New Las Vegas projects and construction is always popping up, but even the most promising and exciting plans don’t always work out. So, This Week in Gambling, we’re looking at four Sin City projects: Two open now, and two under construction, that might not make it another year.
For every Las Vegas player who wins, there are many players who lose. And for every Las Vegas project that succeeds, there are many projects that fail. Now, the city’s new baseball stadium and that high-speed rail project are in jeopardy. But let’s begin with one of Sin City’s biggest gambles ever: The Las Vegas Sphere!
The lights came on July 4th of 2023, and the venue opened to the public a few months later. Their first quarterly financial report showed a loss of almost $100 million which included opening expenses and some construction costs. However, 2 years removed, the Sphere has yet to post a profit. Their latest financials show a loss of nearly $130 million just last quarter. And their parent company, Sphere Entertainment, was carrying a $ 1.5 billion debt to start the year. So, what’s going on?
Unlike some other Las Vegas projects, the Sphere relies on high demand, high revenue residencies, and there are not many of those to go around. Also, attendance is tied to Las Vegas tourism, which has been in the tank this year, leading to lower ticket demand and prices. All is not lost though as their Wizard of Oz show has generated more revenue than expected, leading to a change in business philosophy towards creating unique and immersive content, and running more shows each day. But still the question remains: Just how much can they lose before they have to call it quits?
And speaking of Vegas projects hemorrhaging cash, one of the newest five-star resorts in Sin City also opened in 2023 and has also failed to show a profit yet, and that is Fontainebleau. As they approach their 2-year anniversary, the property is in a critical financial time and needs to refinance their debt. How much debt is not clear, but it’s estimated to be nearly a billion dollars.
Adding fuel to the fire is the ongoing federal investigation into possible anti-money laundering violations, along with the layoffs of more than 50 table game dealers. Plus, the departure of several key executives, including their Chief Financial Officer and Chief Technology Officer. Restructuring debt could significantly reduce the interest on their loans, and while there is no immediate threat of Fontainebleau closing, the risk of failure is not insignificant.
Now, it was just a month ago that we visited the site of the new Las Vegas baseball stadium, and construction was underway. But for how long? That’s the question. Many of the best laid plans for new Las Vegas projects break ground only to run out of money before completion. Think Dream Las Vegas. And that’s a real concern with this stadium project as well. Estimates for the new ballpark were initially $1.5 billion… then 1.75 billion… and now it’s up to $2 billion or more. And that’s just for the stadium, not the new Bally’s casino that they want to build next to it.
The company had been working with gaming and leisure properties on several sale leaseback agreements in order to raise cash, but GLPI seems reluctant to go any further with this project, raising serious doubts about where they will find the rest of the money. Additionally, the lack of another serious investor has led many to believe that the stadium will never be completed, let alone a new 30,000 room Bally’s resort. And if you think this is a fiasco, then you haven’t been following the high-speed rail project.
Brightline West has barely started the construction of their 220 miles worth of tracks, connecting Las Vegas with Los Angeles, but things are already off the rails. Initial cost estimates put this project in the $8 billion range, which doubled to $16 billion not too long ago. But new estimates have the final cost at a whopping $21.5 billion… and they don’t have the money. With less than $5.5 billion available to them, Brightline has now asked the US Department of Transportation for a $6 billion loan. And that’s in addition to the $3 billion they received in federal grant money.
But that would still be considerably short of what they actually need. Additionally, the cost of train tickets on Brightline would be equal to or more than plane tickets, and travel time by rail will take over two hours compared to just 1 hour in the air. So, that’s a look at some of the Las Vegas projects that may or may not make it through 2026. Hopefully, they survive, but when money is involved, you just never know.
