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MGM Mirage wants the right tone for CityCenter’s first night
Tuesday, Oct. 13, 2009 | 2 a.m.
Sun Coverage
CityCenter
In another economy, CityCenter might have opened with the kind of pageantry befitting royalty.
Instead, the $8.5 billion resort complex — billed as a redefinition of the resort experience for future generations of tourists — will open in December in a manner more appropriate for troubled times.
Managing partner MGM Mirage isn’t revealing its opening strategy for CityCenter, but it’s clear that the plan, finalized after much debate, will be a toned-down version of what could have been.
“We struggled to find the right tone,” MGM Mirage spokesman Alan Feldman said. “To do something grandiose doesn’t feel right with the economy.”
How to be extravagant without seeming wasteful?
One scenario the company rejected was put forth by a company that helped create the opening ceremony for the Beijing Olympics, for example. Not that the festivities will be solemn. There will be fireworks, thousands of invited guests, hors d’oeuvres and champagne. But the real money, Feldman said, will go into marketing rather than an over-the-top party.
•••
Thanks to a tourism economy built around giant, expensive buildings, Las Vegas — which grabbed headlines earlier this year for being No. 1 in home foreclosures — also has more distressed assets as a percentage of total property investment volume than any city in the nation. That’s according to Real Capital Analytics, a New York firm that tracks troubled assets, including those with loans in default, projects that have sought bankruptcy protection or buildings foreclosed on by lenders.
Through September, Las Vegas had 234 troubled assets valued at $17.3 billion, up from August’s 168 troubled assets valued at $9.2 billion. Already included in previous reports was Station Casinos’ bankruptcy in July (Real Capital values those assets at $7.5 billion) and Fontainebleau Las Vegas’ bankruptcy in June (valued at $760 million, roughly in line with a large chunk of its financing).
The monthly pace of assets falling into default, foreclosure or bankruptcy fell sharply in August — to just under $9 billion from $15.8 billion in July, Real Capital said. But resolution has come slowly, with only 15 percent of sales associated with distressed properties. That’s “far below any point of equilibrium that investors may hope to see,” the company said in its October report. New to the list: Planet Hollywood, which defaulted on its mortgage loan in August and is valued by Real Capital at $1.3 billion.
•••
It’s been more than a year since a federal judge in Nevada sided with a group of shareholders who sued Archon Corp. — a small, publicly traded company controlled by Paul Lowden, former owner of the Santa Fe (now Santa Fe Station) — for undervaluing 4.4 million shares of preferred stock by more than $7 million when the company redeemed the shares in 2007.
In the lawsuit, shareholders said Archon owed dividends of $8.69 per share of stock, with dividends compounding on the original principal, rather than the $5.24 per share Archon paid at the time.
The judge ordered the parties into mediation to determine damages according to the company’s latest quarterly report in August.
In the report, Archon — which has sued the attorneys who drew up the preferred stock redemption documents — said it intends to appeal the decision if mediation is unsuccessful. Company representatives couldn’t be reached for comment.
In June a group of independent shareholders voted against issuing 250,000 additional stock options to company executives. Lowden, who owns more than 60 percent of the company, voted his shares for the plan. Executives had 741,500 exercisable options as of June 30 with an average exercise price of $28.09. Archon stock now trades at about $14 per share, down from about $29 a year ago.
Archon, which reported a second-quarter profit of $1.2 million, has pocketed millions in deposits to secure its major asset, the 27-acre site of the former Wet ’n Wild water park south of the Sahara.
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I hope the CityCenter will help Las Vegas.
I am looking forward to see it in January when I visit there.
I also hope that the CityCenter will be intereting to walk around in, not just bunch of boring buildings put together......
The tone of that message will be "We're broke"
yup we are broke and talk to our bankruptcy attorney
"Come and spend your money here, but not at the Mirage or MGM Grand. We like to cut off our left hand first and feed the right hand before we'll lose that one, too".
ono17jpjp - If anything at all, hopefully the burst of new jobs into the market will do the trick
umcmaniac - I hope your wrong but I believe you'll be right :-/
I guess they'll be offering a lot of discounts.
Start the night off by having a memorial for all the dead men they killed while building the project. This would be a good start.
And don't forget they're only supporting Rory Reid for Governor.
They will have an opening night Gala, then the next day an auctioning off of all the furniture and gaming devices to pay for the opening Gala LOL!!
ono17jpjp,
Yes it is a well laid out design. Not just a bunch of building thrown together.
VegasInsider,
You must not understand how life works. When you make a mistake, you take accountability and responsibility for your actions. Not blame someone else. "they" didn't kill anyone. The individuals who died, did it themselves.
