In late March, all 30 NBA governors voted in favour of exploring Las Vegas as a potential league expansion site. While there is still a long way to go to bring the NBA to southern Nevada, Las Vegas has also secured multiple high-profile sporting events in the interim.
Last month’s vote was preliminary and a final decision is expected by year’s end. NBA Commissioner Adam Silver told reporters on 25 March there was “nothing that I see in the relatively short-term future of this league that would indicate in any way that there won’t be enormous interest” in a Las Vegas franchise.
That said, there are multiple factors that could derail the expansion process, at least for now. From a financial perspective, the expansion franchise is expected to fetch between $7 billion and $10 billion. That’s a steep price for a yet-unproven market – the Boston Celtics and Los Angeles Lakers, which have won 35 of the NBA’s 79 championships, sold last year for valuations of $6.1 billion and $10 billion, respectively. Additionally, Las Vegas is slightly off its record stretch of visitation and gaming performance from 2021-2024.
Timelines and potential venues also loom large. Initial reporting suggests the league would want the Las Vegas franchise to begin play in 2028, perhaps too soon for a greenfield venue. The NBA Cup in-season tournament finals are held in Las Vegas at T-Mobile Arena, although the arena would need to be renovated to host NBA games full-time. The venue’s ownership is split between MGM Resorts, Anschutz Entertainment Group and Bill Foley, who owns the Las Vegas Golden Knights NHL franchise.
Foley has committed to financing the renovations if he is included in ownership, but that is no guarantee. MGM declined to comment for this story.
Not enough talent to expand?
Aside from brass tacks, there are other considerations potentially impacting a Las Vegas NBA expansion. The most pressing is “tanking”, in which teams deliberately underperform in the regular season in order to receive a higher pick in that year’s league draft.
This year, an NBA record eight teams finished with more than 55 losses, all of which are jockeying for position in a high-profile draft with more than a dozen elite prospects.
“I would say virtually everything we covered at the board meeting was very positive,” Silver said at the same press conference cited above. “One topic, not so positive. And that’s ongoing tanking issues in the league.”
The quality of play has suffered in recent years, and Silver has vowed to curtail tanking in the offseason by beefing up penalties and tweaking league incentive structures. In his most direct denouncement of tanking yet, Silver vowed to “fix it, full stop”.
Questions on potential dilution
Tracy McGrady, a Naismith Hall of Famer and NBA commentator for NBC, said on his podcast last month that the rampant tanking is evidence that the league doesn’t have the talent to support two more teams.
“I’m all for trying to increase the revenue… I’m just like, we have 30 teams, got a lot of players, 450, maybe more now. We don’t have the talent to be trying to start two more teams. I just don’t think we have the talent to start two more teams,” McGrady said.
Existing league owners will have to make signification economic decisions in potentially allowing the expansion. League revenue is split among 30 teams, and there has been an influx of new owners recently. Eight franchises have been sold in the last five years, more than a quarter of the league. Some owners, especially new ones, may be reticent to split future revenue among 32 teams, but the addition of two expansion franchises could grow the league enough to generate more revenue for each franchise.
For instance, each existing owner would receive $500 million from expansion fees if both Seattle and Las Vegas franchises fetch a combined $15 billion, the lower end of their estimates. That amount would theoretically be enough to offset projected annual media revenue losses of between $11 million and $14 million a year, but sale prices and future league revenue are both far from concrete.
The NBA said it has engaged with PJT Partners to study the immediate dilution of shared revenue through the expansion to 32 franchises. A Las Vegas expansion would ultimately require 23 of 30 affirmative votes.
Las Vegas sports expansion
In the meantime, Las Vegas is steadily growing its sports footprint elsewhere. Earlier this month the city hosted the Frozen Four NCAA ice hockey championship for the first time, which was won by the University of Denver. Then this past weekend, WWE fans flocked to Allegiant Stadium for WrestleMania 42, the second straight year the city has hosted the signature wrestling event.
There is also no shortage of future events. The NFL announced 30 March that Las Vegas will host Super Bowl LXIII in 2029, five years after hosting the game in 2024. That edition was a massive success, an overtime thriller between the Kansas City Chiefs and San Francisco 49ers that generated $1 billion in economic impact for the city.
NFL Commissioner Roger Goodell said in a statement that the 2024 game “demonstrated the scale, energy and hospitality the city brings to global events”. Steve Hill, CEO of the Las Vegas Convention and Visitors Authority, added that “Las Vegas was built for moments like this, and we look forward to delivering another exceptional experience for fans in 2029”.
On the collegiate side, Las Vegas was selected in January to host the College Football Playoff for the first time in 2027. Since then, the CFP has announced a multi-day weekend fan event in the run-up to the championship game, which is typically played on a Monday.
“Our weekend in Las Vegas will be about far more than just the CFP National Championship,” Rich Clark, executive director of the CFP, said in a statement. “Whether you’re inside the stadium or enjoying the festivities across the city, there will be something for everyone.”
Aguero: All events contribute to market growth
Between the Super Bowl and the annual Formula One Las Vegas Grand Prix, Las Vegas has proven that it can glean $1 billion in economic impact from major sporting events. But that doesn’t necessarily mean that that is the expectation or the goal for all events, according to Jeremy Aguero, principal analyst for Applied Analysis.
“Yes, the height of the impact of major events has approached, and even in some cases like the Super Bowl, breached $1 billion, but that’s not a mark that we are aspiring to,” Aguero, whose firm conducts much of Las Vegas’ economic analyses, told iGB.
“We’re not saying every event needs to be a billion-dollar event in order for it to be a great event in Las Vegas…. Did Bruno Mars this weekend generate $1 billion worth of impact? No. Was it great for the city? Absolutely.”
New properties coming over the next decade
With regard to the 2029 Super Bowl, Aguero said “we have every expectation that it is going to beat” 2024’s total. That is partly due to inflation, but there are other considerations as well. One is the construction of the Hard Rock Las Vegas, which will add 3,000-plus hotel rooms to the Strip in late 2027.
Speaking to iGB last week, Hard Rock CEO Jim Allen said about 30 of the 42 stories of its iconic guitar tower are complete. When construction is finished, the tower will be 688 feet, making it the highest skyscraper on the Strip.
Bally’s is also planning a Strip development with 3,000 total rooms, but that project might not be open by then. The company’s mixed-use project adjacent to the new A’s Las Vegas stadium will cost an estimated $1.19 billion. Bally’s Chairman Soo Kim does not have a timetable for when construction will begin, but said last week that the company plans to “move cautiously”.
Las Vegas’ continued expansion into premier collegiate events is notable, Aguero said. The city gained valuable experience in previous years hosting smaller events like the Las Vegas Bowl, but now it’s attracting the main draws, like national championship games.
“This is the biggest stage for college basketball,” Aguero said. “This is the biggest stage for college football. That return on experience for fans, for athletes and for the NCAA itself is really important, and that is paramount in Las Vegas.”
Jess Marquez
Jess has covered the global gaming industry since 2022. A native of Reno, Nevada, he’d like to note that it’s Ne-va-da, not Ne-VAH-da.
