Wednesday, December 30, 2009

Best of 2009 #1: "CityCenter, CityCenter, CityCenter!"

Come on, you knew this was coming. It's the largest private construction project in the nation's history. It's created at least another 12,000 jobs for Nevadans badly in need of work...

And will likely come in handy to save Harry Reid's job in DC...

And it's refueled a long simmering controversy over the death of "Old Vegas" and whether a CityCenter-like business model is better for the Nevada gaming industry than the type of business model "one of the boys" would "think up".

Well, we know for sure that "one of the boys" wouldn't think this up!

Or this...

Or this...

Or this...

And especially this!

An environmentally friendly Vegas casino? REALLY??!!

So obviously, there is plenty to talk about CityCenter. And going into 2010, this will still be a major development in the ongoing saga of The Las Vegas Strip.

So first, let me remind you of something I wrote late last month about how quintessentially "Las Vegas" CityCenter really is.


So The Sun has a big story today on City Center's grand opening. Jim Murren's putting on his confident face for the grand occasion. MGM Mirage continues to reassure us that Dubai World's debt crisis won't send Las Vegas' newest attraction crashing to the ground. So City Center starts opening this week and all of Vegas holds its breath.

I really think Jim Murren's heart was in the right place with City Center. Despite what all the critics are saying, it is exactly what Las Vegas needs. Until very recently Las Vegas has lacked an urban center, an artistic edge, and forward-thinking design. But now with City Center, we finally have something to call our own... Not just another carbon copy of yet another world landmark, but a stunning collection of postmodern architecture that we can really call our own.

It just seems like this was cursed with bad timing and bad financing. MGM Mirage has relied on Dubai World to help complete this project, but now Dubai is collapsing on its own debt load. MGM Mirage has also taken on more debt than it could handle in trying to monopolize almost all the west side of The Strip. In many ways, the tale of City Center so far is a reflection of the George W. Bush era of unbridled corporate greed let loose to cannabalize our economy.

I guess in many ways, City Center is a reflection of Jim Murren himself. We see his beautiful artistic side with the whimsical design of the buildings, the public art adorned all over, and the "green" defining this entire project. However we also see Murren's darker corporate side with the construction death scandals, the now hot mess with the Dubai World financing, and the constant reminder that the era of "New Vegas", started 20 years ago when Steve Wynn opened The Mirage and brought the "Wall Street Raiders" to conquer Las Vegas, has come to a brutal end here as we contemplate how to move forward in a "New New Vegas" with a more sustainable, both environmentally sustainable AND economically sustainable, future.

I still hope for success with City Center. We need some success in Las Vegas for a change. I guess I'm now also hoping that this become a wake-up call to all of us that Las Vegas needs to change. "Old Vegas" left the building long ago with its mafia history and Old Hollywood glory, and "New Vegas" didn't quite work out as planned, fueled as it was by unsustainable real estate speculation and "construction begetting construction" that was long doomed to fail. Now the cynics and skeptics that always predict the fall and demise of Las Vegas have somehow always been proven wrong, as we somehow always adapt for survival and undergo a metamorphosis to ultimately thrive. But that's just it, we succeed when we change what's wrong and do what's right.

Las Vegas could have died when the luster of the new railroad wore off, but instead we legalized gambling and made marriage (and divorce) so damned easy that almosr anyone could do it. Las Vegas could have died when World War II ended and the military build-up eased off, but instead The Strip was born and Hollywood glamour transformed our once sleepy outpost in the Mojave Desert into the cutting edge of "cool". Las Vegas could have died when the mob was driven out of town by the feds and the gaming regulators, but instead Howard Hughes ushered in a new era of "corporate casinos" that led Kirk Kerkorian to build bigger and inspired Steve Wynn to build better. Las Vegas could have died with the post-9/11 tourist slump, but instead this town became the "it destination" that's now made us the most visited place on earth.

I really think Las Vegas is at another turning point today. And interestingly enough, City Center may lead us to our future. We will be reminded of Wall Street greed gone wrong, but also inspired by eco-friendly design done right. We will be horrified by the massive corporate debt loads and shady "wheelin-dealin'" enabled by the corporate right and conservative wet dreams of hyper-deregulation, but we will also be awestruck by the moving public art that will encourage us to let our imagination run wild and free.

