Proposal for south Strip arena hinges on securing financing
18 May 2011
- Texan closer to bringing arena complex to Las Vegas, signs contract for 51s (5-6-2011)
- Just build it already: Why Las Vegas can’t land a pro sports team (4-18-2011)
- Proposal emerges to build three-stadium complex in downtown Las Vegas (2-8-2011)
- UNLV athletic department sees on-campus stadium as a game-changer (2-1-11)
- Developers put early plans for UNLV stadium, retail district on display (2-1-11)
- Regents to hear UNLV arena plan for football, basketball (1-31-11)
- Mayor: UNLV domed stadium wouldn’t conflict with a downtown Las Vegas arena (1-27-2011)
- Report: UNLV domed stadium plans will be unveiled Tuesday (1-27-2011)
- Goodman: Arena project a key issue for next Las Vegas mayor (1-20-2011)
- UNLV acknowledges effort to bring stadium, football to campus (1-19-2011)
- Mayor: Sports arena ballot petition 'irrelevant' to city arena efforts (11-18-2010)
- Symphony Park targeted for sports arena (11-12-2010)
- Mayor: American League team says no to Las Vegas (8-26-2010)
- Mayor: Without public funding for arena, Las Vegas won't get NBA team (7-22-2010)
- Strip sports arena has very little support (6-10-2010)
- MGM Mirage opposes arena options seeking public financing (5-18-2010)
- County wants arena details, says public money unlikely (4-6-2010)
- Cowboys Stadium poses Texas-sized threat to Vegas (3-21-2010)
The inspiration for Texas businessman Chris Milam’s plans to buy the Las Vegas 51s and build a multisport athletic venue at the south end of the Strip can be found in his relationship with baseball Hall of Famer Nolan Ryan.
Milam met the legendary pitcher along with Ryan’s sons, Reid and Reese, while negotiating a loan to purchase a helicopter with money from the family’s Texas bank. Milam, who reportedly earned much of his money developing retail malls and office space in Eastern Europe following the collapse of the Soviet Union, had since returned to Austin and was seeking another business venture.
He was intrigued by the success of the Ryans’ Round Rock Express baseball franchise which, like the 51s, is a member of the Triple-A Pacific Coast League. During the past five years, the Express, named for Nolan Ryan’s legendary fastball, have become one of the most popular draws in minor league ball, playing in a stadium with luxury suites, chairs with seat backs and cup holders, a swimming pool, and LED video board. All are standard fare for the newest major league ballparks but unusual for the minors.
Milam looked to the success of the team, which draws better than most minor league baseball franchises, and decided to make a similar play in Las Vegas. He has put down an undisclosed deposit to purchase the 51s and is working with Wall Street investment bankers Goldman Sachs and Morgan Stanley to raise money to build his planned $1.95 billion professional sports complex west of Mandalay Bay.
The 51s sale, which could be completed as early as this summer, would be one of several pieces to the development. It would include a 9,500-seat ballpark for the 51s; a 36,000-seat stadium for professional soccer; and a 17,500-seat arena that is being positioned as a future home for the National Finals Rodeo and the Professional Bull Riders finals, which are nearing the end of their contracts with the aging Thomas & Mack Center.
Sources close to Milam, who did not return phone messages seeking comment, say he is negotiating with 12 banks that own the 63-acre vacant site. The land broker is CB Richard Ellis. “They have agreed upon a price, and money has been put down,” a source said of the south Strip site. But the deal could fall apart if adequate financing is not raised.
Goldman Sachs Managing Director Greg Carey is spearheading Milam’s efforts to raise private equity to fund much of the project. Carey, considered one of the leading financiers of sports stadium and arena projects, joined the investment banking firm in 2004 after working at Citigroup, where he raised $552 million in financing for the Capital Beltway toll road project, which is two-thirds complete. Carey did not return a phone message.
Investment banker Morgan Stanley is seeking to raise revenue through bonds that would be leveraged against the creation of a special taxing district that must be approved by state lawmakers. The proposed district would draw a line around the 63-acre site and would bond against the tax revenues generated by the project, the source said.
Milam has met with Nevada legislative leaders, who have reportedly heard a supportive pitch of the Milam effort as well as talk of league expansion from the commissioner of Major League Soccer, which is viewed as a smart strategic addition to the project because of this region’s booming Hispanic population, many of whose members participate in amateur soccer leagues throughout the Las Vegas Valley.
The Portland Timbers are viewed as Milam’s model for a successful MLS franchise. Oregon’s largest city recently added a second professional sports franchise, the MLS’ Timbers, and it has become one of the most successful teams in the league, routinely selling out its 17,000 seats, prompting a 5,000-seat expansion and renovation. The team’s owner, Merritt Paulson, the son of former Treasury Secretary Hank Paulson and a Harvard MBA, has become a business adviser of Milam’s and has made telephone calls on his behalf to vouch for Milam’s veracity, a source said. Merritt Paulson failed to return a phone call seeking comment.
