Saturday, August 30, 2008

Another casino delays construction (MGM)

Another casino company is delaying construction. I will have more of an opinion on this later, but here is the article from The Press of Atlantic City. (Check out the sidebar for more information on the petition mess with the Revel casino project.)

MGM to delay start of Atlantic City casino project until 2009
By DONALD WITTKOWSKI Staff Writer, 609-272-7258
Published: Saturday, August 30, 2008

ATLANTIC CITY - Tight credit markets will force gaming giant MGM Mirage Inc. to postpone construction until 2009 on an Atlantic City resort that would mimic a multibillion-dollar casino and hotel development in Las Vegas.

Despite a delay in getting started, the company still hopes to complete the estimated $5 billion MGM Grand Atlantic City development by the previously announced 2012 grand opening, spokesman Gordon M. Absher said.

MGM will use the extra time to refine its designs and streamline the construction schedule to contain costs, though there are no plans to downsize the project.

"We're still enthusiastic and confident about the Atlantic City market. The project has not changed or been downscaled," Absher said Friday.

Absher confirmed what gaming analysts have been predicting for weeks - MGM will focus on completing the financing for its massive $9.2 billion CityCenter project in Las Vegas and take another year or two before breaking ground in Atlantic City. CityCenter has served as the inspiration for the Atlantic City project, although the Las Vegas development would be larger.
MGM is getting closer to working out the final financing for CityCenter, but the global credit crisis means the company will have to be patient to secure additional funding for Atlantic City, Absher said.

"The banks just aren't lending money, and these projects obviously require financing," he said. "It is a matter of the financial institutions being tight with money."

Casino companies have been delaying or killing projects outright in Las Vegas and other gaming markets because of the difficulties of borrowing money during the economic downturn. In Atlantic City, Pinnacle Entertainment Inc. previously announced it would hold off on redeveloping the old Sands Casino Hotel site for a megaresort, and the Atlantic City Hilton Casino Resort has delayed a proposed billion-dollar expansion.

Jeffrey Vasser, executive director of the Atlantic City Convention & Visitors Authority, said MGM's delay underscores the nationwide casino construction slowdown rather than exposing any particular problems with the Atlantic City market.

"This is more of a macro situation that we're facing," Vasser said. "When you look at the Las Vegas expansion projects, the Las Vegas properties are stopping in their tracks as well. I don't view it as any reflection on Atlantic City's growth."

MGM announced its project last October, before the credit markets tanked and while casino operators still were going gangbusters to build the industry's newest must-see attraction. At that time, the company said it would start construction in 2008 on a $4.5 billion to $5 billion complex featuring Atlantic City's largest casino and tallest building.

The project would include three hotel towers totaling more than 3,000 rooms, a world-class spa, a convention center and 500,000 square feet of upscale retail shops, restaurants and entertainment. One of the hotels would soar 800 feet high, easily dwarfing any other building in town. MGM's proposal for 280,000 square feet of gaming space would give it bragging rights for Atlantic City's biggest casino floor.

The development is planned on a 72-acre site in the Marina District next to Borgata Hotel Casino & Spa, which MGM co-owns with Boyd Gaming Corp. Approximately 60 acres would be used for the casino resort, with the remaining 12 reserved for future development, possibly posh condominiums, the company said.

Absher stressed that while no construction will be done this year, the company is moving ahead with the planning and regulatory approvals for the project. One key piece of the regulatory process is MGM's pending application for a Coastal Area Facilities Review Act construction permit from the New Jersey Department of Environmental Protection.

MGM also anxiously awaits the findings of a lengthy New Jersey Division of Gaming Enforcement investigation into its partnership with the eldest daughter of Asian gaming mogul Stanley Ho for a new casino in the Chinese gambling enclave of Macau. Critics claim New Jersey gaming regulators should deny the partnership with Pansy Ho because of her father's reputed ties to Asian organized crime. MGM repeatedly has said it is doing business only with Pansy Ho, not Stanley Ho.

"We're confident that when they complete the investigation that everything will be fine," Absher said of MGM's belief New Jersey will approve the Macau partnership.

It is not known when the DGE will wrap up its investigation and make its recommendation to the New Jersey Casino Control Commission for a vote. The commission must approve the Macau partnership because MGM holds a New Jersey gaming license. If the commission turns it down, MGM likely would have to cut its ties to Atlantic City to concentrate on Macau.

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