City Center now embodies Las Vegas. It tells the story of our past, warts and "beauty marks" and liposuctions and facelifts and triple bypass operations and all. It reflects our present, a jarring contrast of celebrity panache and inglorious economic collapse. It shows the way to our future, hopefully one that includes living in concert with Mother Nature and building a stronger community with a sound economy.

So let City Center open and start a new chapter in the great Las Vegas story.


And now, I'll move onto something I wrote this month when I was a little miffed at MGM Mirage CEO Jim Murren "dissing" us Vegas locals.


Jim Murren is now in the hot seat over City Center. It's just starting to open up, and people are starting to wonder what will be next for MGM Mirage's big bet.

Will it fail?

Will it succeed?

What happens now to Las Vegas?

We'll all soon be finding out in the coming days, weeks, and months. In the mean time, a mini-scandal is emerging over what Murren said in the last video clip above. Steve Friess first caught this in the transcript of last night's "Face to Face", when Jon Ralston asked Jim Murren about what he had earlier told Friess for his LA Weekly write-up on City Center.

Here's the original clip from LA Weekly:

I’ve never been in Encore, when did it open up? I’ve never been into Palazzo. It’s not that I don’t care, I just don’t need to go. But I do know – I have nothing against either one of those guys, especially Steve Wynn, I like him a lot. But [CityCenter] is not going to be, for most people, the same as just another resort opening up. I know it won’t.

And in case you haven't yet started uploading that second video, here's how Murren made it worse.

"I live in Summerlin. I have a great community. I coach my kids. I have a lot of restaurants out there. If I didn't work in the resort community, I probably wouldn't come down here much. That was my point. That is my point as a counterpoint to CityCenter. I really believe it is not a casino-hotel. I really would not be upset at all if people never visit Aria that live here. ... ." [Emphasis mine.]

Donde los yikes??!! Does Jim Murren really want to kick sand in the locals' faces? And worse yet, does he really want to hand over all these potential customers to Boyd Gaming and Station Casinos on a silver platter? Many of my neighbors already complain all the time about how expensive everything on The Strip is, how much traffic always plagues The Strip, and how snooty all those fancy-schmancy hotels on The Strip are. By Jim Murren adding to "the snooty factor", how will he ever get my neighbors out of Green Valley Ranch, Sam's Town, or The M to venture to The Strip to see City Center?

I guess if he's really not all that upset if locals never visit Aria, Tony Marnell will really appreciate keeping more local business at The M.

But really, this is just one of the many concerns MGM Mirage should still have about City Center. I toured Crystals with my dad last weekend after I gave him an intimate "birthday celebration" at Aureole at Mandalay Bay. (By the way, I'm obviously NOT one of those Strip-hating locals!)

Now let me say that I just LOVE the design of this place! It's very "eco-chic", and I'm digging it. However, my dad wasn't...

That is, he wasn't finding Crystals all that attractive. For one, not all the stores are open yet. Furthermore, most of the ones that are open have already set foot in Southern California (where Dad still lives), in exclusive "shopping resorts" there like Orange County's South Coast Plaza and LA/Beverly Hills' Rodeo Drive. So not only might Jim Murren have a problem with Vegas locals, but he may also have trouble finding Californians to jump up the 15 to see something that they think they've already seen in LA and OC.

So what's his plan to lure in travelers who aren't all that into postmodern architecture and/or high-end designer label shopping? Does he have one?

I hope he does... And he thinks of one fast. I really think City Center can be a huge success, but only if it actually entices people to come and spend money in it.

And guess what? This means making it easy to move around City Center. This means making gamblers feel comfortable gambling in Aria. This means not alienating locals and SoCal weekenders. Oh yeah, and this means keeping up with the competition! I'll let Steve Friess explain that last bit some more.

Whoa, whoa, WHOA! [City Center President Bobby] Baldwin said Aria's casino is the economic engine of the whole she-bang and Murren knows that. But Murren doesn't even care if his neighbors ever see it and, if he didn't have to because he gets millions to do so, he might never bother either! This is not a ringing endorsement of the most significant financial element of your new endeavor, is it?

