Vital Vegas tweeted several rumors about a potential Rio sale over the past few months. The latest involves the property becoming a Major League Baseball stadium.
We'll up the ante on our Rio sale rumor with another juicy tidbit: As we've shared, could very well be a land play. New rumor suggests Rio could be demolished, site to be developed as (wait for it) Major League Baseball ballpark.
— Vital Vegas (@VitalVegas) October 8, 2018
Rio sale rumors are nothing new. PokerStars stated that it was approached with a Rio and World Series of Poker (WSOP) sales pitch. Caesars Entertainment, owner of Rio and WSOP, declined to comment on that claim when it came to light in 2013. The company has denied other Rio sale rumors.
The property is an outlier when compared to other resorts owned by Caesars Entertainment in Las Vegas. All others are located on the Strip. This seems to be a basis for the sale rumors that have spanned a decade.
What is Rio’s value?
It is difficult to pinpoint the value of a Las Vegas resort. Clark County property records show the 2017-2018 taxable assessment was $538 million. The lot size is 88.53 acres.
To compare the potential accuracy of tax records, Palms appraised at $300 million for 2017-2018, according to the county assessor. Station Casinos acquired it for $312.5 million. That parcel is 24.79 acres. Palms is one block west of Rio on West Flamingo Road. Based on this, I will accept the tax assessor’s Rio appraisal as being reasonable and use its figure in calculations below.
Is a Major League Baseball stadium on Rio parcel feasible?
The 88.53-acre Rio parcel is large enough for a professional sports stadium. The Raiders stadium will sit on 62 acres. That land has significant parking issues that the additional 26 acres of the Rio parcel likely would not have. That and its proximity to the Las Vegas Strip make it a reasonable location for a stadium.
While the Rio lot may be the perfect size and location for an MLB stadium, there are many other issues at play here.
Rio’s estimated $538 million cost does not include demolishing the property. There are two hotel towers and a sprawling casino and convention center there.
The demolition cost of Riviera was around $45 million. Rio is much larger and taller than Riviera. It is reasonable to assume that the only way the demolition costs could remain in that vicinity is if one of the hotel towers remained. This puts the land cost closer to $600 million, if not above it, when accounting for demolition work.
To put that into perspective, the Raiders paid $77.5 million for its stadium land. The lot was vacant.
Paying $600 million for stadium land is problematic for budgets. That is about what the entire land and construction budget was for SunTrust Park in suburban Atlanta. The construction portion of it was just under $500 million and that was before steel prices increased sharply due to tariffs.
SunTrust Park is an open-air stadium. That seems impossible for Las Vegas where summer evenings are routinely near or above 100 degrees. That may work for a minor league stadium, but pros will not go for that. A domed stadium could cost double that of an open-air one. This could put the cost of the rumored MLB stadium in the range of $1.3 billion to $1.5 billion when accounting for the land.
Who is paying for the stadium?
The Raiders pulled off one of the largest stadium tax heists in history. Las Vegas residents are on the hook for $750 million in bonds that will exceed $1 billion including interest by the maturity date. This required raising the hotel tax 0.88 percent. At the same time, the Las Vegas Convention and Visitors Authority (LVCVA) received a 0.5 percent hotel tax increase to fund its convention center expansion plan.
The stadium tax was not popular among Las Vegas residents. It was a political play. Major GOP donors pushed for a special session of the Nevada Legislature. The GOP governor called the session as the party held a majority in both chambers.
It was the perfect storm that is not available this time around. Pulling it off again seems unlikely, especially with schools and businesses holding fundraisers to save teaching jobs due to a lack of funding. It would be a tough sell to Clark County residents while schoolchildren sit in outdated, overcrowded classrooms.
A new stadium would likely need significant private funding. History has taught us that sports teams typically only pay a fraction of the funding towards their own stadiums. That makes it difficult to raise more than $1 billion for this project.
LVCVA does not appear to think this is happening
A minor league stadium is under construction near Red Rock Resort in Summerlin. The LVCVA pledged $80 million towards the project. That seems like a poor decision if there was a thought that the MLB had a serious thought of moving to Las Vegas.
The Oakland A’s have been floated as a team that may be interested in the Las Vegas market. Its triple-A team is moving into the Summerlin stadium. While convenient, it is hard to think that Las Vegas can support both teams. There are also reports that the team is close to announcing a new stadium deal in Oakland.
Rio lot becoming stadium seems unlikely
I do not believe that there is any serious chance of Rio becoming a stadium site. The land is too expensive and would require extensive demolition work. If there is a serious plan with private funding to bring Major League Baseball to Las Vegas, there are much better sites for its stadium.
The 58-acre Wild Wild West property on West Tropicana Avenue comes up whenever there is talk of a stadium. That site would not have the same demolition costs. It would be just as close to the Strip as Rio at a fraction of the land value. It is far from the only parcel in Clark County that is suitable for a stadium. However, it may be the most convenient to the tourist corridor.
This is not to say the Rio is not for sale. Anything is for sale for the right price. If Rio changes hands, I do not think the buyer will be a stadium developer or anybody else with the intention of demolishing the hotel towers.
