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Adelson Ignores Las Vegas Sands Board To Go All In On Stadium

Summary

The Las Vegas Sands Board turned down Adelson's proposal to develop a 65,000 seat domed stadium in Las Vegas. So he went ahead anyway.

Adelson is leading the fight against MGM CEO Jim Murren, who wants the city to develop more convention space and not more event venues.

The spat highlights a Las Vegas economic conundrum where casino/resort owners are trying to maximize their shortage of hotel rooms.

When Las Vegas Sands (NYSE: LVS) CEO Sam Adelson went to his corporate board about developing a 65,000 seat domed stadium in Sin City, they balked. There were no potential tracts of land near any Sands properties. In fact, any such domed stadium would likely have to be located somewhere near properties owned by Las Vegas Sands rival MGM Resorts International (NYSE: MGM). So after Adelson talked to members of his family, he went ahead anyway: pledging $650 million of his personal fortune to get the stadium built.

The Perception of Las Vegas

It highlights a struggle for the future of Las Vegas that is playing out on stages, events centers, gaming floors as well as board rooms. A subject I have written about before has been the changing face of Las Vegas. Most of the public and the media, and far too many analysts, are looking at a perception of Las Vegas several decades old.

A pessimistic look at Vegas is daunting. Gaming revenues are at best flat and at worse dipping. Population growth to benefit "locals" casinos is flat. Big players on the Las Vegas Strip such as Las Vegas Sands, MGM and Wynn Resorts (NASDAQ: WYNN) are straining to diversify to new markets in Macao and areas like the Northeast and Midwest.

Of course, as Atlantic City and Macao gaming economies have convulsed, the major players have suffered.

LVS data by YCharts

Which is why re-examining the Las Vegas market is a good idea.

Las Vegas has the most convention space of anywhere in North America, and arguably the world, with more to come. In fact MGM's CEO Jim Murren has been a vocal proponent of expanding convention space in Las Vegas.

According to the Las Vegas Convention and Visitor's Authority (LVCVA) in 2015 there was a staggering 21,306 conventions and meetings in Las Vegas. These ranged from a few dozen attendees to hundreds of thousands each, for a total of around 5.9 million conference attendees. Total visitors to the city were 42.3 million producing about $9.6 billion in gaming revenue. Early indications are that 2016 numbers will be up.

But an excerpt of historical numbers from the LVCVA is instructive:

Historical Las Vegas Visitor Statistics

Year Visitors Conventions Room Inventory Occupancy Rates Gaming Revenue
1995 29,002,122 2,826 90,046 88% $5.7bil
2000 35,849,691 3,722 124,240 84.7% $7.7bil
2005 38,566,717 22,154 133,186 89.2% $10.6bil
2010 37,335,436 18,044 148,935 80.4% $8.9bil
2015 42,312,216 21,306 149,213 87.8% $9.6bil

Click to enlarge

The Las Vegas economy was hit hard by the economic convulsions in 2007-2009. The numbers are just now starting to return to the numbers ten years prior. Except...

Gaming...


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