MGM Grand sells portion of Bellagio art for $124 million

Monday, June 5, 2000 | 11:23 a.m.

Eleven paintings from the Bellagio Gallery of Fine Art have been sold for $124 million -- three to former Mirage Resorts Chairman Steve Wynn and the rest to an undisclosed buyer or buyers.

Wynn, who announced plans to acquire the Desert Inn hotel-casino for $270 million from Starwood Resorts and Hotels Worldwide last month, says he plans to display art from his collection there.

A spokesman for MGM Grand Inc., which acquired about half of the $400 million art collection in its $6.4 billion acquisition of Mirage Resorts Inc., today would not disclose which three paintings Wynn acquired nor the purchase price.

Alan Feldman of MGM said the company would not identify any of the paintings that were sold. He also would not identify any of the other buyers. MGM Grand will apply the proceeds of the sale to the retirement of debt.

"The painting sales represent the first major divestiture of nonstrategic assets," MGM President and Chief Financial Officer Jim Murren said in a statement today. "All sale proceeds will be applied to reduce debt incurred for the Mirage acquisition."

The gallery at the Bellagio hotel-casino closed last week, but Murren said it would reopen with a schedule of rotating exhibitions in cooperation with other museums and art institutions.

"We believe using this facility in this way will provide our guests with a more varied and dynamic experience," Murren said.

MGM Grand plans to keep some of the works, displaying 20 of them at restaurants that bear the names of two artists. Twelve paintings and ceramics are being displayed at Picasso at the Bellagio, while eight are at Renoir at the Mirage. The Picasso restaurant also displays rare photographs of Pablo Picasso, while the Renoir displays paintings by Pierre Auguste Renoir and other French impressionists.

MGM is marketing the Mobil five-star restaurants as places where diners can eat amid works of the famed artists.

Wynn, whose collection was a cornerstone of the development of Bellagio, confirmed last week that he plans to display art at his new property.

"Next time you'll be able to see those paintings is at the Desert Inn or whatever it's called then," Wynn said at last Tuesday's Mirage Resorts shareholders meeting at which the MGM deal was finalized. "There will be a gallery. Meantime, they'll be at the house."

Wynn removed his half of the Bellagio art collection when the deal closed. Documents filed with the Securities and Exchange Commission indicated Wynn is at an advantage in acquiring the art because an agreement with MGM allows him to purchase the art at the book value of the art piece or the appraised value, whichever is higher. That right would also apply even if the alternative price was below an amount offered by an outside party, although Mirage Resorts officials have said Wynn would not get any below-market deals.

The agreement is the subject of a lawsuit filed by Crandon Capital Partners, a New York-based Mirage Resorts shareholder. Crandon has asked that the art be placed in a constructive trust while the matter is resolved.

Crandon has sued Wynn twice over the MGM deal, but did not file an injunction to block the MGM acquisition of Mirage Resorts. Both parties agreed to push back hearings until June 26, but Crandon attorney Roger Harwood said last month that he thought none of the art would be sold pending the hearing.

Harwood could not be reached for comment this morning.