The US$500 million arena, behind the Bally's and Paris hotel-casinos on the Las Vegas Strip, is projected to open in 2010. It's a step toward attracting a pro sports franchise to a city that has tried to persuade reluctant league officials to look past its legalized sports betting.
The deal puts a dent in Mayor Oscar Goodman's plans to have an arena built downtown with the help of tax breaks, but he said such plans would go forward. The site for the Harrah's-AEG arena, a block east of the Strip, is in unincorporated Clark County, outside city limits.
Gary Loveman, the chief executive of Harrah's, which is being bought by two private equity firms in a US$17.1 billion deal, said the development was "very much a part of our master plan for Las Vegas."
Harrah's has yet to fully detail its long-awaited vision to link or redevelop its nine hotel-casino properties in Las Vegas, including Caesars Palace, Flamingo, Harrah's and Bally's, which are near the same intersection.
"It's our ambition to create a place that transcends a series of hotels," Loveman said. "The presence of a state-of-the-art events centre of this size provides a reason for people all around us on the Strip to come into our neighborhood."
AEG, a subsidiary of Denver billionaire and Qwest Communications founder Philip Anschutz's Anschutz Co., owns the Galaxy and the Staples Center in Los Angeles and has booked such acts as Celine Dion and Bette Midler at Caesars Palace. It said it was in talks with professional leagues and potential team owners about bringing hockey or basketball to Las Vegas.
"It just so happens 2010 is an opportune time for an expansion team in Vegas for either or both (leagues)," said Timothy Leiweke, president and chief executive of AEG.
NHL deputy commissioner Bill Daly said the arena announcement "positively impacts the prospects of Las Vegas attracting a major-league franchise" but said there was "nothing new to report" regarding league expansion or the NHL's intentions about a team in Las Vegas.
"That is a matter our Board of Governors would have to consider at an appropriate time," he said in a statement.
The NBA, which has appointed a committee to study a proposal by Goodman to locate a franchise in Las Vegas, postponed meetings after the league was rocked by a betting scandal involving one of its referees. The city hosted the NBA All-Star game in February, but commissioner David Stern said the league was not likely to return without a modern arena.
A key factor in the decision for AEG to build on the Harrah's site was the "200,000 hotel rooms within walking distance," Leiweke said. "I don't know any place else like it on the face of the Earth."
An annual pre season game between the Los Angeles Kings and the Colorado Avalanche in Las Vegas usually sells out, and there was good support for the Las Vegas Wranglers minor league hockey team, he said.
Even without a sports franchise, the arena will be financially viable by hosting concerts, boxing matches and other events, and the likely sale of naming rights, he said. In a recent deal, AEG sold such rights to what is now the O2 Arena in London to the U.K. cellular phone company for US$12 million a year, he said.
Until now, events such as big boxing matches, mixed martial arts fights and concerts have largely been held at the aging Thomas & Mack Center on the UNLV campus or at Strip properties owned by MGM Mirage Inc., at the MGM Grand Garden Arena or Mandalay Bay Events Center.
MGM Mirage spokesman Alan Feldman said the company welcomed the competition.
"The people that come for concerts and conventions, we're confident they'll visit more than one place on the Strip and we're confident they'll visit at least one of ours," he said. "Any time anyone adds value to the Strip, that's a good thing."
Goodman said the deal does not slow down city plans for a proposed US$9.5 billion sports arena with casino, retail and residential uses on 85 acres downtown, put forth by Michigan-based REI Group LLC.
Any team that wants to locate in Las Vegas could now shop between two large venues for a home, he said.
"With the competition, they're going to be able to get a better deal," Goodman said. "So it's a win-win."
Jon Weaver, the president of REI, criticized the Harrah's-AEG plan because it would rely on Strip tourists for its fan base. He said the downtown site was geared more to residents.
"I think it would be very discouraging have an arena to be filled by folks from out of town wanting to see their home team play in Las Vegas," he said. "I don't think that would be a very successful model."
AP Sports Writer Ira Podell in New York contributed to this report.