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LAS VEGAS-Harrah’s Entertainment Inc. and AEG on Wednesday unveiled plans for a 20,000-seat, privately financed arena one block off the Las Vegas Strip. The development site is a 10-acre parcel directly behind the Bally’s and Paris resorts that is owned by Harrah’s. Subject to a signed letter of intent between the two organizations, and the completion of definitive documents, the plan calls for construction to commence in summer 2008.

The plan is seemingly in direct competition with the City of Las Vegas, which last month selected a preferred developer for a publicly funded 22,000-seat sports arena in Downtown Las Vegas. Just like the city’s vision, the Harrah’s-AEG arena would open in 2010 and be constructed and configured in a manner that will make it capable of housing an NBA or NHL franchise as well as concerts, boxing matches, special events and awards presentations, tournaments and exhibitions.

Without making specific reference to the Downtown project, a source with Harrah’s tells GlobeSt.com that the Strip arena project will be built, regardless of any competing project. The Harrah’s-AEG project has the necessary financing in place and will be complete by September 2010, she says.

AEG is a developer and operator of sports venues such as Staples Center, The Home Depot Center, Target Center, London’s O2 Arena and NOKIA Theatre Times Square. It has an existing presence in Las Vegas through its subsidiary AEG LIVE, which oversees programming for the Colosseum at Caesars Palace, and recently agreed to operate and program new 4,000- and 1,500-seat indoor venues now under construction on the Las Vegas Strip.

The would-be developer of the arena project in Downtown Las Vegas is Real Estate Interests Group of Bloomfield Hills, MI. While REI Group’s plans call for much more than an arena –- the arena is slated to be incorporated into an $8.5-billion, 85-acre mixed-use development on the West side of Main Street — REI president John Weaver has said that without the arena his overall project would fall apart.

Weaver tells GlobeSt.com that Harrah’s project is more about competing with the other entertainment venues operated by competing casino-resorts such as MGM or Mandalay or Caesars than killing the Downtown arena plans. Moreover, he is confident the two arenas can coexist.

“We were always aware that Harrah’s had included this type of entertainment venue as part of their master plan, and that AEG has a tremendous presence in Las Vegas and a great reputation for delivering high quality events and close ties with the NHL and other leagues,” he says. “We believe our location and access and cooperation with the city sets us apart; I think there are certain events, including those that require a casino-neutral location, and other opportunities for which we may have an economic advantage.”

Mayor Goodman did not respond to a request for comment.

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