Two years ago, Milam hired the politically connected Las Vegas firm Rogich Communications to build legislative support for the proposal as well as provide introductions to Las Vegas Mayor Oscar Goodman, who is viewed as a key link between a sports developer and the commissioners of major sports leagues.
“Goodman is one of the assets you have in attracting a franchise,” said Chicago-based sports marketer Mark Ganis, who has no business ties to the Milam proposal. “The flamboyance, his promoter’s persona and the actual substance, he has the ability to sit down with league executives, actually get the meetings, and discuss the economics of locating a team there. He also has to persuade casino sports book operators to change their sports betting operations to meet the concerns of league executives. I’ve always (thought) if Las Vegas was successful in this effort, he would have been one of the driving forces.”
During the past decade, Las Vegas political leaders and business executives, most noticeably Goodman, have flirted with major sports leagues, hoping to persuade a league to operate a team here. City officials have also attempted to lure NHL and Major League Baseball franchises, but as the Nielsen Co.’s 42nd largest U.S. TV market with 718,030 households, no sprawling suburban base and the uncertainty of operating in a recession-plagued tourism-driven community, professional sports commissioners and owners have been reluctant to base a franchise here.
“Las Vegas is often viewed as a mirage in the desert for the sports industry,” Ganis said. “There’s a lot of glamour associated with it, but when it comes time to paying for the facility and generating revenue for the team to operate, it’s a difficult proposition, not impossible, but much more difficult. There are competing political structures at the city and county levels, and they generate issues over taxation, revenue. But they are resolvable.”
Sources close to Milam say he has been told that no public money is available in this economic environment to build an arena. Instead, his team has pitched a hybridized version of Caesars Entertainment’s plan to build a sports arena behind the east side of the Strip. Rather than drawing from revenue from a portion of sales tax generated by businesses surrounding the Caesars project, the Milam tax district would draw upon a portion of the revenues generated from business activities on the Milam site. Morgan Stanley would then issue construction bonds leveraged by the revenue.
The 49-year-old Milam has a degree in finance from the University of Texas at San Antonio and saw his start in real estate in 1985 with USAA, a San Antonio-based insurance and financial services company, according to a 2002 profile in the Austin (Texas) American-Statesman. He sifted through 40 to 50 potential deals weekly to determine which were worth pursuing. The then-president of USAA’s real estate group, Drake Leddy, remembered Milam as being “very aggressive and very sure of himself.” While working for the Texas company, Milam was negotiating to purchase a building from Chicago developer Gene Golub. Milam thought the price was too high and declined to close the deal, according to the Texas newspaper. Golub liked his style and hired Milam.
At the time, the U.S. real estate market was in the midst of a deep recession, and Milam’s new boss sent him to Eastern Europe to pursue opportunities in the Soviet-dominated Eastern bloc. Milam found hunger, poverty and a corrupt system that was not prepared to deal with an influx of Western business practices or investment capital. He worked with the World Bank and the European Bank for Reconstruction to arrange financing for high-rise construction projects.
A February 1991 story in Crain’s Chicago Business explored the opportunities and obstacles by U.S. developers in the then-recently liberalized Poland. Western developers were starting to learn of the challenges faced in developing projects in the former Soviet bloc. They spoke of the difficulties of obtaining materials and establishing construction schedules. “The actual physical construction is probably the toughest part of the job,” Milam said.
The American-Statesman profile credited him with helping develop the 700,000-square-foot Warsaw Financial Center, the 600,000-square-foot Moscow Corporate Center, and the 120,000-square-foot Sony Center in Budapest. But he grew tired of traveling every other month from Eastern Hungary to Austin to visit his children, so he returned to Austin in 2001.
A decade ago, he developed a retail mall in suburban Austin that was opposed by the nation’s largest retail mall operator, the Simon Property Group, which operates the Forum Shops at Caesars. He also lost a key partner in the project, Forest City Enterprises, which is overseeing construction of the new Las Vegas City Hall. There was also opposition from an environmental group, which was critical of a sales tax rebate plan used to finance the project. Despite the opposition, a retail mall in the Village of Bee Cave was developed, although it was downsized from its original plans.
In early 2007, Milam and Australian billionaire media magnate and casino operator James Packer, the son of the late-Las Vegas high roller Kerry Packer, entered into an agreement to build a massive tower on the site of the old Wet ’n Wild property just south of the Sahara. The property was owned by former U.S. Senate candidate Sue Lowden and her husband, Paul.
Packer had previously acquired a reported 19.6 percent stake in the project of what is the now-shuttered Fontainebleau on a nearby parcel. Billionaire Carl Icahn later purchased the $2.9 billion tower in bankruptcy court for $150 million. The Packer-Milam skyscraper project also fizzled. That led Milam to talks with the Lowdens about building an arena with a public financing component on the Wet ’n Wild site. That project also fizzled. He then met with representatives of the Cordish Cos., the city’s preferred developer of an arena on downtown land, but Milam has since decided to pursue his latest deal.
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