20TH OCT 2017 | WRITTEN BY: CHRIS SIEROTY
MGM’s purchase of a Women’s National Basketball Association (WNBA) franchise underlines the rapprochement between professional sports and the casino industry even if it is unlikely to lead to other franchises being acquired by gaming companies, according to a leading sports analyst.
Michael Colangelo, a sports consultant in Los Angeles, called MGM Resorts International’s purchase of WNBA’s San Antonio Stars an “interesting investment,” but he does not expect the casino company to look to acquire another professional franchise.
“Another professional team may be difficult,” Colangelo told GamblingCompliance on Thursday. “This could theoretically be to test to see how it works out. The billion-dollar investment would be difficult with their current debt structure.”
As of June 30, MGM’s outstanding debt stood at $13.3bn.
“MGM would most likely want to own a team in Las Vegas. The National Football League (NFL) is already moving there. The National Hockey League (NHL) is already there. There aren’t many options,” said Colangelo, assistant director of the Sports Business Institute with the University of Southern California’s Marshall School of Business.
MGM on Wednesday acquired the San Antonio Stars and will relocate the team to Las Vegas, another move by a professional sports franchise to the nation’s gambling capital.
Terms of the deal were not disclosed.
Colangelo said professional sports leagues will be careful moving into Las Vegas and will continue to monitor and learn from the NHL’s Vegas Golden Knights.
The Golden Knights began their inaugural season this month playing their games at the T-Mobile Arena on the Strip, which is owned and operated by MGM.
“In terms of MGM, we’ve reviewed the problem with raising capital to purchase a team,” Colangelo said. “They would really have to show shareholders true value since National Basketball Association (NBA), NFL and Major League Baseball (MLB) teams are so expensive.”
He added that “any expansion fee would be prohibitive to a publicly traded company.”
Bill Foley, owner of the Golden Knights, paid $500m to the other NHL owners as an expansion fee. When the NHL expanded in 2000 to Minnesota and Columbus each paid just $80m to join the league.
Maybe Major League Soccer (MLS) would work, “if they think that Vegas is America’s next great sport city, but their expansion fee is pretty high,” Colangelo said.
“The NBA could be an option, but that’s a longshot due to the costs associated with an NBA team and the fact that teams aren’t moving. The NFL is not an option since teams must be privately owned by majority ownership.”
NFL owners voted 31-1 in March to allow the Oakland Raiders to move their franchise to Las Vegas by 2020.
“Publicly-traded companies have owned — and do own — professional sports teams, but this is a bit different where a publicly-traded casino company owns a team,” Colangelo said. “The truth is views are starting to shift in regards to gambling.”
The WNBA welcomed MGM’s acquisition of one of its struggling franchises.
“We are thrilled to bring the first major professional basketball team to Las Vegas,” said WNBA president Lisa Borders. “With its culture of diversity and inclusion, MGM is an ideal fit for the WNBA.”
Borders said the move has already been approved by the WNBA and NBA Board of Governors. The Stars franchise was originally established for the WNBA’s inaugural season in 1997 in Salt Lake City before moving to San Antonio prior to the 2003 season.
“We appreciate, now more than ever, the league’s confidence in Las Vegas and believe the team will be a tremendous addition to the city,” said Lilian Tomovich, MGM’s chief experience and marketing officer.
Colangelo believes gaming companies will continue to seek out opportunities to add new entertainment offerings.
“It not only helps them diversify their portfolio, but it also helps them put an event in a building 17 nights a year,” Colangelo said. “There are new venues popping up in Las Vegas at an amazing rate. There is a lot of competition to bring in actual events so these venues aren’t dormant.”
The move is not the WNBA’s first relocation of a team into a casino.
The Connecticut Sun are owned by the Mohegan tribe and play their games at the Mohegan Sun casino-resort.
The Sun used to be located in Orlando, Florida, but financial problems in 2002 left the franchise close to disbanding before the Mohegan Tribe bought the team and relocated them to Connecticut.