Friday, February 16, 2007

Viva Las Vegas – Welcome to the Center of the Sports Universe (NBA All-Star Weekend)

This weekend the sports world will focus their attention to Sin City. It what on the surface would seem to be a perfect marriage, the NBA’s multi-million dollar superstars will be turned loose on the Vegas strip. Having had the opportunity to attend three NBA All-Star Weekends (along with MLB and NHL All-Star festivities) All-Star events are more about corporate entertaining then they are about sports. Much of the “backroom conversations” this weekend will center on Las Vegas Mayor Oscar Goodman and his interest in bringing a major sports franchise to Las Vegas.

"I think Las Vegas is the next great world city, and a component part of that has to be a major league team, be it NBA, NHL, baseball or football," Mayor Oscar Goodman told the Associated Press on the eve of the most important mainstream sports event to have been held in Las Vegas in many years. "That's what makes great American cities."

Las Vegas remains the center for pay-per-view boxing matches, UNLV men’s basketball, the Las Vegas Bowl and a Triple-A baseball franchise, but with Nevada being the only state where sports’ gambling is legal, professional sports leagues have avoided Las Vegas treating it like a modern day Sodom and Gomorrah.

"It's not about a moral crusade about gambling," NBA commissioner David Stern said when announcing the All-Star game would be in Las Vegas. "It's just about betting on basketball games."

However in what could be the start of something big in regard to the NBA and its future in Las Vegas, Stern first spoke with New York Newsday about the NBA Tuesday, and then speaking to the Las Vegas Chamber of Commerce Wednesday challenged Goodman to find a way to make it work for an NBA franchise in Las Vegas.

NFL commissioner Roger Goodell was asked the following question during his “State of the Sport” two weeks ago on the eve of Super Bowl XLI. Given the amount of money bet on the league throughout Vegas as well as in the world. And the NBA All-Star Game coming to Vegas, you going to London where there's tons of gambling halls. Can you give your personal view if an owner came to you and said he wanted to move to Las Vegas?

“I feel strongly about keeping a very strong line between the NFL and sports gambling, and sports betting. I think it's a real issue. I have my personal views about gambling and I don't think it's in the best interests of the NFL to have any association with sports betting. I think we are working hard with all of our franchises now to stay where they are, to stay competitive and successful in those communities and make those communities even better. I do not, from my standpoint, have any dialogue with anybody about that -- that hypothetical, but we're going to work hard to try to keep our teams where they are.”

Baseball Hall of Fame member Reggie Jackson has put together an investment group with the expressed purpose of buying and moving a Major League Baseball franchise to Las Vegas. His latest attempt to buy the Oakland A’s failed after Lewis Wolff bought the team for $180 million in April 2005. Wolff offered to keep the team in the Bay Area, Jackson who reportedly offered close to $230 million was turned away by then A’s owners Steve Schott and Ken Hofmann.

Florida Marlins owner Jeffery Loria dispatched Marlins President David Samson to meet with Goodman in hopes Goodman would offer Las Vegas as a relocation site for the Marlins if they can’t get a taxpayer built facility in South Florida. Regardless of the Marlins and Mr. October’s interest Major League Baseball wants nothing to do with Las Vegas as long as betting on baseball in legal in Nevada. Shortly after his December 2004 visit, MLB commissioner Bud Selig told Loria in no uncertain terms the Marlins should stop talking to Las Vegas about relocation.

“I've been told by [commissioner] Bud Selig to stay out of the Marlins' business,” Goodman said last Friday. “He indicated [last year] he prefers I don't speak with them and that the team stays in South Florida.” He said he did not push the issue because he wants to preserve a good relationship with MLB.

Last week, MLB president Robert DuPuy expressed similar concerns about any team relocating to Las Vegas to The Miami Herald.

