A financial history of the CityCenter project

By Liz Benston (contact)

Saturday, March 28, 2009 | 2 a.m.

November 2004: MGM Mirage announces CityCenter without an official budget. Unofficially, executives say the project will cost at least $4 billion and perhaps as little as $3 billion when including proceeds from the sale of about 1,650 condominiums.

March 2005: The company doesn’t include a budget for CityCenter in its 2004 annual report, cautioning that the project’s budget and scope is a moving target. This warning would be repeated.

August 2005: The company publicizes a $5 billion budget for CityCenter in its quarterly earnings report.

September 2005: The company announces an all-star lineup of architecture and design firms for CityCenter, including Cesar Pelli and Associates, Rafael Vinoly Architects and Foster and Partners.

February 2006: The company announces plans for additional CityCenter condominiums, as other developers scale back condo plans amid stiffening competition and rising labor costs. The budget rises to $6 billion.

March 2006: The company publishes a $7 billion budget for CityCenter in its 2005 annual report, a figure that excludes the value of underlying land and marketing costs. MGM Mirage says CityCenter is expected to cost the company around $4.5 billion after $2.5 billion in condominium proceeds.

August 2007: The company’s second quarter report says CityCenter is expected to cost $7.4 billion, excluding land and preopening costs. After condo proceeds, the net cost is expected to be $4.7 billion.

November 2007: The company’s third quarter report says CityCenter will cost $7.8 billion, excluding land and preopening costs. After condo proceeds, it will cost $5.1 billion.

February 2008: The company’s 2007 annual report publishes an $8.7 billion construction figure, including capitalized interest. After condo proceeds, it will cost about $8 billion.

May 2008: CityCenter’s construction budget rises to $9.2 billion, or $8.5 billion after condo proceeds. Including a theoretical value of $1.7 billion for the land, $200 million in preopening expenses and $100 million for a grab bag of expenses including the value of brands and management expertise, training and marketing costs and research and development, the total cost is $11.2 billion.

August 2008: CityCenter’s construction budget peaks at $9.3 billion, or $8.6 billion after anticipated condo proceeds.

November 2008: A cost-cutting program initiated at CityCenter is expected to save $400 million, according to the company’s third quarter report. That brings the construction budget to $8.9 billion.

March 2009: The company’s 2008 annual report lists a host of warnings triggered by the economy, including doubt that the company will have enough cash to make payments on its debt and CityCenter and that a Chapter 11 filing by MGM Mirage could drag CityCenter into bankruptcy court, indefinitely delaying the project. Expected cost savings on CityCenter rise to $500 million. Delaying the Harmon hotel until 2010, a decision announced in January, reduces the condo count to 2,400 and is expected to save another $200 million, yielding a construction budget of $8.7 billion.