Last September, Alex Meruelo’s Grand Sierra Resort (GSR) in Reno, Nevada announced a $1bn development centred around a 10,000-seat sports and entertainment arena. Officials confirmed last week that the plan is moving forward.
Originally announced on 27 September, the so-called Reno Arena project includes several developments to be built out over 10 years. Among these are an 800-room hotel tower, a new parking garage, 300 affordable housing units and entertainment offerings such as an ice skating rink and a renovated waterfront golf driving range.
New renderings released on 25 July show that the arena has been moved to the northwest part of the property rather than the southwest, as originally planned. The new hotel tower and housing units are situated behind the existing 2,000-room resort.
The arena would become the new home for the University of Nevada, Reno (UNR) Wolf Pack men’s basketball team. The team has played at the 11,200-seat Lawlor Events Center since it opened on campus in 1983. The Wolf Pack women’s team will remain at Lawlor if the proposed arena is built.
According to Sportico, Meruelo also plans to move the Tucson Roadrunners minor-league hockey franchise to the arena. His NHL franchise Phoenix Coyotes was dissolved earlier this summer, and his SaharaBets sports betting platform is still licensed, but is no longer taking bets in Arizona even though the team has left.
Andrew Diss, chief strategy officer for Meruelo Gaming, told the Reno Gazette Journal that the goal is to obtain all the necessary approvals for the Reno project in the fall and winter so that construction can begin as soon as the weather allows in the spring.
“Construction should be completed within 20 months, which puts it at a 2027 opening,” he said.
Project to be privately financed
Meruelo is said to be privately financing the arena project. At $1bn, that would make it the biggest private investment in the city’s history. UNR is not contributing any funds and no public funding has been proposed as of now.
The 60-year-old media and entertainment mogul has invested in gaming before. After purchasing the Sahara Las Vegas in 2018, Meruelo helped turn the ailing casino around by investing $150m in renovations and appointing industry veteran Paul Hobson as general manager.
His visions for the GSR are grander, but the ambitious project faces a few challenges. The first is that the property itself has had no shortage of difficulties since it originally opened as the MGM Grand in May 1978.
Troubled past for a property with ever-present potential
In its 46-year lifespan, the GSR has changed hands four times and each newcomer has arrived with renewed optimism. When Metro-Goldwyn Meyer (MGM) first opened the property, it featured 1,015 rooms. Within three years, its success was such that an expansion doubled its capacity to just over 2,000, its current total.
But by 1985, MGM decided to sell both the Reno and Las Vegas MGM Grands to Bally Manufacturing for $440m. The ambitious Bally – which operated health clubs, casinos and sold equipment – then went bankrupt in early 1992. Soon after Hilton Hotels snapped up the property for $83m.
Hilton poured tens of millions in renovations over the next decade and also pondered an expansion that never materialised. By the early 2000s, a convoluted corporate saga resulted in Hilton spinning off its gaming operations into the company now known as Caesars Entertainment. The casino was again put up for sale in 2005 when Caesars had to disassociate from all Hilton hotels. An investor group known as Grand Sierra Resort Corp bought it for $150m and gave it its current name.
The next six years were perhaps the property’s darkest. The global financial crisis derailed several plans as the group again poured millions into renovations and failed proposals (including one for an indoor waterpark). JPMorgan ultimately foreclosed on the property in 2008.
In early 2011, the casino had fallen in value to the point that the Meruelo Group was able to purchase it for $42m in cash. Around this time the entrepreneur reportedly became friends with Brian Sandoval, who was governor of Nevada but is now the president of UNR. Over the last decade, Meruelo has made constant, steady improvements and has solidified the casino as one of the best in the market.
Reno market slow to evolve, adapt
Aside from the GSR specifically, the Reno market overall is difficult to break into. With gambling legalised in 1931, it is the most mature locals casino market in the US. That means that spending is lower and development is slower.
The last new-construction casino project to open in the area was Legends Bay in August 2022. That project cost $130m, took 15 years to complete and was the first ground-up opening in more than 20 years. The J Resort, formerly the Sands Regency, reopened last June. Owners Jacobs Entertainment took six years and spent $300m to remodel the property.
Most of the other prominent casinos in the area – such as the Atlantis, Peppermill, Circus Circus and Eldorado – were all built in the 1970s. Prior to Legends Bay, the Silver Legacy (1995) was the most recent opening.
Rather than big and splashy, slow and steady has been the typical route to success in Reno. Operators with successful track records in the market, such as John Farahi’s Monarch Casino (operators of Atlantis), are often praised for their discipline and frugality.
Arena could help with spending, visitation
Unlike Las Vegas, Reno’s gaming revenue makes it difficult to economically justify such large developments. In June, the market generated $64.2m in gross gaming revenue (GGR) as a whole, according to the Nevada Gaming Control Board (NGCB). Conversely, the Las Vegas Strip alone posted $758.6m during the same period, in addition to $66.2m from downtown and $147m from the locals market.
Weather variance is another factor that weighs heavily on performance during winter months. For example, in January 2022, GGR was $52.3m. In January 2023, bad weather caused that to fall nearly 20% to $42.1m, before jumping 55% back up to $65.3m in January this year.
Over the years, Reno operators have also faced increasingly steep competition from tribal gaming in neighbouring California. The National Indian Gaming Commission (NIGC) said in June that the Sacramento region, comprising tribal casinos in California and northern Nevada, posted $12bn in GGR in 2023. That was by far the biggest market of the eight regions reported by the NIGC.
Casino could benefit from sports partnerships
Despite the challenges, there is still reason to believe the project could thrive if completed. One such believer is Buddy Frank, principal at BF Slot Strategies. Frank spent decades as a casino executive in Reno and at high-profile tribal properties in California. He is also a UNR alum and Wolf Pack basketball superfan.
“I think (the arena) could definitely bolster the Reno market,” he told iGB. “There’s always been good symmetry between sports and gaming. One of the best benefits you can offer your casino patron is seats.”
Frank noted that when he worked at Pechanga Resort & Casino in Southern California, players loved the promotions tied to the casino’s sponsorships with the NBA Los Angeles Lakers and MLB Los Angeles Angels. While a UNR partnership wouldn’t have quite the same cachet, the school is still the most popular sports brand in the area.
The basketball team’s success could also be seen as a revenue driver for gaming, at least to a small extent. In 2022, the team went 22-11 and missed the NCAA tournament. That March, Reno sportsbooks made $1.38m in GGR from basketball betting, per the NGCB. In 2023, they went 26-8 and made the tournament; Reno’s basketball betting GGR jumped to $2.13m.
Keeping up with the Rebels
Revenue aside, the arena could help UNR keep pace with its rival UNLV. The UNLV football team plays at the Raiders’ Allegiant Stadium and its basketball team would likely move to an NBA stadium should one be built in Las Vegas. Developers LVXP proposed that exact project in April.
Having seen all the previous iterations of the property, Frank contended that Meruelo’s era of leadership has been the best. If anyone could pull this off and bring the Las Vegas experience to the north, Frank argued, it’d be Meruelo.
“In years past you never had much of a reason to go there,” he said.
“It was a big empty place, it had old equipment, outdated systems. The restaurants were getting tired. It wasn’t until [Meruelo] came along that they really put some energy and capital into the place and made it a great resort. I think it competes well, really well now.”
