Vol. 4, No. 11, November 2007
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Making It Grand
MGM Mirage announces mega-development in Atlantic City
When Steve Wynn acquired Atlantic City’s former dump in the mid-1990s, he envisioned three huge casinos on the 110-acre plot in the city’s Marina District. His joint venture with Boyd Gaming, for what would become the Borgata, was only the first. But then he sold his company, Mirage Resorts, to MGM Grand and all the plans were put on the back burner.
For years, MGM Mirage contended it planned to build at least one casino on the land, now known as Renaissance Pointe, but it always was the “next project.” In the meantime, MGM Mirage announced and built projects in Detroit (the permanent MGM Grand Detroit), Las Vegas (CityCenter), Macau (MGM Grand, with partner Pansy Ho), MGM Grand Foxwoods (a JV with the Mashantucket Pequot tribe adjacent to the tribe’s casino resort in Connecticut), and Las Vegas again (a joint venture with Kerzner International, across from the Sahara Hotel and Casino on the Las Vegas Strip), not to mention joint-venture agreements with companies from Dubai to China to build non-gaming destination hotels and resorts.
Last month, however, it was finally Atlantic City’s turn. The company announced MGM Grand Atlantic City, a $5 billion project that will occupy 60 of 72 acres set aside for the project. Along with the city’s biggest casino (280,000 square feet), the project will include three hotel towers holding more than 3,000 rooms and suites (one tower, a 57-story skyscraper, will become the tallest building in the state), retail, entertainment and convention facilities.
The $5 billion price tag does not include the value of the land. Unlike CityCenter in Las Vegas, there currently is no residential or condominium component to the project, but may be added at a later time on the extra 12 acres.
MGM Mirage Chairman and CEO Terry Lanni says he expects the project to create “very healthy returns” for company shareholders.
“We believe the success at Borgata demonstrates the eagerness for further evolution of the nation’s second-largest gaming market,” Lanni said. “We will continue to raise the bar, and by doing so, hope to re-energize the city’s resort offerings.”
Company officials say the announcement of the Atlantic City development is completely unrelated to an ongoing investigation by the New Jersey Division of Gaming Enforcement into the business relationship between Pansy Ho and her father, Stanley Ho, who for many years controlled all gambling in Macau. Ho’s connections to the organized crime triads have long been suspected, but Pansy Ho denies there is any business relationship between her and her father. Regulators in Nevada and Mississippi have found there to be no reason to reject the MGM joint venture with Pansy. Should New Jersey turn down the arrangement, however, MGM officials have suggested they would abandon New Jersey in favor of Macau.
While Atlantic City’s casinos are facing their first annual year-over-year decline in revenue since the establishment of casino gaming in 1978, due to competition from nearby states and a partial smoking ban imposed earlier this year, MGM remains confident that Atlantic City’s future is bright.
“We believe that it is the right time to develop something that is revolutionary in the marketplace," said Jim Murren, president and COO of MGM Mirage. “If we were simply going to build a casino along the lines of what exists today, that would probably be uninspiring and not successful.”
MGM Mirage plans to file for city and state approvals toward the end of 2007 and early 2008, with groundbreaking scheduled for mid-2008. Completion is set for 2012.