“We had very productive discussions with Las Vegas about a baseball team in that city during the Expos' relocation process,” DuPuy said in an e-mail. “And the mayor and local leaders were very enthusiastic and committed. As a rapidly expanding city, Las Vegas offers interesting professional sports opportunities. The television market there is quite small, but the growth is intriguing.

“However, the gaming remains an issue, particularly the fact that baseball is on board with the other sports. While gambling has become more pervasive in other forms in many states, the difference in Nevada is the sports betting. Given the history of the Office of the Commissioner and the sensitivity to the issue of gambling, this would be a significant obstacle.”

The one league that isn’t saying no way to Las Vegas is the National Hockey League.

"Certainly there has been interest expressed since the lockout ended by people wanting to own a franchise in Las Vegas," deputy commissioner Bill Daly said in a Houston Chronicle report. "At the appropriate time I think we have to look at that interest."

If and when a major professional sports league seriously considered allowing one of their franchises to move to Las Vegas or considered expanding to Las Vegas a prerequisite would be the building of a new state-of-the art facility to accommodate that team. As far as Las Vegas and the National Hockey League, Las Vegas might work in the short-term as a novelty act, but Las Vegas is as non-traditional hockey market as any one of a half dozen NHL franchises currently home to NHL teams and the last decision the NHL needs to make is placing another franchise in a market where the NHL will never work long-term.

The naysayers’ aside Goodman will fully use this weekend as an opportunity to showcase Las Vegas. Betting on National Football League games is big business in Las Vegas (accounting for close to 40 percent of all sports betting done in Vegas), the biggest weekend of the year in Vegas is Super Bowl weekend (an estimated $93.8 million was bet two weeks ago during Super Bowl XLI), as attractive as Las Vegas would be to an NFL team (Las Vegas is the perfect city for an NFL team) that will never take place. The Lords of the Diamond are simply too afraid of gambling (the deadliest sin associated with baseball is betting on baseball) to ever seriously consider allowing a team in Las Vegas. And while the NHL may be the most accommodating sports league, the NHL and Vegas aren’t a good match and the NHL isn’t a major league anymore in the eyes of American sports fans. That leaves the National Basketball Association.

The population of Las Vegas has tripled over the course of the last 20 years to 1.8 million, and it remains one of the fastest-growing cities in the country. Its economy pumps out a staggering $72 billion annually, with nearly 38 million tourists blowing through town each year and contributing their mortgage/retirement/child's college fund to that honey pot. If we assume three-fifths of all Las Vegas visitors are sports fans - a measurement the Founding Fathers would approve - that would yield a pool of roughly 24 million fans to draw from.

"I've said before that just like Dallas is America's Team, I truly think that a team in Las Vegas would be the World's Team," Goodman said. "We really have the type of cosmopolitan people out here that would embrace the hometown team."

Tuesday, comments NBA commissioner David Stern made to New York Newsday’s Ken Berger offered a dramatic about face in Stern’s long held stance the NBA would never consider allowing a team to move to Las Vegas until the Vegas sports books agreed to end betting on NBA games.

"Absolutely, not, I wouldn't," Stern said in a 20-minute phone conversation advancing the league's first All-Star Game in a non-NBA city. "This league is run by owners. The only vote is the Board of Governors."

Stern is sending more signals by the day that he is willing to adjust his thinking. On Wednesday, he told's Chris Sheridan that gambling "is not inherently evil," adding, "One of the reasons I was happy to come to Las Vegas [for the All-Star Game] is because there's this lingering notion that gambling is bad. ... Gambling has become the American way, and we're all changing our attitudes with respect to it."

Before last year's All-Star Game in Houston, Stern said, "We are not going to go there while they have betting on NBA basketball games." But Tuesday as he told Berger, the door open for compromise.

"I think that there's a negotiation to be had with the city," Stern said.

What Stern suggested to Berger (and this is truly a stunning 180 degree turn) betting could take place on NBA games but not any betting on a team based in Las Vegas. Vegas sports books do not allow any betting on UNLV teams (and that included the back-to-back Final Four appearances the Runnin’ Rebels made in 1990 and 1991).

