If Las Vegas casino race & sports books could have booked action on the Las Vegas Monorail’s ultimate success back in 2000 when the bonds were sold and the project started; the books would have made Failure a bigger favorite than Secretariat at the ’73 Belmont.
Despite the project opening in July of 2004 when the town was en fuego, the nearly 4-mile monorail never attracted enough riders to make bond payments. Mass transit up and down the Las Vegas Strip sounds like it would be a stone cold lock, but the do-gooders that implemented the project didn’t listen to casino owners like Sheldon Adelson and Tom Elardi who suggested the monorail run right down the median of the Strip between the north and south lanes.
It not only would have taken pressure off surface street traffic, which can take hours to transverse on busy weekend nights, but it would have been a tourist attraction. What a great way to see the Strip. The monorail would have been packed every evening.
Anyone who has taken the monorail knows that it, instead, runs behind the Strip properties and doesn’t extend to the McCarran Airport, which would be an enormous benefit for tourists, who would gladly pay to ride it, rather than wait to take an over-priced cab ride to their hotels. But Sin City politicians know Las Vegas cabbies would quickly mobilize and protest.
The Las Vegas Convention and Visitors Authority (LVCVA) and the Culinary Union made sure that not only did the monorail not run down the middle of the strip, equally benefiting all Strip properties, but riders will notice that going north the elevated track swings east, avoiding Adelson’s non-union Venetian Hotel, Elardi’s Casino Royale, and the Sands Expo Center, a direct competitor to the LVCVA’s Las Vegas Convention Center. The monorail stops conveniently at the convention center on it’s way to the Sahara Hotel, a property that will go dark May 16th. The Sahara hasn’t been any sort of destination since the Rat Pack roamed the Strip. But at the time the monorail project was hatched, the Sahara was owned by the late Bill Bennett.
Bennett is best known for turning Circus Circus into a money machine in the ’80s and 90′s before selling it. However, the Culinary Union will always remember him for feeding striking Frontier employees who picketed the Elardi family property for more than six years. Bennett is said to have spent $1 million a year feeding picketers.
“He was a giant in the gaming industry in town and for us he was unbelievable, especially during the Frontier strike,” said D. Taylor, a Culinary Union official. “One of the vital things that kept the strikers going was Mr. Bennett feeding them three times a day. You never forget that kind of generosity.” The Elardi family and their in-house labor counsel haven’t forgotten him either.
The monorail never cash flowed, being 10,000 riders a day short of the number needed to break even. And something always seemed to go wrong, such as wheels falling off and riders being injured when the brakes locked up.
“The Las Vegas Monorail Co., a nonprofit organization, filed for Chapter 11 bankruptcy in January 2010 after coming nowhere near close to being able to repay tax-exempt revenue bonds issued through the Nevada Department of Business and Industry in 2000,” Rich Saskal wrote for The Bond Buyer in February.
Now a reorganization plan has been filed by the company “that would wipe out more than 90 percent of its $658.8 million debt but leaves hurdles to continued operation until the end of the decade,” writes Tim O’Reiley for the Las Vegas Review-Journal.
Even with the debt slashed by 90 percent, the monorail will not generate enough cash to service the remaining debt and cover needed refurbishing of fare collection equipment and platform doors estimated to cost between $23.1 million and $77.5 million.
“From 2007 through 2010, revenues dropped 25 percent to $23.6 million in operating income slumped 65 percent to $4.3 million,” writes O’Reiley. “Passenger counts went down by a third to 5.2 million.”
If the project seemed dicey more than a decade ago, at least the bonds were insured against default by Ambac Assurance Corp. However, Ambac itself filed Chapter 11 Bankruptcy on November 8th of last year. Las Vegas Monorail bondholders are prepared to accept $111 million and release Ambac Assurance Corp. from its exposure to the defaulted bonds.
Bill Bennett passed on in late 2002. The Sahara will go in a couple weeks, and the monorail looks not to be far behind. Plenty of D. Taylor’s Culinary Union members remain idle and the LVCVA has had to cut back. Its furloughed union workers want to be paid for the days they were laid off and refuse to negotiate for pay cuts.
Casino Royale still packs in gamblers, offering the best gaming value on the Strip, and Sheldon Adelson was paid $11.4 million last year. His family’s stake in Las Vegas Sands is currently worth $20.5 billion. The Elardi and Adelson properties remain non-union.
