Las Vegas showdown: Sony and Warner Bros. vie for state funding to build production facilities
The battle for Las Vegas
In a dramatic twist worthy of a Hollywood script, Sony and Warner Bros. are gearing up for a high-stakes showdown in Las Vegas. Both studios are vying for state funding to establish rival production facilities, aiming to expand their footprint beyond Los Angeles. The allure of Las Vegas, just a 75-minute flight away, is undeniable. However, the key factor in this decision hinges on whether the state is willing to offer a tax incentive.
Diversifying the Las Vegas economy
Nevada’s leaders are keen to diversify the Las Vegas economy, which has long been dominated by tourism and gaming. However, the hefty price tag associated with funding both projects has caused some hesitation. This has set the stage for a fierce competition between the studios, each trying to prove they can deliver the most economic growth.
Warner Bros.’ ambitious proposal
Warner Bros. is a heavyweight in the industry, proposing a larger project with a higher volume of film and TV production. Senator Roberta Lange, who is sponsoring the project in the legislature, emphasized Warner Bros.’ “ability to keep the studios full starting from day one” as a key differentiator. The studio plans to spend at least $500 million a year on production once the Las Vegas studio is complete, amounting to $8.5 billion over 17 years.
Sony’s strategic approach
On the other hand, Sony is proposing a smaller, less costly project that would be part of a larger commercial development, including retail and hotels. David O’Reilly, the developer of the Sony project, confidently stated, “We can show, and demonstrate, and earn our votes. This project is going to deliver the most economic growth.” Sony’s studio would see about $270 million a year in production spending, with only a third coming from Sony itself. The rest would come from other production companies leasing the space.
The current state of film incentives
Nevada currently offers $10 million a year in film incentives, a modest amount compared to other states. For instance, New Mexico awards up to $120 million a year, plus an unlimited credit for its “film partners” like Netflix and NBCUniversal. Arizona approved a $125 million-a-year incentive in 2022.
In 2023, Lange proposed increasing the Nevada credit to $190 million a year over 20 years. Prominent supporters included local celebrities and industry professionals, who pushed for the inclusion of funding for film projects in northern Nevada. However, the bill stalled as the state focused on a $380 million incentive package to build a new baseball stadium on the Las Vegas Strip.
The rivalry intensifies
As the state reached the limit of public appetite for subsidies, lawmakers had to pare down their ask, forcing the two projects, which had been allies, to become rivals. The Nevada Legislature meets every two years, so the next opportunity to pass a film incentive will come next spring. Each project will be represented by its own bill, with Lange backing the Warner Bros. project and Assembly Majority Leader Sandra Jauregui supporting the Sony project.
The Sony project in Summerlin
Sony and Howard Hughes Holdings plan to build 10 soundstages in Summerlin, a master-planned community on the western edge of Las Vegas. The project would be part of a $1.8 billion commercial development, including up to three hotels. Proponents have commissioned an economic impact study, which contends that the state would see a significant return on its investment.
The Warner Bros. project at UNLV
Warner Bros. plans to build its studio at a UNLV business park in southwest Las Vegas. The details are still being finalized, but the proposal is expected to cost around $100 million a year in tax credits, plus millions in additional funding for production elsewhere in Nevada. Warner Bros. joined the UNLV/Birtcher team in August, announcing its commitment to $500 million a year in production spending.
The economic impact
Both projects promise significant economic benefits, but the competition has led to a focus on the strengths and weaknesses of each proposal. O’Reilly, the CEO of Howard Hughes, highlighted Sony’s “rock solid balance sheet” in contrast to Warner Bros.’ $40 billion debt. Meanwhile, Warner Bros. has touted its scale, with $20 billion in annual spending on content, inviting comparisons to the smaller Sony.
The unique nature of Nevada’s film incentives
Film incentives in other states typically are not tied to a particular facility, making the Nevada bills unusual. The concept originated with Birtcher Development, which began conversations five years ago with UNLV about incentivizing the construction of soundstages at the school’s Harry Reid Research and Technology Park. Building stages in Las Vegas would bring jobs to the state, with the goal of building up a local crew base over time.
The road ahead
The construction of both projects would be privately financed, with the subsidy applying to productions that utilize the facility. As proposed in 2023, the tax credit would be 30% of production costs, matching the going rate in Georgia and other states. However, no legislative language has yet been drafted, and the numbers remain in flux, making it hard to do a reliable price comparison.
The sides are also jockeying over who would be a more reliable partner. The Sony team notes that Howard Hughes already owns the land on which the studio would be built, whereas Warner Bros. and Birtcher are leasing land from the UNLV Research Foundation, giving them less flexibility and control. Sony has also said its project is “shovel ready,” though it’s not clear how quickly either project would be built.
In Arizona, the tax credit bill approved in 2022 was designed to incentivize the construction of soundstage facilities in the Phoenix area. Soon after the bill passed, two projects announced that they would break ground the following year. However, there have been few updates about either project since then.
As the battle for Las Vegas unfolds, the stakes are high, and the outcome will shape the future of film and TV production in the region. For cinema and TV series enthusiasts, this is a thrilling saga that promises to bring more Hollywood magic to the Silver State.
For more information on the proposed projects, check out the trailers and information pages for Warner Bros. and Sony.