"The good commissioner has been consistent that he would not allow a team to come here because of sports betting," said Goodman, sporting a grin as wide as Charles Barkley's backside in a Las Vegas Sun report. "Now he's backed off that, thank goodness."

"Everybody talks about the NBA testing Las Vegas, and we're not, because we know what's in Las Vegas," Stern said. "But I think to some degree, Las Vegas is testing the NBA, to see how exciting it is. And to contemplate some scenario down the road where it's Dateline, Las Vegas."

The team that many sports industry pundits (presently company included) believe will move to Las Vegas is the Sacramento Kings. For the uninitiated or those needing a refresher on why the Kings are the NBA most likely to move to Las Vegas in the very near future consider this: Sacramento voters on November 7, 2006 overwhelmingly rejected two key measures that would have provided a publicly funded arena for the NBA franchise. Owned by Joe and Gavin Maloof, the arena measures were rejected by a resounding 80 percent. Nine days after staring at the end of the NBA in Sacramento, Joe and Gavin made their first intelligent decision in months – they turned their arena fortunes to NBA Commissioner David Stern.

“The Maloofs have never wavered in their interest in keeping their teams in Sacramento and they have requested that we take a leadership role in helping them achieve that goal,” Stern said.

“We believe that David Stern’s combination of experience and creative thinking will help us find a plan that will work for both the public and the team,” Joe Maloof said. “We will remain an integral part of the process, but the league is going to take the leadership role going forward. Gavin and I and the rest of the management team are going to be spending 100% of our time supporting the Kings and Monarchs and enhancing the experience of our loyal fans and community partners.”

Are the Maloofs really committed to keeping the NBA in Sacramento? That remains to be seen, but this is certain – the Maloofs were their own worst enemies when the voters decided the fate of an arena plan the Maloofs and the City of Sacramento signed in early August. Six weeks later in mid-September the Maloofs pulled their support of a proposal that would have seen taxpayers pay $470 million towards the cost of a proposed $530 million state-of-the art facility. Then weeks before the vote, the Maloofs drew the scorn of voters and public indignation when they appeared in a Carl’s Jr. Burger commercial eating burgers washed down with a $6,000 bottle of wine.

Ever the politician, David Stern made it clear on November 15 he doesn’t believe there is any damage control the NBA has to deal with in the aftermath of the November 8 vote.

“No, because, well, I guess you might say that there was a campaign and a lot of things done, even in the negotiations and the like, that maybe different people would like to have back and do them a little differently. Tie them up in better ways, and buttoning them down rather than tying them up.”

“But I think in some ways the election, the result, everything that has gone past, has sharpened everybody’s focus. And so we now know that we can either do it or we can’t, but from the NBA’s perspective, we’re going to devote enormous resources to try to do it. I don’t mean enormous resources to trying to get some vote or another, I mean resources to determine whether what seems to be a very good marriage – the Maloofs and Sacramento, Sacramento and the NBA – is something that should be continued in the context of a spanking-new, multipurpose facility for the city of Sacramento and the Monarchs and the Kings. And it’s as broad as that, and I think what goes on will help inform us, but I’d like to think that in some ways it will help to inform everyone who participated and maybe some who didn’t, to see exactly what it is that we all want and what is it that’s possible and what investments need to be made on all sides,” Stern commented.

The current home of the Kings opened in 1988, seats 17,317 for basketball, and has 30 luxury suites and 412 club seats. It cost $40 million to build and was completely privately financed. The Kings enjoyed 313 consecutive sellouts at 18-year-old Arco Arena. That’s more than 17,000 tickets sold for each game the last seven and a half seasons.

