In September 2023, Alex Meruelo's Grand Sierra Resort (GSR) in Reno, Nevada, unveiled a $1 billion initiative to construct a 10,000-seat sports and entertainment arena. Last week, officials confirmed that the project has received approval.
Dubbed the Arena Reno project, which was announced on September 27, 2023, it encompasses the construction of several facilities over a span of 10 years. Key features include an 800-room hotel, a parking facility, 300 units of affordable housing, and various entertainment amenities, such as an ice rink and a waterfront golf course.
New renderings released on July 25, 2024, indicate that the arena's location has shifted from the southwest to the northwest section of the site. The hotel and housing units are planned to be situated behind the existing 2,000-room casino complex. The arena will serve as the new venue for the University of Nevada, Reno (UNR) Wolf Pack men's basketball team, which has been playing at the 11,200-seat Lawlor Events Center since its establishment in 1983. The Wolf Pack women's team is expected to remain at Lawlor if the new arena is completed.
As reported by Sportico, Meruelo also intends to relocate the Tucson Roadrunners hockey team to the new arena. Following the folding of his Phoenix Coyotes NHL franchise earlier this summer, his sports betting platform, SaharaBets, remains licensed but is no longer operational in Arizona.
Andrew Diess, chief strategist at Meruelo Gaming, informed the Reno Gazette Journal that the objective is to secure all necessary permits for the Reno project during the fall and winter months so that construction can commence as soon as the weather allows in the spring. "Construction should be completed within 20 months, anticipating a 2027 opening," Diess stated.
The Media Mogul's Grand Plan
Meruelo said the Reno arena project will be privately financed. The $1 billion figure would make it the largest private investment in the city’s history. UNR is not contributing any funds, and no public financing has been offered.
The 60-year-old media mogul has a history of investing in the gambling business. Meruelo bought the Sahara Las Vegas in 2018 and helped turn it around by investing $150 million in a renovation and appointing industry veteran Paul Hobson as general manager.
Meruelo’s vision for the GSR is truly grand, but the ambitious project faces some challenges. The first is that the hotel and casino itself has been a troubled property since it opened as the MGM Grand in May 1978.
A complex past of an object with ever-growing potential
Throughout its 46-year history, the Grand Sierra Resort (GSR) has changed ownership four times, each transition accompanied by ambitious visions for the property. Originally opened by Metro-Goldwyn-Mayer (MGM) with 1,015 rooms, the hotel and casino quickly thrived, necessitating an expansion to over 2,000 rooms within three years.
In 1985, MGM sold its properties in Reno and Las Vegas to Bally Manufacturing for $440 million. However, Bally, known for its ambitious ventures in clubs and casinos as well as gaming equipment sales, filed for bankruptcy in early 1992, leading Hilton Hotels to acquire the property soon after for $83 million.
During the subsequent decade, Hilton invested tens of millions in renovations and contemplated expanding the hotel, but those plans ultimately did not come to fruition. By the early 2000s, Hilton's complex corporate structure prompted the spin-off of its gaming operations into a new entity now recognized as Caesars Entertainment. In 2005, with Caesars needing to divest itself of all Hilton properties, the GSR was sold to a group of investors called Grand Sierra Resort Corp for $150 million, adopting its current name.
The following six years proved to be particularly challenging for the hotel and casino, as the global financial crisis hindered plans for the property. Despite further investments in renovations and several failed proposals—including an idea for an indoor water park —the outlook remained bleak.
In early 2011, the casino's value had deteriorated sufficiently for Meruelo's group to acquire it for $42 million in cash. Around this time, Meruelo reportedly struck up a friendship with Brian Sandoval, who was then the governor of Nevada and is currently the president of UNR. Over the past decade, Meruelo has consistently enhanced the property, establishing the casino as one of the top destinations in the market.
The Reno market is slowly evolving and adapting
Beyond the GSR, Reno is a tough market to break into overall. Since gambling was legalised in 1931, it’s the most mature domestic casino market in the U.S. That means lower costs and slower growth.
The last new casino under construction to open in the area was Legends Bay in August 2022. That $130 million project took 15 years to build and was the first casino to open in more than 20 years. The J Resort, formerly the Sands Regency, reopened last June after owners Jacobs Entertainment spent six years and $300 million renovating the building.
Most of the other notable casinos in the area — Atlantis, Peppermill, Circus Circus, and Eldorado — were built in the 1970s. Before Legends Bay, the most recent was the Silver Legacy (1995). The typical path to success in Reno is slow and steady, not sudden and loud. Operators with a successful track record in the market, such as John Farahi's Monarch Casino (operator of Atlantis), are often praised for their discipline and frugality.
Will Reno Arena Worth the Investment?
Unlike Las Vegas, Reno's gaming revenues are insufficient to warrant a significant project like the arena. As reported by the Nevada Gaming Control Board (NGCB), the total gross gaming revenue (GGR) for Reno was $64.2 million in June. In stark contrast, the Las Vegas Strip alone brought in $758.6 million during the same timeframe, with downtown contributing $66.2 million and the local market totaling $147 million.
Weather factors also play a significant role in influencing revenue during the winter months. For instance, in January 2022, GGR was $52.3 million, but poor weather conditions in January 2023 led to a nearly 20% decline to $42.1 million. This figure rebounded 55% to $65.3 million in January of this year.
Additionally, Reno operators have been contending with heightened competition from tribal gaming establishments in neighbouring California. According to the National Indian Gaming Commission (NIGC), the Sacramento area, which encompasses tribal casinos in California and northern Nevada, is projected to generate $12 billion in 2023, making it the largest market among the eight regions reported by the NIGC.
Casinos Could Win Partnerships With Sports Teams
Despite the challenges, there is hope that the project will thrive if it can be completed. Buddy Frank, CEO of BF Slot Strategies, believes in the project’s success. Frank spent decades as a casino executive in Reno and on prominent tribal lands in California. He is also a UNR alum and a Wolf Pack basketball superfan.
“I think the arena will definitely strengthen the Reno market,” Frank told iGB, “There has always been a balance between sports and gambling.”
Frank noted that when he worked at Pechanga Resort & Casino in Southern California, gamblers loved the casino’s sponsorship promotions with the NBA Los Angeles Lakers and MLB Los Angeles Angels. While the UNR partnership won’t have the same popularity, the school is still the most popular sports brand in the region.
The basketball team’s success can also be seen as a revenue driver for the gambling business, at least to a small extent. The team went 22-11 in 2022 and missed the NCAA Tournament. In March of this year, Reno sportsbooks earned $1.38 million in basketball bets, according to NGCB data. In 2023, the team went 26-8 and made the tournament; Reno basketball betting GGR rose to $2.13 million.
Keeping up with the Raiders
Apart from generating revenue, the arena could assist UNR in staying competitive with its rival, UNLV. UNLV's football team currently plays at the Raiders’ Allegiant Stadium, and if an NBA arena were constructed in Las Vegas, the basketball team is likely to relocate there. In April, the developers at LVXP proposed such a project. Frank, who has observed all previous iterations of the proposal, claims that the Meruelo era has been the most successful. He believes that if anyone can successfully infuse a Las Vegas vibe into the region, it’s Meruelo.
Previously, there wasn't much incentive to visit the hotel. It was a large, vacant space with outdated equipment and facilities, featuring lacklustre restaurants. It wasn’t until Meruelo arrived that they injected energy and investment into the property. They successfully transformed it into a fantastic resort. I believe it now competes very effectively.”
