should not go the route of the monorail. It needs to get built in the right place and big enough for pro sports The Monorail is a major joke. If the stadium is built in the right place say out by the M-Resort, big enough for pro sports, and friendly to local events when it's not in big demand it's ok. If it's done right than it's fine. That is a BIG if....

    Tom D.

    If 100-200 dollars is that much money to you for a new stadium, all I can say is WOW. I spent more than that on firecrackers this year. It's not that much money for a stadium, IF, it's a one time thing.