Las Vegas sports face COVID-related economic damage

The past five months have battered the Las Vegas sports scene, doing enormous economic damage that might not be sorted out for years.

Local fans yearn for the days when they can return to the valley’s venues en masse just as they did before the COVID-19 pandemic brought a sudden halt to such gatherings in mid-March. Allegiant Stadium, T-Mobile Arena, the Thomas &Mack Center and Las Vegas Motor Speedway, among others, sit unoccupied for now.

Las Vegas economics analyst Jeremy Aguero, whose clients include the Las Vegas Convention and Visitors Authority and the UFC, estimates it will take the Las Vegas economy 18 to 36 months to return to pre-pandemic levels.

“2020 is going to be difficult,” Aguero said. “2021 is going to be difficult, too, unless there’s a substantial change … I certainly hope that is the case. The virus is going to dictate the timeline.”

Las Vegas Events president Pat Christenson added a caveat.

“The issue isn’t so much the science … it’s more cultural,” Christenson said. “Who can predict when we as a country will start acting collectively responsible? … You’ve got a good portion of this country that’s protesting wearing masks.”

Aguero’s projection, which is based on a coronavirus vaccine being developed in the first quarter of 2021 and being effectively distributed within a year, doesn’t necessarily mean all events will be fan-free through next year. Fans are expected to be allowed to attend sporting events on a limited basis during what would be an interim phase.

Las Vegas Motor Speedway hopes to receive governmental clearance to allow a limited number of spectators next month when NASCAR’s South Point 400 takes place. The economic impact from this year’s spring race was $121.5 million, according to the LVCVA. Last year’s fall race generated $110.5 million.

South Point general manager Ryan Growney is hopeful the Sept. 25-27 weekend becomes a successful testing ground for fan attendance at other events. “I think it’s important to start the conversation, to start the process and let people see they were able to do this, that they were able to follow the protocols and do it safely,” Growney said. “Then maybe we can move on to the next event.”

Learning from the past

This isn’t the first time Las Vegas sports and the area’s economy at large have been dramatically affected by an outside event.

The Sept. 11, 2001, terrorist attacks resulted in the postponement or cancellation of two local boxing cards and a handful of UNLV sporting events, including a Rebels football game against Colorado State.

The 2008 global financial crisis affected local athletic budgets and the number of discretionary dollars available to fans.

Aguero said the previous economic damage from such crises resulted in the loss of “tens of thousands of employees, millions of dollars in wages and salaries and billions of dollars in total economic activity.”

“I guess if there’s one lesson to be learned is that the Las Vegas economy is remarkably resilient in its ability to kind of bounce back from challenges,” Aguero said. “During Sept. 11, people were concerned that no one was going to get in a plane again. Obviously, during the great recession, Las Vegas was ground zero for a foreclosure crisis that had gripped the entire nation. And yet Las Vegas came back stronger every single time.”

That doesn’t mean, Aguero said, the short-term damage won’t be significant. This crisis is deeper than the prior two, as devastating as those were at the time.

How the financial losses affect the local sports scene can take on any number of forms.

Fans won’t have as much spending power, which could result in lower demand for Golden Knights and Raiders tickets, which could force those teams to cut ticket prices to make them more affordable. It also could result in empty seats.

Fewer discretionary dollars likely would affect other teams and events in the city as well.

“Every week that goes by, economically, you’ve got more and more people being laid off and more people being laid off longer,” Christenson said. “None of that bodes well for successful events. … The one thing I think we’ve got going for us is there will be a lot of pent-up demand. As long as the destination can provide a safe experience, I’m pretty confident you’re going to steadily build your event customer.”

Lower ticket prices also could mean teams and those who run events are forced to slash budgets, which could result in layoffs and furloughs. UNLV’s athletic department will receive about $1.5 million less from the state. Athletic Director Desiree Reed-Francois will have to make up the difference, and she recently launched a fundraising campaign to do that.

That need to raise funds is even more urgent after the Mountain West postponed the football season until possibly the spring, drying up for now one of UNLV’s two primary revenue sources. The Rebels’ other prime revenue generator, men’s basketball, could face a truncated schedule or, in the worst case, a cancellation of its season.

The Raiders had hoped to make this a sparkling debut season at Allegiant Stadium, playing in front of 65,000 fans each NFL home Sunday. Now they are scheduled to compete in an empty stadium and, according to Forbes, will suffer a ticket value loss of $571 million, the highest in the NFL.

Aguero said roughly half of those fans would be those visiting Las Vegas specifically to watch an NFL game in that stadium, which would have produced about $620 million in economic impact. Plus, about 6,000 workers would have had jobs tied to the stadium.