City Center will open, it will, and has, created jobs, against all the naysayers wishes, and it will continue to provide for the economy.
I have one question for all of you who hate the casinos. WHY DID YOU MOVE HERE? If you are against them, there is one simple solution: MOVE!!!!!!
it will be just like the m resort, aliante, and everything else.
it will be really busy from people just going to check it out and they'll put out a bunch of press releases saying how good they are doing, and newspapers will print them and then in a few months, when the "newness" has worn off...it will be dead. in 2002.
iknow : It's not the we hate the casinos, we are just unhappy with their greed and blatant defiance against offering any value to us the customers who are the most important people in the world! Sounds like they need more people like you to stay in business!
It is only going to be a soft opening. 70% complete but lets open anyways. Hopefully no one will notice that we are not done. let's make it look like the tower is open by really opening the rooms on odd floor. that way it will seem like the whole tower is open. Come on. it's been done before.
I don't go into any of the casino's. I let the tourist, when they are here, spend their money. It is free enterprise. When the economy is good, no one cares what a CEO makes. But when the economy is upside down, all of a sudden it is a crime for a person to make 500K or 1M.
As for offering value to customers, I guess that the occupancy rate speaks for itself (prior to the downturn that is).
I agree with onerare1, it will be a very soft opening. Aria is bought out to the 40th floor, or there abouts. The pool deck isn't due to open until Feb or March.
The rest of the project, like the Harmon, won't open until sometime next year.
I give it less than two years before MGM Mirage wishes it had never built CityCemetary. Unless it secretly already feels that way.
When will the "public traded" MGM have to explain to its shareholders the real cost (and damage) of CC ? It has been hidden inthe mumbojumobo of their corporate speak and will have to be leaked out slowly like a tire going down on I-15.
Why do you think Haig resigned? Because Directors have serious fiduciary responsibilities under Sarbanes-Oxley and he has a reputation to protect.
They may as well take a shovel to City Cemetary, fountainblows, and all the others because they are NOT going to pay what they need to exist. This super sizing mega resort condo crap went too far out here. At least Atlantic City can offer condo's with a beach frontage and access to 375 million people a mere gas tank away. Why would anyone in their right mind shell out a million dollars for a view of LV BLVD? they can get that in most metropolitan settings across the country, and for a lot less. City Center R.I.P.
Iknow You seem like an authority on casinos yet you never go in one. You also ask why people move here if they don't like casinos. There are other things here no state tax, reasonable houses (even before the recession) good restaurants, weather,etc. As for criticizing the execs who make a fortune i'm not envious of them but they should be held accountable when things go bad. City Center is a disaster in the making. We do not need any new casinos for 20 years at least!
chazbean : I am in full agreement with you!
iknow - I fully agree with everything your saying... CityCenter is going to be (and already has begun) to be a great thing for LV. I especially like your statement - "I have one question for all of you who hate the casinos. WHY DID YOU MOVE HERE?"
vegasgm85 : It's not a question of hating the casinos, it's the way they are being run nowdays. My guess is that you have not lived here very long, so you don't know what it used to be like.
Wear black and look solemn.
environprotector - I have not lived here too long (4+ years) so I dont know first hand but its like when someone says "they dont make Fords (or whatever) like they used to" but people obviously keep buying them and enjoying them... Their just made different... (or in the casinos sake - ran different) . . . probably a bad analogy but hopefully you get what I am trying to say...
I've known Vegas for 50 years now, It's been a wonderful place, and has always been in a constant state of change. Over the last 2 decades I've watch the cooperate junk bond masters kill the goose that laid the golden egg. Is there a CEO in Vegas who understands what made Vegas great is value?
A couple of decades ago Vegas offered a lot of bang for the tourist dollar! Before casinos were taken over by corporations, that built multi-billion dollar monuments to their ignorance and greed. Out of state family & friends don't come to visit near as often as they use to, their complaints are the same "everything has gotten so expensive, minimum gaming bets, food, and shows" are the most common complaints I hear.
After Atlantic City opened most folks couldn't resist the temptation to go visit, the visitors that I know said at the time they'd never go back. They were expecting the Vegas experience, what they found was that everything was so expensive! And nothing like Vegas at all, so they continued to make the pilgrimage to Vegas.
