Minneapolis CNN –
When Formula 1 race cars hurtle down the iconic Las Vegas Strip this Sunday, it will serve as another highly visible reminder of a significant shift in the city’s economy.
In less than a decade, the deserted city, long known for its casinos, food and live entertainment, has become home to four greater League sports teams (the latest of which is the MLB Athletics), six minor league teams, a major sports organization in Ultimate Fighting Champion, and four major sports venues that host events such as NCAA tournaments, NFL Pro Bowls and, coming in February, Super Bowl LVIII.
At least half a dozen more venues are in the planning stages, and the city appears poised to be a top choice for an NBA expansion team and even an MLS team.
“Ten years ago, the leagues didn’t even want to look at us twice,” said Andrew Woods, director of the Center for Business and Economic Research at the University of Nevada, Las Vegas. “Now it looks like we’re the belles of the ball.”
Las Vegas a sports metropolis? It’s a potentially lucrative development that could mean expansion and a broader economic base for the city; however, it comes with growing pains.
Initial economic impact estimates for Sunday Las Vegas Formula 1 Grand Prix and the February 2024 Super Bowl were $1.3 billion and $500 million, respectively. (But that was before Ticket prices have dropped for F1 when the championship was won at the start of the season).
According to one report, this total would correspond to the estimated contribution of $1.8 billion to the metropolitan area from all sporting events from July 2021 to June 2022. economic impact study published this summer by the Center for Business and Economic Research at UNLV’s Lee Business School.
With larger events, however, get bigger challenges. Construction and preparation for the F1 race gnarly traffic, agitating the locals. Also drawing the ire of residents and longtime visitors are the (initially) exorbitant prices and potentially blocked views of everything from the Bellagio fountains to the Mirage volcano due to the temporary grandstand and signage.
“There are questions about whether we have adequate infrastructure that can handle increasingly larger events,” Woods said. “How do we make this beneficial to both a community that may soon have 3 million residents and 50 million visitors a year and make it work for everyone?”
And initially, it doesn’t seem like everyone is benefiting equally from the doubling down on sports. Examining the intensity of sports in the Las Vegas area, Woods and his team noticed a worrying trend: “sports deserts,” or lack of access to facilities.
They found that some communities, especially those that have been underserved in the past, may not have the same access to local parks, sports and athletic facilities. Woods said more research is needed to confirm the initial findings.
The sport has been deeply rooted in Las Vegas for decades, dating back to the boxing heyday of the 1950s and 1960s and the rise of sports betting. Super Bowl Sundays and March Madness tournaments typically bring packed casinos and sportsbooks.
But for many decades, the NFL and other leagues have opposed sports franchises in Las Vegas, most likely due to the city’s deeply entrenched gambling industry. At one point, the city couldn’t run a tourism commercial during the Super Bowl.
By 2017, sentiment had begun to change, even among league commissioners like the NFL’s Roger Goodell, as the National Hockey League and the The Oakland Raiders had plans open a shop there.
“I think society in general has undergone a little bit of a change with regards to gambling in general,” Goodell said during a news conference March 2017 press conference. “Las Vegas is not the same city it was 10 or 20 years ago. It’s a much more diverse city, it’s become an entertainment mecca.”
He added: “They made a very convincing proposal, which the owners obviously approved by an overwhelming majority.”
Then came the Supreme Court’s 2018 ruling that struck down a federal law that prohibited commercial sports betting in most states.
As sports betting exploded into people’s living rooms, Las Vegas remained at the center of that digital industry, being home to casino operators that supported sports betting and online gambling companies like FanDuel. The rise of sports betting and the continued explosion of fantasy football has created further interest in the sport and, in turn, in returning to Las Vegas, said Steve Hill, CEO of the Las Vegas Convention and Visitors Authority.
“Las Vegas fans also tend to be sports fans, and sports have helped us expand the base of customers willing to consider Las Vegas,” Hill said.
Last year, 6% of visitors surveyed attended a sporting event, up from 3% in 2019, and 4% of visitors said sporting events were the primary reason for a trip to Las Vegas , according to the LVCVA 2022 Las Vegas Visitor Profile Study.
“I think the city and our businesses are betting big on both of those percentages growing,” UNLV’s Woods said, “that we could see those percentages double in the near term here, over the next two, three, four years as we add more events sportsmen”.
Withstand the ups and downs
The city that proclaimed itself the “Entertainment Capital of the World” is now renamed the “Sports and Entertainment Capital of the World.”
Sports are growing in Las Vegas, but leisure and hospitality remain the city’s bread and butter. In Clark County, Nevada, where Las Vegas is located, one in four workers is in the leisure and hospitality industry, and $1 of every $3 is generated by those businesses, Woods said.
And during the last two years, Las Vegas and other tourism-focused cities have benefited from consumer influence Post-pandemic overspending on experiences and travel versus goods. Nevada’s monthly gaming revenue this year has surpassed pre-pandemic levels and hit a nominal monthly record in July at $1.4 billion, according to Nevada Gaming Control Board Data.
Having such deep concentration in an industry can be good when times are good, but if there is an economic downturn, it can be devastating to a local economy.
In April 2020, Covid-19 shutdowns caused unemployment in Las Vegas to spike to an astonishing 34%, as the metro area became the hardest hit in the United States.
“The Strip was shut down, and that’s where the revenue is generated for services and livelihoods for hundreds of thousands of people, and it was terrible and scary at the time,” Hill said.
As the pandemic has continued, work has continued to expand the Las Vegas Convention Center and the Raiders’ Allegiant Stadium, among other projects.
“The city continued to bet on itself,” Hill said. “And that really paid off.”
Although the sporting events industry is nestled within the leisure and hospitality sector, there are some early indications that investment could stimulate the diversification of the regional economy, through the increase of ancillary activities in sectors such as services, marketing and medicine.
According to UNLV research, the number of businesses in the sports education sector has seen a 156% increase over the past 10 years. And according to the report, youth sports participation, especially among girls and young women, has seen a notable increase.
“Any time you can broaden what drives the economy, you have a stabilizing influence and maybe even a growth influence,” Hill said. “When it comes to team sports in particular, it doesn’t matter what’s going on in the economy, there will be those events, and it’s a reason why people decide to come to Las Vegas.”