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As an 11-year Las Vegas resident, I feel like we’ve been in a whirlwind. What a financial mess – the monorail is just a parable for the entire city. The strength of unions (teachers’, culinary, labor, etc) has literally put a dam up against innovation and growth.
Unfortunately, since the monorail is not a bare naked government entity (non-profit corp, no direct tax money, etc) this all will probably be cited as yet another “market failure” to be fixed by the state.
It was private in name only. The city dictated the route, so it can’t even be remotely accused of being a market failure.
yet, that is precisely what’s going to happen. :-/
The monorail is expensive at $5.00 per ride. What a joke? The monorail helps save the planet.
“The Las Vegas Monorail is privately funded and operated, using no tax dollars for its construction or operations. It connects eight major resorts, linking more than 25,000 hotel rooms and about 4.4 million square feet of meeting and convention space, including one of the world’s largest convention centers. The 4-mile route stops at the following seven stations: MGM Grand; Bally’s/Paris; Flamingo/Caesars Palace; Harrah’s/Imperial Palace; Las Vegas Convention Center; Las Vegas Hilton; and the Sahara.
The $650 million transportation system runs along the Las Vegas resort corridor, traveling at a top speed of 50 mph. Up to nine trains consisting of four cars each run on a single rail that rises 20 feet high in most areas, its highest point reaching 70 feet above the Las Vegas Convention Center. The system is electric and has improved transit along the Strip without impacting air quality. Each year, it will take more than 4.4 million automobile trips off the major roadways and reduce carbon monoxide by 135 tons.”
I was just in Vegas for the first time, and our party of 7 thought the monorail was strange. It sits BEHIND the main strip, so it feels like an after thought. We were able to rent a van for almost the same price of riding the monorail for a week, so it was quite expensive. The real problem is that the monorail wasn’t a convenience. It didn’t connect to many places we wanted to visit. I agree completely with the folks that pushed for it to go down the main strip. That’s why folks go to Vegas – to be part of the action!
And that was the only folly the people of Las Vegas ever embarked upon. Except for the popsicle stick skyscraper. And the 50-foot magnifying glass. And that escalator to nowhere . . .
We used the monorail on one of trips to Vegas. It takes so long to walk all the way to the back of the casinos, which are huge and as mentioned by other, you can’t see anything interesting.
If at least it had taken us all the way down to the old part, but no, it ended in the middle of nowhere. Yes I agree, it was expensive. What can I say? a complete failure. Never rode that thing again and advised others against it. At least the Unions got their way. Hooray for that!
Just one more example of how the Unions have only helped to hurt our country. Way back when, they were good and helped the worker. Now days, they simply abuse the power they have and create nothing more than unjustified expense. On a grand scale you can see how devastating they were by being the driving force behind Obama. We often hear people complain about the people on welfare who do not pay taxes and feel entitled to the free ride. But when you think about it, the unions have gotten to the point where THEY feel entitled to special treatment. I say, let everyone stand on their own merits. Why should someone else get the same benefits as me if they don’t produce and show the same concern for the employer as I do. We need to work to end the “Entitlement ” mentality. Our country was better off when common sense was employed and peoples philosophy was if you work for it, you can acheive it. Instead of “If I spend hours in the right line and fill out the right paperwork (available in multiple languages) I can get something for nothing.
The last time my bride and I visited Las Vegas, we bought a bus pass instead of riding the monorail. If you can get a front seat in the upper deck of the Deuce, you won’t care that you’re stuck in traffic because the view is so good. I think a pair of three-day passes for the bus was about $50 total. We even used the bus to go downtown to have dinner in a well-rated steakhouse for which we had a 50% coupon. Can’t do that on the monorail.
I rode the monorail one time. I’m glad I can say I did it. Beyond saying I did it, I don’t really care if it lives or dies.
Putting it right down the center of the Strip would have been brilliant. I think the only thing better would be a subway!
The Sahara hasn’t been any sort of destination since the Rat Pack roamed the Strip. But at the time the monorail project was hatched, the Sahara was owned by the late Bill Bennett.
Hilarious!
Anyone remember that episode on the Simpsons where the monorail salesman came to Springfield and sold the Mayor a pup monorail?
Life imitating art?
What an excellent rort!
As a frequent tourist I have given up on trying to find the monorail stations! Yes, the project would have been a success if it were located directly on the strip.
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