It seems the longest lines in Vegas these days are casino executives lining up to re-negotiate loans, bonds, and to file for bankruptcy, I'm left to ponder two things, is there anyone at the head of the line asking for their "player's rewards card" and will these actions result in low hanging fruit that the mob won't be able to resist thus resulting in Vegas becoming a mob run city again?
i cannot believe the overbuilding of vegas --- makes me recollect how NJ was canabalizing their customers and customer base amongst themselves (care of The Donald (trump)...
what does City Center have to bring in daily to stay afloat? i mean it is an 8.5 Billion Project (unprecedented!). what is the loan service payment monthly alone for that?
i do not know if the city can sustain another property like this! (and no city has EVER had one quite like this)... and fountainebleu Vegas is still on the horizon of opening (someday)...
i wish them the best of luck - but i fear MGM is only going to be stealing customers from their other properties, and thus hurting the synergy of the Corp overall.
god_is_imaginary : No way will the Mob ever get there hands on Vegas again. There are so many guards against that. But today's owners should take a long hard look at the way they used to run things with regards to value and customer service which is what made Vegas become what it was, the most exciting city on the planet!
cuts240 : You have identified what needs to happen here, and that is competition! these properties need to be sold off to other owners to create real healthy competitive marketing and value to lure the tourists back!
No Mob in Vegas? What? Wow!! Are we that blind not to see that the Mob will never lose control of Vegas.I believe they only control in diferent ways these days.I believe they have just channeled their involvement through multiple routes that are virtually undectable and are slowly moving around the industry with great stealth.
Many people think the Mob is virtually gone.Are they really? The Mob is organized crime and that will probably never leave.Don't get me wrong I don not agree with the organized crime organizations but I do believe they are extremely smart and I hope they are not involved with anything in Las Vegas but I can not help but suspect that they are still present.My theory may be just a theory but my question is this.For example there was an article in the past that MGM miracously came up with funds to pay debt and to complete City Center.There was talk of selling properties and land that they acquired over the years.They also put up some of these investments as coladiral.In return for money from 7 different banks in 5 different countries.HMMMMM!!!
My question to anyone who knows when the States gamming commission approves gamming licenses, do they look at the banks investing and who do they deal with? If so then my theory is a bust.
City center will not be an asset to this community do to a few small tid bits of things.
They are to need a marketing plan that has never been seen of its kind and just looking at its structure I dont see it working.A city within a City just not to appealing.I wish that they would have invested in the concept of Freemont Street and bought some of those properties and redifined them.Investing in moving the pan handlers on.
My wife and I recently went down to Freemont Street and had a very nice time.I also saw a tremendous amount of potential that is not being capitalized on.First thing is removal of all the pan handlers I mean removal start arresting them.I must have been approached a dozen times and seen dozens of them sitting on the ground with there back packs beside them.I would see Freemont street security riding around and the vegrant would see them get up and move or start walking.I know that it is profiling if they accuse them but they need undercover security that catches them in the act.
This being said Ibelieve if they would start by getting these guys away from Freeemont Street the Experience more pleasurable and we would feel safer
Hey iknow - we're not a bunch of idiots! The casino executives deserve their big salaries when the company is doing well, but not when the company is on the edge of failure. Greedy casino executives who still collect mega salaries in the face of layoff's and awful co performance. Sorry we have to lay off the little guys because we made terrible decisions, but I still want my million dollar salary. I don't care whether you live in LV or anywhere, the casinos have gotten greedy with their tight slots and rip off BJ games.
rodtig : THERE IS NO MOB IN VEGAS CASINO'S PERIOD! The completion funding for City Center was provided by wrap heads in Dubi( or however it's spelled) Company. And since you mentioned it, Fremont St. Experience ruined downtown as well...
Oh yes, we are so bad attacking those poor casino owners. The company line at MGM Mirage went from "showing the customer a good time" to "separate the(sucker)customer from his money as fast as possible". The economy killed Vegas, but the greed on the strip hasn't helped matters.
FYI - City Center will struggle after the novelty wears off. Has anyone seen the projections for Xmas retail season? So much wealth is gone and not coming back! 401K's obliterated and housing equity gone! You people who disagree live in denial!!
Environprotector: If there isn't still mob influence in Las Vegas, tell me how someone can come to town, get a job as a bellhop and a very few years later, buy a casino? This being back in the days when bankers were reluctant to invest in the gaming industry. For a peek into the closets on one of Las Vegas' premier propertties...
http://unlimitedfightnews.com/wordpress/...
Hopefully the ghosts of all the dead men appear and curse these buildings forever.
MGM = Greedy bastards.
KenoDave,
You're talking about something that happened in the '60's...
To this day, "families" back east may still own shares in the various casino corporations, but not any sway. Publicly traded funds or private funds (Harrahs, Stations) own this town now.
Where the underworld still is involved, is the off-strip men's clubs, the taxi operators, and crap like that.
Environprotector, your "wrap heads" reference is offensive.