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Work could begin in 18 months on new Strip project
By Robert Macy
ASSOCIATED PRESS WRITER
LAS VEGAS - MGM Grand Inc., fresh from a $6.4 billion acquisition of Mirage Resorts Inc., could begin construction on a new "over-the-top" Strip megaresort in 18 months, Chairman J. Terrence Lanni said Thursday.
Meanwhile, his company also is moving ahead on developments in Atlantic City.
Lanni told a news conference that MGM Grand is "engaging major architects who do over-the-top properties" to submit design plans for a resort on a 55-acre tract between the Bellagio and Monte Carlo resorts. The land came with MGM's acquisition of Mirage, which was approved by Nevada casino regulators and Mirage stockholders Tuesday. The acquisition gives MGM Grand 18 properties with annual revenues of $4.2 billion.
Lanni said major resorts have raised the bar in Las Vegas for decades, citing the opening of the posh Caesars Palace in 1966, the Mirage in 1989 and Bellagio, which was "over the top" when it opened in 1998.
Those resorts were joined by city-themed resorts, such as New York-New York, Paris and The Venetian.
"We need to move to the next level," he said, promising the MGM Grand project would target "Generation X."
"They have the affluence, the ability and the mobility to enjoy themselves," Lanni said.
The Rio, Mandalay Bay and the Hard Rock Hotel are targeting that market but the new MGM resort will be "a statement far beyond," he said.
Las Vegas has succeeded because the city's new resorts are "emotionally engaging properties" that attract new visitors and draw regular visitors more often, Lanni said.
MGM is expected to begin work on the project as soon as it pares its debt significantly. He said the company has been selling off non-revenue-producing assets such as art work, planes and undeveloped land in Texas, Pennsylvania, Mississippi and Nevada. MGM hopes to recoup $250 million from the sale of such assets to reduce debt and clear the way for the next Strip project.
Some land might also be sold in Atlantic City, where the company has six or seven developable sites, Lanni said.
John T. Redmond, co-chief executive officer of MGM Grand, has been appointed to develop one or more resorts in Atlantic City, Lanni said.
"We are committed to being an integral part of Atlantic City's future," Lanni said.
Lanni said MGM Grand would be moving ahead on the Borgata resort in Atlantic City, a joint venture with Boyd Gaming.
Following start-up of Borgata, the company will evaluate which of several development options in Atlantic City have the highest strategic value, Lanni said.
The MGM chief said he was not overly concerned about the expansion of Indian casino gambling in California.
There are 112 federally recognized Indian tribes in California and "90 percent of them are geographically disadvantaged," offering limited public access, Lanni said.
New casinos in Northern California could hurt Reno and Lake Tahoe while Laughlin and downtown Las Vegas could be affected in Southern Nevada, he predicted.
But new casinos in the San Diego and Palm Springs area are not likely to make a significant impact on the Las Vegas Strip, he said.
"You won't have the ease of flowing from one property to another like you have on the Strip," Lanni said. He also cited the critical mass of 125,000 hotel rooms in Las Vegas, a growing number of upscale restaurants and world-class entertainment. The five highest-grossing shows in Las Vegas will be at properties owned by MGM-Mirage, Lanni said.
"I'm not terribly bothered by what is happening in California," Lanni said, noting that some even suggest the proliferation of Indian tribal casinos in California will create new gamblers for Nevada.