$ 24million buys LVCVA outside of monorail restrictions
The Las Vegas Monorail has always claimed to be more than it really is, a shuttle service bringing tourists from a handful of casinos on the east side of the Strip.
It was built mostly on the juice of its founders, who turned a short train ride from MGM to Bally’s into a slightly longer train ride to four more casinos and the convention center.
The train never lived up to its hugely inflated ridership projections and struggled to pay its bills, even though it was built with state-sanctioned tax-free bonds and avoided most taxes, thanks to its non-profit status. Its bankruptcy was inevitable.
And while many have dreamed of extending the train beyond its current four-mile route, it never really realized those plans.
But legendary Las Vegan Bob Broadbent predicted more than once that this would end up in public hands, and he was ultimately right. Last week, the Las Vegas Convention and Visitors Authority agreed to buy the ailing train.
The purchase was less due to the convention authority wanting to run a train and more because of a special clause included in its franchise agreement that blocks other hop-on hop-off transport systems for the most part of the eastern part of the band.
By dissolving this non-compete clause, new technologies such as The Boring Co.’s underground shuttles take hold at the surface level or encroach on airline height restrictions.
“I think the most important thing from my point of view in this deal today is the fact that we remove the biggest obstacle, and that is the exclusivity, that no one can enter this corridor until that this exclusivity is eliminated, ”Clark County Commissioner Larry said. Brown, the chairman of the board of directors of LVCVA.
And this fact is underscored by the looming timeline in the future of the monorail: in eight to ten years, the current monorail cars will have reached the end of their useful life and new ones will cost $ 200 million. LVCVA CEO Steve Hill said it was out of the question for him to ask the agency to shell out so much money for a train that only brings in around $ 2 million a year.
So the monorail seeks to end its life as it began, taking a humble and lonely road to the back doors of its casino patrons.
There’s always utility in there, says Hill. The LVCVA will operate the train for the next decade, moving people to the convention center and tourists between hotels. During extremely popular conventions such as CES, MAGIC or SEMA, the roads near the convention center are congested with cars, and the monorail is a useful alternative to taxis or carpools.
And Hill says LVCVA is open to new ideas on the monorail, to private investors who might find a way to make it work, do something different with existing tracks, or something else as yet unanticipated.
But even Hill acknowledges that, without the benefit of removing a barrier to transportation alternatives, LVCVA would have been far less interested in acquiring the train. “To have him block the alternatives at this stage is a real obstacle,” he said.
But is it worth the $ 24 million it will cost to acquire the trains, some stations and the all-important franchise agreement? (For the record, the entire LVCVA board of directors, with the exception of Las Vegas Mayor Carolyn Goodman, voted to purchase the monorail.)
Hill says the alternative was for the monorail to go to bankruptcy court again, where a fire sale buyer or even current bondholders would have acquired the system. The new owners probably wouldn’t have wanted to give up or sell the franchise restriction, as this would make the operation of the monorail even more difficult and much less profitable.
Instead, the LVCVA will run the train for the next decade as tourism officials scramble to find the best alternatives for getting people to and from the convention center. They will contract to operate the monorail, perhaps with some of the same people who currently operate it (although perhaps not at the same rate; the CEO of the monorail, Curtis Myles, currently earns almost as much as Hill for manage the entire LVCVA).
In the meantime, the sometimes useful monorail will remind us that all the juice, all the hype, and all the marketing in the world can’t change reality. It’s a useful, albeit costly, lesson that all Las Vegas should pay attention to.
Contact Steve Sebelius at [email protected] or 702-383-0253. Follow @SteveSebelius on Twitter.