So let's remove Aria from CityCenter. Without it, you're left with four buildings containing private residences, two of which are also hotels that contain no shows or casinos. And you have a 500,000-square-foot "retail and entertainment district" with some of the most expensive products anyone can sell anywhere in the world, not exactly a locals-friendly shopping experience. Plus a whole lot of terrific art and an oft-mentioned pocket park that Murren recommends as a neat place to sit even though there's no place (yet) to sit. [...]

Again, there are lots of elements of CityCenter I love. But it is worrisome when a massive gaming company is being piloted by someone who isn't personally aware of his competition and seems so personally uncomfortable with the heart of his business.

Again, don't get me wrong, City Center is a great concept. I'm even liking the new ad campaign for Aria.

I just think MGM Mirage needs to remember that this needs to offer great products, great comfort, and great service for this to be a real success.


And I'll finish with this piece from November, when I shocked y'all here with my "commie lovin' socialist pinko!" self agreeing with Steve Wynn and Sheldon Adelson on something: Viva Las Vegas! :-D


Well, we have some bad news and some good news. First, the bad: MGM Mirage's bottom line REALLY bled red last quarter. The good news? They're looking at a better 4th Quarter so far.

With its CityCenter resort set to open, MGM Mirage today reported a loss for the third quarter as revenue fell on the Las Vegas Strip -- but also said its results are improving in the fourth quarter.

"We continue to show sequential improvement in our operating results over the course of 2009,'' Chairman and Chief Executive Jim Murren said in a statement.

MGM Mirage lost $750.4 million, or $1.70 per share in the third quarter vs. a profit in the year-ago quarter of $61.3 million or 22 cents per share. Net revenue of $1.533 billion was down from $1.785 billion.

The results include previously announced noncash accounting charges against earnings of $1.17 billion. These include a $956 impairment charge for the company's investment in CityCenter and $203 million to write down the value of condominiums under development there.

Yikes! Those are some serious losses. So why the hell is Jim Murren still so upbeat? MSNBC (via Stiffs & Georges) provided some answers earlier this week.

[Union Gaming Group analyst Bill] Lerner and others also predict a rebound in visitation of up to 5 percent next year as people check out CityCenter, take advantage of the ongoing bargains and begin to feel better about their own financial situation. International visitation is also increasing, says Jicinsky, and now accounts for about 15 percent of the total. (Last week, British Airways started daily, non-stop service from Heathrow; next May, XL Airways will start twice-weekly charter service from Paris.)

All of which bodes well for both CityCenter and Las Vegas and, perhaps, for travel in general. “We’re a good microcosm of the broader business community,” says Murren. “The next six months are going to be muted, but business travel and consumer activity are going to improve, particularly by April or May of next year.”

And so far, even Murren's cross-Strip rivals are cautiously optimistic about City Center's ultimate success.

"We hope it grows the market," said Steve Wynn, chief executive at Wynn Resorts Ltd (WYNN.O). "But so far, the talk has been about its problems, instead of about what an incredible, unusual place it will be." [...]

Rival Las Vegas Sands Corp (LVS.N) is also rooting for MGM. "It think it will succeed," said Sands CEO Sheldon Adelson. "If it doesn't, they will lower the room rates and that will affect everyone."

Wynn said he is unable to predict 2010 hotel rates "with any degree of confidence," given the wide number of market variables related to CityCenter and the general economy.

I guess this is one of those rare times when I'll agree with both Steve Wynn AND Sheldon Adelson! I may be perceived as some "crazy extreme left socialist", but in reality I'm also rooting for MGM Mirage and City Center right now. I really do hope they ultimately succeed.

And so far, there's good reason to hope. The worst of "The Great Recession" is over, and once unemployment turns around more people will have more money to spend on such discretionary items as trips to Vegas.

Still, everything isn't coming up roses just yet. Again, unemployment is still high and even a lot of people with jobs are focusing on saving money right now just to stay on top of the bills. Unfortunately for the big casinos (but good for savvy travelers!), room rates are likely to remain in the bargain basement just to lure all those tourists here to see the shiny new Vegas attraction next to what was our shiny new attraction 11 years ago.

So don't fret too much, Las Vegas will very much survive the rest of this recession and ultimately recover. Just don't expect a return to 2000 or 2005 hey days so quickly. There may be some bumps along the way, but City Center will bring in the tourists and Sin City will go on.

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