Lanni fine-tuning plans for megaresort at Boardwalk site

David Strow

Thursday, Oct. 19, 2000 | 11:14 a.m.

It's one of Las Vegas' most anticipated future projects -- a massive new casino resort on the Strip south of Bellagio, targeted squarely at members of the so-called "Generation X."

The start of construction on the new MGM MIRAGE resort is probably still 18 to 24 months away. Yet that isn't stopping MGM MIRAGE Chairman Terry Lanni from spending a half-day each week on the project, talking with young people about what they want in a Las Vegas resort, meeting with "world-class architects" to discuss possible plans.

The direction that's leading in, Lanni said, is a "minimalist" resort, where technology and Internet accessibility are more important than lavish rooms. And, the middle-aged Lanni admits with a chuckle, the target audience doesn't want to rub shoulders with people who are his age.

In Lanni's words, the resort will be "a Bellagio for the young person," a Las Vegas resort for the young dot-com millionaires.

"We want those young people who made a heck of a lot of money at a very early age, who aren't ashamed to play hard and work hard," Lanni said in a Wednesday meeting with reporters. "They spend a fortune (on entertainment), and nothing ever bothers them."

To date, Lanni believes no resort has targeted squarely on that consumer, the affluent 25-to-35-year-old. The Hard Rock appeals to a younger set, Lanni said, but its demographic isn't as affluent as MGM MIRAGE is aiming for. The Rio and Mandalay Bay also appeal to younger patrons, but aren't designed primarily for them.

MGM MIRAGE's resort will designed solely to appeal to these guests -- but the trick is designing the resort so it appeals not to young people in general, but young people willing to spend considerable amounts of money.

"What we don't want is someone 25 and under with no money coming to the bar to pick up a significant other," Lanni said. "That's the last thing we'd want."

Construction of the resort will proceed after MGM MIRAGE has reduced its debt load from the Mirage Resorts merger. That debt stood at $6.4 billion when the merger was completed in May -- by year's end, Lanni said it will be down to $6 billion.

A good portion of that debt reduction has come from the liquidation of assets acquired in the Mirage Resorts merger, including the sale of $141 million in artwork.

Even Lanni's Bellagio office -- which once belonged to Steve Wynn -- isn't immune from such sales. Lanni pointed to an empty wall in his office, noting that the Rembrandt that once hung there -- "Portrait of = a Man," painted in 1632 -- will be soon be sold by Christie's.

Though Lanni said it's too early to go into specifics about the planned resort on the Strip, he did say there may be opportunities for MGM MIRAGE to leverage the popular culture themes owned by the movie studio Metro-Goldwyn-Mayer. Both MGM MIRAGE and the MGM studio are controlled by Los Angeles billionaire Kirk Kerkorian, but are separate companies.

"We have people working with MGM/UA (United Artists) to find various ways to work together," Lanni said. "There's lots of opportunities for us to work together."

Lanni said he believes the construction of such new resorts -- and the expansion and renovation of existing ones -- is crucial for the city's long-term success.

"We need to have a continual building phase in Las Vegas in order to -- continue to succeed," Lanni said. "It's a living being, and that's the way we need to keep looking at this. After three to four years, if you don't do that (renovate and expand a property), you end up with a vertical motel. There has to be a reason for people to keep coming to Las Vegas."

Lanni also weighed in on a variety of issues:

--The MGM MIRAGE chairman expressed doubts over a proposal by Nevada Gaming Commission Chairman Brian Sandoval to cap bets on college events to $550 per game per person.

"I have a great deal of respect for Brian Sandoval," Lanni said. "But the administrative aspects of trying to deal with this ... it's extremely difficult, if one thinks about the logistics. It would be an administrative nightmare for a casino to enforce this provision."

Lanni also ripped one of the motivations behind the Sandoval proposal --- an effort in Congress to ban college betting in Nevada. Lanni noted that 98 percent of betting on sporting events in America is occurring illegally.

"Any fair-thinking person would say this proposal before Congress is a feel-good proposition," Lanni said. "I suspect some small-time bookmakers may be laying off bets in Nevada. But the very large (illegal) bookmakers are even bigger than us.

"No one in Washington wants to hear the facts. This is typical of Washington; pass a bill and think it solves everything."

Lanni also blasted proposals before city of Las Vegas officials to license the city's name and seal to an Australian Internet casino in exchange for a portion of revenues.

"On the face of it, I would question the appropriateness of government competing with the largest industry in the state," Lanni said.

However, that position isn't based on opposition of Internet gaming. Lanni said he believes legal Internet gaming in the United States is inevitable, regardless of whether Congress passes legislation to ban it. That's the reason, he said, that MGM MIRAGE signed a deal with Silicon Gaming Inc. to put non-cash, Internet-based versions of slot machines and table games on the Internet.

Lanni emphasized MGM MIRAGE wouldn't move into Internet gaming without the blessings of regulators, but suggested it may be impossible to screen out people from jurisdictions where Internet gaming is illegal, noting that even secure government websites have been successfully hacked.

"It's absolutely foolhardy to make that prediction (that Internet sites can be completely secure)," Lanni said.

Despite swallowing Mirage Resorts in a record-breaking deal, Lanni said MGM MIRAGE remains committed to future growth, both through new projects around the country and through acquisitions.

"Our greatest challenge is the opportunity to grow this company ... we're very interested in growing," Lanni said. "(Acquisitions) have to be accretive, and they have to be complementary to what we're doing."

The one area MGM MIRAGE probably won't seriously look at, Lanni said, will be the riverboat casino market.

"If someone came along with a great opportunity (for a riverboat acquisition), we'd look at it," Lanni said. "We owe that to our shareholders. But we're not enthusiastic about riverboats. It's fair to say we're not looking at riverboats in that equation."