Las Vegas crapping out, MGM in dire straits
Filed under: Company News
The glitter of the Strip in Las Vegas is shining a little dimmer today, as the recession has raked a big stack of chips off the gaming table and left some key players struggling to pay up. Kirk Kerkorian's MGM Mirage (MGM) in particular is in danger of being taken for a long ride into the desert.The Wall Street Journal (subscription required) reports that talks with a potential angel, Colony Capital LLC, which could help cover the company's massive debt, have collapsed. MGM, owner of the Bellagio, Mirage, Mandalay Bay and other Las Vegas casinos, as well as properties in Detroit, Mississippi, and half of the MGM Grand Macau in China, faces $13.5 billion of debt as well as payments due on its 50 percent share of the CityCenter development. It has tapped out its senior credit facility, and a waiver that it received delaying required repayments is due to expire on May 15. It reportedly is ready to sell off MGM Grand Detroit and a Mississippi casino to raise some cash.
Last week the corporation dodged a bullet by meeting a required $200 million payment on the CityCenter project, although the future of this project is clouded by its strained relationship with partner Dubai World. Dubai claims that MGM has failed to keep a lid on the cost of the multi-billion dollar development.
Over half of MGM's net revenue comes from non-gaming activities, which means that is has been hit hard by the sharp decline in convention business. The Las Vegas Tourism Bureau reports that the number of guest rooms in the city grew by 8,000 in 2008, while visitorship dropped by 11.87 percent and gross gaming revenue fell by 16.27 percent.
While a favorable report about the gaming scene in Macau and the possible casinos sell-off have helped check the long decline in the price of MGM stock, the sword of Damocles still hangs over MGM Mirage. The odds aren't all that great that it can avoid bankruptcy if the gaming malaise continues.
On the other hand, those looking for vacation deals should take a look at Vegas. You won't have to contend with crowds.
Over half of MGM's net revenue comes from non-gaming activities, which means that is has been hit hard by the sharp decline in convention business. The Las Vegas Tourism Bureau reports that the number of guest rooms in the city grew by 8,000 in 2008, while visitorship dropped by 11.87 percent and gross gaming revenue fell by 16.27 percent.
While a favorable report about the gaming scene in Macau and the possible casinos sell-off have helped check the long decline in the price of MGM stock, the sword of Damocles still hangs over MGM Mirage. The odds aren't all that great that it can avoid bankruptcy if the gaming malaise continues.
On the other hand, those looking for vacation deals should take a look at Vegas. You won't have to contend with crowds.
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Reader Comments (Page 1 of 6)
4-10-2009 @ 3:17PM
scott said...
I'd like to know were this news is coming from. I live in Vegas and i'm on the strip 5 days a week. I can tell you there has been so many people here its nuts! On Fridays-Mondays forget it. So many people the sidewalks are packed. I think the casinos or the news makes these stories up. Last weekend I actually took a video as I drove down the strip to show how crowded the streets and sidewalks are.
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4-10-2009 @ 4:21PM
Felix28 said...
Yes there are people there but not spending money. I go every year for ShoWest, and noticed a big difference from previous years. We did not have to pay an outrageous amount for our rooms at the Bellagio. Had no problems getting dinners reservations each night at the place and time we wanted. And the store in the casinos (which are usually dead anyway) had great markdowns. Could not find deals like that on clothing in Los Angeles. Get a clue, the newspapers are not m"making things up", they actually are not as harsh as they should be. Accept the fact that times are tough in Las Vegas.
4-12-2009 @ 12:48PM
Robert B. Quick said...
They Lie out their pieholes.
4-12-2009 @ 11:49PM
ron jeremy said...
Vegas is a crazy place you see nice people and mean ones .We will get the best service on one trip and the worst service on another we live in california and go to vegas on average 2 to 3 times a mo. The strip is always busy all the time but they have over built the strip and the town, and want us to pay for it. That wont last long with the people that make the drive from california to vegas if it wasn't for all of us vegas could not servive,and its time to go back to how it was. And not make vegas only for teens. IT is the thousands of people that bring hard earned money and willing to put it on the line for a chance of hitting the big one that bays there bills,They need to remember that, or vegas will no longer be the vegas we new or want.
4-13-2009 @ 12:23AM
Panapada said...
Last time I was in Vegas, there were no slots on the sidewalks. I think you are on to something there; if the sidewalks are full of people, can slots be far behind.
4-10-2009 @ 4:41PM
Stella said...
I was in Vegas two weeks ago and yes the strip is full of people, but they are walking and not in the casinos spending money. I saw younger adults with cheap drinks in their hands walking that’s all. The casinos were not full. That is where the casinos make money in the casinos. You can tell by looking at the crowd on the strip, there were there for cheap entertainment. I love Vegas and I have been going to Vegas for years now and I can tell the difference. Also these big corporations that run the strip, they changed Vegas, and this is not the place that it used to be 3-4 years ago. If this corporations want our money they should start treating us the visitors better Customer service is declining and if I am treated the same as here in California why spend my money in Vegas? Unfortunately the Steve Winn's glamour treatment is not there any longer and if these new corporations that took over the strip want the clients back they should change the way business is done. They became very greedy and they deserve what they get.
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4-12-2009 @ 9:36AM
JOHN said...