If the NBA is to stay in Sacramento the franchise needs a new arena. Does the NBA have a future in Sacramento – any sports team who enjoyed a sellout streak that had reached its eighth season is one of the more impressive sellout streaks in professional sports history. As damaging as an 80 percent no vote at the ballot box, Sacramento residents who were polled by The Sacramento Bee days ahead of the vote made it clear they support the Kings, love the NBA but had no interest in a proposal that asked taxpayers to contribute nearly the entire cost of a $540 million arena.

Three months later Stern has turned the challenge for securing arena funding in Sacramento over to John Moag Moag, president of Moag & Company. Moag is probably best known for this role, where he personally led the successful effort to return an NFL franchise to Baltimore. As well respected as John Moag is in the sports industry, over the last two decades California voters have consistently rejected any measures that included taxpayer funding for sports faculties. Moag will give it his best (and he is the best) but at the end of the day he will not secure the needed funding to build a new arena for the Kings in Sacramento.

This weekend would have been the perfect opportunity for the Maloof’s owners of the Palms Casino and Hotel (there is no betting on NBA games allowed at the Palms) but for what it’s worth the Maloof brothers have distanced themselves from a pending move to Las Vegas.

Joe Maloof made it clear to the Sacramento Bee he believes Las Vegas would be a good fit for an expansion team rather than an existing team.

"We have a great team going in Sacramento," he said.

"We've been here eight years. We've built a lot of friendships, and we want to get it done in Sacramento."

"We don't want to leave, and we've never thought about Vegas," echoed his brother Gavin.

In Sacramento reaction to the Maloof’s saying they’ve never thought of Las Vegas as a future home for the Kings and Stern’s earlier revelation that the NBA is much more open to a team moving to Las Vegas didn’t come as a surprise.

"It certainly opens up another scenario, especially since the Maloofs' base of operations is Las Vegas," said Councilman Rob Fong, who worked on the previous arena plan.

"But I take Stern and the NBA at their word that they value Sacramento as a market. We certainly have our team. If, at some point, the NBA decides Las Vegas needs a team, they could put an expansion team there."

Nonetheless this will be a big weekend for the Maloof’s, Las Vegas and the NBA. More than 1,500 media are accredited for the weekend (1,200 from the United States and 300 from the rest of the world). The Las Vegas Convention and Visitors Authority estimated the economic impact from this weekend’s events will be $26.8 million.

"We are going to be the place to be in the world," said Rossi Ralenkotter, president and CEO of the authority, which spent about $4.5 million to host the All-Star Game.

However, not everyone seems to believe what the Las Vegas Convention and Visitors Authority believes the weekend will represent.

"I don't think it will have much impact at all," said Stephen Pruitt, a finance professor at Missouri-Kansas City specializing in sports sponsorships in a Sacramento Bee report. "The players have to stay somewhere, and it's not like people are going to believe they went to Las Vegas to stay at that hotel. It's an indication that it is a very good hotel because the NBA wouldn't use it if it wasn't. But it's not going to make that a destination hotel."

George Maloof doesn't expect it to.

"It's not going to be a turning point for us," the president of Maloof Hotels said. "We've been open almost six years. We've already been able to build our own brand. It's always been about the community of Las Vegas. It's such a special place that deserves all the positive publicity it gets."

What makes this NBA All-Star Weekend much more interesting than the average NBA All-Star Weekend (and an NBA All-Star Weekend is anything but average when compared to a regular NBA weekend) this weekend features more business related agendas than one can imagine.

Las Vegas Mayor Oscar Goodman has his heart set on winning a major league sports franchise. The Malooof’s can say whatever they’d like but the Kings will end up either in Las Vegas or Anaheim and this weekend has to be perfect for the Kings to move to Las Vegas in the near future. David Stern is hoping and praying Sin City doesn’t claim any of his star players as victims. This weekend, whatever happens in Vegas isn’t like to stay in Vegas.

For Sports Business News this is Howard Bloom. Sources cited and used in this Insider Report: The Las Vegas Review Journal, New York Newsday, The Sacramento Bee and The Miami Herald

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