Then there are businesses around the stadium that won’t have the foot traffic otherwise expected.

“While I’m absolutely concerned about the impact inside the four walls of the venues that we have and during game day, I think the economic implications extend far beyond that,” Aguero said.

The same can be said of other local venues, most notably T-Mobile Arena.

The Golden Knights are completing their season in a bubble setting in Edmonton, Alberta. When T-Mobile will again serve as one of the NHL’s most electric settings is anyone’s guess.

After a record-breaking season, the Aviators are not playing at all this year after minor-league baseball operations were shut down. The Aviators rely on revenue produced at Las Vegas Ballpark. They don’t have a lucrative TV contract to help sustain the organization like those for the Raiders and Golden Knights.

The Aces and rest of the WNBA are playing their entire season in Bradenton, Florida.

Some events were played

Some events were completed just before the COVID-19 shutdown, such as NASCAR’s Pennzoil 400 at LVMS. Also, the Mountain West men’s and women’s basketball tournaments at the Thomas &Mack Center, the West Coast Conference’s men’s and women’s tournaments at Orleans Arena and the Pac-12 women’s tournament at Mandalay Bay Events Center played to their conclusions.

The WCC, in 2009, became the first conference that didn’t have a team affiliated with the city to play its postseason tournament in Las Vegas.

As for next year’s tournament, WCC Commissioner Gloria Nevarez said “especially with the tournament in March, time is our ally there. I think there’s optimism about still being able to host it. Whether it looks the same as in normal years, we don’t know yet.”

The Western Athletic Conference wasn’t nearly as fortunate as the WCC, as its men’s and women’s tournaments ended prematurely. That cost the WAC about $250,000 in revenue between unused tickets and unfilled sponsorships.

Though the Pac-12 canceled its men’s tournament after a day, the conference didn’t take a financial hit because insurance covered the loss. That conference was scheduled to play its football championship at Allegiant Stadium this season in the first of a two-year contract, but the deal was delayed by a year.

Both conferences plan to return their events to Las Vegas in 2021 if health conditions permit.

Other events canceled included the NFL draft, NBA Summer League, Rock ‘n’ Roll Las Vegas Marathon and equestrian World Cup Finals.

Venues throughout the valley are facing revenue losses that were unanticipated when the year began, including at South Point Arena, even though most of its events aren’t ticketed. Revenue there is driven by fans and competitors staying in its hotel.

“It’s safe to say that we’re well over seven figures lost,” South Point Arena general manager Steve Stallworth said.

The financial losses weren’t limited to the event sites.

According to Las Vegas Events, in 2019, the NBA Summer League resulted in an economic impact of $72.6 million for the area and the marathon $110 million. The equestrian finals in 2015 resulted in $24.6 million in economic impact — the last year it was in Las Vegas. The economic impact of the NFL draft last year in Nashville, Tennessee, was $224 million, and the expectation was for an even higher number in Las Vegas.

“What we worry about is keeping the fan support,” said Warren LeGarie, co-founder and executive director of the NBA Summer League. “Like anything else, if you don’t have something, they find interest in other hobbies. We hope the fans, if we’re able to do something in the future, are still going to be there for us.”

Waiting to see

In addition to the Raiders’ season and the NASCAR fall race, some events are still scheduled — for now. That includes the Shriners Hospitals for Children Open at TPC Summerlin, a PGA Tour event that will be played Oct. 8-11 in front of no fans and a second PGA Tour event added a week later to replace a canceled tournament in South Korea.

Less certain are the National Finals Rodeo at the Thomas &Mack, two notable college basketball events at T-Mobile and the Professional Bull Riders World Finals at T-Mobile. The NFR, which according to Las Vegas Events last year created an estimated economic impact of $175.8 million, could keep its Dec. 3-12 schedule in Las Vegas before limited or no fans or search for a city elsewhere for this year’s event.

The Las Vegas Bowl’s immediate future also is less certain after the Pac-12 and Big Ten conferences announced they were postponing their seasons. The bowl was scheduled to pit teams from the Pac-12 and Southeastern Conference this year. Bowl executive director John Saccenti said game officials will “evaluate the next steps.”

Venue managers throughout the valley take part in a conference call every two weeks to discuss the state of affairs and the efforts being made to move forward.

“It’s honestly one of the most depressing calls I’m on all week,” Stallworth said.

Depressing calls for depressing times in which everyone is searching for answers.

“When this first started, I was kind of looking at a month, six weeks ahead,” Christenson said. “I think about a month into it, it got whittled down to where I’m thinking about a week at a time.”