YOU ARE CERTAINLY CORRECT ABOUT THE CASINOS GETTING GREEDIER. NOT ONLY IN VEGAS,
BUT ALL OVER. WE PLAY SLOTS AND VIDEO POKER
AND WE HAVE CUT DOWN OUR CASINO VISITS TO ONCE OR TWICE A YEAR FROM 8 - 10 TIMES AND MAY QUIT GOING. THE NEW MULTI GAME MACHINES ARE TIGHTER THAN THE OLDER MACHINES. FROM 6 YEARS BACK (2003) WHEN WE COULD WIN MUCH MORE OFTEN, BUT SINCE THEN, WE HAVE NOT EXPERIENCED NOT ONLY LESS WINS BUT LOWER DOLLAR WINS.
PLUS I FEEL STRONGLY THAT USING A PLAYERS CARD THE CASINOS CAN CONTROL ONE'S PLAY WINNINGS AND DOLLAR WINS. IT ALSO SEEMS WHEN ONE GETS A COMPTED ROOM, ONE LOSES ENOUGH QUICKLY TO PAY FOR THAT ROOM.
4-11-2009 @ 1:30PM
Sheila said...
I moved here 1 year ago.People are right about customer service here...it sucks.The people who grew up here are some of the rudest and dumbest people Ive seen in my life.This place is going down...and I wont be here to watch it!!
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4-12-2009 @ 9:17AM
Tony said...
I love these people that don't live in Vegas making economic assumptions .... 'I was there two weeks ago...'
SHUT UP ... if you don't live here you don't know crapola boy scouts!~ ' I visited Vegas for two days last month and ..'
again, SHUT UP!
Tony
Las Vegas, NV
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4-12-2009 @ 12:02PM
Cheryl said...
Looks like the poster who pointed out the rudeness of the people living in Vegas was absolutely correct. Thankfully, Las Vegas has no appeal for me, and even less after hearing how nasty the "locals" are.
4-12-2009 @ 9:53AM
John said...
ok boy's and Girl's let the games begin...Happy day's will be back soon....
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4-12-2009 @ 2:21PM
Gordon Speigle said...
Just returned from vegas on Thu. (4/9/09) and yes it was spring break week and yes people were there SPENDING money and it was crowded. I do agree about corp. ruining vegas as customer service is GONE and some of the prices are HORRIBLE....... I don't mind anyone making a living but they are trying to make a KILLING with no customer service and even the smallest of things are priced way to high...... $3.00 for a bottle of water, at the bar $12.00 for a drink and a SMALL GLASS AT THAT..... If they are hurting, the gambling business they need to look at things like this and go back to what made vegas an attraction in the first place.....
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4-12-2009 @ 10:13AM
Snoop said...
Y 'all---I live in West Texas and I used to go to Vegas once a year sometimes Reno. I agree them gambling casinos used to give more for their customers as compared now. The rich can still afford to gamble a lot but us working stiffs who save to go to Vegas for a vacation is feeling the brunt of the recession.
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4-12-2009 @ 10:46AM
bar said...
it's simple.....what once was thought to be recession-proof turns out to be cyclicle just like every other industry.....paired with the fact that these corporations WAY overbuilt the city.....not just the strip area but the entire metro area; what were they thinking? actually, not much!!
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4-12-2009 @ 10:32AM
Mark said...
Gambling is a very destructive behavior. As far as I'm concerned I hope Sin City feels the wrath of God come down hard on it. The Indian casinos will see the same fate too, they sold out there souls for the dollar and went from making money hand over fist...then they got greedy like vegas and built bigger and bigger outrageous projects and now the bills are due and the money isn't comming in. Vegas and Indians...you got what you deserve greedy scum bags.
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4-12-2009 @ 12:54PM
Tony said...
Shouldn't you be in church? Riding in the car with that funny looking fish on the back?
4-12-2009 @ 10:57AM
John said...
You want a profitable Las Vegas? Turn it back over to the mob!!! When the mob was running Las Vegas it was a fun place to be and the only revenue they were concerned with was the gambling monies, every thing else was compted!!! The bean counters want to make a dollar on everything, no freebies!!! I went in the bathroom at the MGM and farted and the shoeshine guy said, " That's a Dollar".
Give Vegas back to the MOB!!!! They know how to do it!!!
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4-12-2009 @ 11:14AM
lisamarie said...
my philosiphy is,,,,, things happen for a reason !,,, i've stayed in penthouse's @ the mirage and there rooms are'nt what you would think they would be for the price, and there customer serv skills are absolutly intolerable. and have yet to win any amount over $50.00 bucks everytime ive been to vegas. i've never seen such greed in my life!!.and if you want something done you have to do it yourself. i wont be back to vegas until im confident they have learned there lesson,. this is happening to them for a reason, and i hope they figure out what this lesson is for !. thankyou for letting me vent on here.
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4-12-2009 @ 11:15AM
Phil said...
I remember going to Vegas or Reno and feeling like I had some kind of chance to win a little something but, now you pretty much know they are going to clean you out every time.
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4-12-2009 @ 11:37AM
iwillbecauseiam said...
Apparently "Tony" is one of those rude Las Vegans
that everyone keeps posting about...I saved myself a lot
of time gambling on my last trip to LV and just flushed a wad of cash down the toilet. That freed me up to see a show, have a nice dinner, and shop.
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