The Raiders will increase Las Vegas’s television visibility, while drawing sports fans to the gambling destination’s casinos.
Las Vegas casino companies are seeing the benefit of having a prestigious NFL franchise come to town. The Las Vegas Sands, MGM Resorts, and Wynn Resorts all saw their share prices increase when the Oakland Raiders announced they would relocate to Las Vegas in 2020.
One might wonder how an NFL team’s relocation three years from now would affect the stock price of a casino company today. Investors are concerned about the future profitability of a company, so they try to project the economic impact of all news concerning its future. Steve Wynn, the CEO of Wynn Resorts, explained the effect of the Raiders’ decision to the Wall Street Journal.
Mr. Wynn compared the NFL’s public relations impact to other entertainment news involving the Las Vegas area. Suggesting nothing in live entertainment compares to the NFL broadcasting, the Vegas Strip casino mogul said, “You can talk about all the acts that come to Las Vegas and all the concerts but they don’t get televised to tens of millions of people.”
America’s major TV networks view the NFL the same way. It is well-known that CBS, NBC, and Fox take a loss on their NFL packages, despite spending billions of dollars to secure the rights to NFL broadcasts. That might not seem a smart investment, but if you account for the fact ABC and ESPN are owned by the same company (Disney), then all the major networks buy the rights to NFL games.
NFL Viewership Drives Network Ratings
The reason is simple: 22% of all total average viewership in the fall and early winter come from NFL audiences. The networks sell high rates for advertisements, for sure. An even bigger impact is the use of commercial time to advertise other shows on the network. This has a cascade effect, driving viewership to all other programs on the network. Thus, the NFL packages pay off in the wider perspective. In a way, they are essential to the network’s survival, especially since the start of the NFL regular season corresponds roughly with the launch of new seasons in broadcast programming.
As Steve Wynn noted, Las Vegas now gets “free” advertising from the same vehicle which drives interests in the TV networks.
Wynn Resorts’ Shares up 2.3%
Wynn Resorts has seen a 2.3% increase on the week, with a 0.1% increase on the day the move was announced. MGM Resorts had the biggest bump, as it gained a full 1% in share price on the day the Raiders’ move was announced. MGM Resorts owns the MGM Grand Las Vegas, which is one of the biggest sportsbooks in the city.
The Las Vegas Sands, Main Street Station Casinos, and Boyd Gaming all saw an increase in their stock prices. Fremont Hotel & Casino, Penn National Gaming of the Tropicana Las Vegas, and the California Hotel Casino Las Vegas also saw increases in their share price.
Meanwhile, non-Las Vegas gaming companies like Melco Crown have seen their shares decline this week. Melco lost 2.2% of its value. Galaxy Entertainment shares are down 1.8% over the same period of time, after a bad early part of the week.
MarketWatch Speculation on Las Vegas Raiders’ Impact
MarketWatch speculated that the 65,000-seat stadiium and the excitement of live NFL games should attracted a new base of football fans to the Las Vegas Strip. That should boost attendance at casinos, especially their sportsbooks.
Not all gamblers coming to Las Vegas are going to attend the game. Many would prefer to gamble at the casino, then sit in the comfort of the sportsbook’s game station and watch the results of their betting. Especially in the age of fantasy football, many game enthusiasts want access to the full range of live games when viewing their favorite sport. With nearly 50 million American fantasy sports owners, it should come as no surprise that most sports bettors also play fantasy football.
Macquerie Analysts on Vegas Strip Expectations
The stock numbers are helped by an overall rosy economic picture of the Las Vegas Strip. A group of analysts from Macquerie spoke at a consumer conference last week. While discussing the overall Las Vegas Strip consumer market since 2014 and the high-end gaming market.
Macquerie’s analysts said, “Despite recent share-price weakness, the underlying Las Vegas end market remains just as healthy as it was a quarter ago and should continue to benefit as the largest convention market in the country.”
Impact of Previous Relocations
Local casino stocks did not see a similar increase when an NHL franchise decided to relocated to Las Vegas. The National Football League gives the NFL a much higher profile, especially because the Raiders are one of the most prestigious organizations in the league. Even though the Raiders have suffered through a period of decline for most of the 21st century, their silver-and-black merchandise remains one of the best-selling franchises in the NFL.
The Raiders also have a number of young stars, including quarterback Derek Carr, wide receiver Amari Cooper, and defensive end/outside linebacker Khalil Mack. All have entered the NFL in 2014 or later. Carr and Cooper are on the verge of becoming one of the best passing combos in the league, while Khalil Mack was the NFL Defensive Player of the Year in 2016.
