Madison Square Gardens, Las Vegas Sands Strike New 50-Year Deal

Madison Square Garden Co MSG announced in a regulatory filing on Wednesday it will team up with Las Vegas Sands Corp. LVS to build a new concert venue in Las Vegas. The 2 companies will create a new 16,000-seat theater on land Sands already owns which will be leased to Madison Square Garden for 50-years. In addition, Madison Square Garden will own the venue and Sands will provide $75 million to pay for a pedestrian bridge that would like the Venetian-Palazzo-Sands Expo Convention Center complex. The ground lease will have no fixed rent but if certain objectives are achieved then Sands will receive 25 percent of the after-tax cash flow in excess of the objectives which were not detailed. The 2 companies will also provide mutual marketing support and related benefits. According to Bloomberg, the agreement between the 2 companies takes aim at competitors, specifically MGM Resorts International MGM who just opened up its own brand new 20,000-seat venue last month. Bloomberg also noted that casino operators are looking to diversify their business outside of gaming at a time when visitors to Las Vegas is at historical highs but gambling related revenue remains below historical highs which was seen back in 2007.