|By Richard N. Velotta, Las Vegas
SunMcClatchy-Tribune Regional News
May 03, 2013--MGM Resorts International reported its best quarter in five years Thursday.
Chairman and CEO Jim Murren reflected on the financial turnaround and looked ahead to MGM's next big task: developing an outdoor dining, retail and recreation plaza between New York-New York and the Monte Carlo.
When will the public begin seeing construction on the new park and arena planned near New York-New York?
I'm particularly excited about this. The preparation of the site is already underway on both the facades of the New York-New York and the Monte Carlo. The public won't be able to see some of that right away, but it will progress throughout this year.
The major tenants will open up in the first quarter. We'll have Hershey's over at New York-New York. Over at Monte Carlo, the SBE Double Barrel Roadhouse will also be open. Then, you move into the park itself. I'm particularly engaged in that. It's important to me and to the Strip, so we want to get this right from the standpoint of a public space.
We'll have a big anchor there, Shake Shack. You can't get into a Shake Shack anywhere in the country. It'll be a big hit.
Other elements will be on the north facade of New York-New York, including a brewpub that opens up New York-New York to this park. That will progress into 2014, and we'll move into the arena (a 20,000-seat arena) in 2016.
What's the connection with SBE?
That's the Hyde group we work with at Bellagio. It's also the company that has dozens of nightclubs and restaurants in the Southern California market. They also opened the SLS in South Beach, and they're the owner and developer of the old Sahara hotel here. That's the partner we're going to have for that Double Barrel Roadhouse we'll have at the Monte Carlo.
MGM Resorts had record earnings this quarter, and you said, "It's the beginning of a new era for MGM." But the gaming industry is telling state lawmakers that it's in terrible shape and can't afford higher taxes. How do you reconcile the two?
I don't think there's any inconsistency there.
Our stock used to be $100 a share, and that was only four years ago. We used to make more than $2 billion in cash flow in this market alone, and we're down profoundly from that. It's a hole that was so incredibly deep, most people didn't think anyone would be able to claw its way out of it. We laid off thousands of people. It was the most punishing, damaging, demoralizing, painful time of Las Vegas' history and certainly mine.
We have started to improve. We had a better-than-expected first quarter, but we were only marginally profitable. We made just a penny a share.
What we always have to think about, particularly in Las Vegas, is that we are extraordinarily dependent on national and international economies -- more than we've ever been before in the history of this town. It's a place where gamblers would come, and it was more recession resistant. We've learned the hard way how dependent we are on the economy.
I don't know exactly what Mr. (Steve) Wynn said when he visited with lawmakers, but I can say it has been tough in every segment. Circus Circus used to make $80 million to $90 million a year in cash flow, and it will be lucky to make $25 million this year. MGM Grand made over $400 million a few years ago; it'll maybe make half that. Bellagio made $450 million, and we won't come anywhere close to that -- and it's our best property in the market. Aria, at CityCenter, with billions of dollars invested, has only recently begun posting strong results.
I think that we have to be very clear on what is going on in this state and how vulnerable we are to slowdowns and how fragile the recovery has been to this point. All we were trying to convey as a barometer of what's happening in the state is that things are getting better, slowly.
What's happening with MGM's interactive gaming strategy?
We have been working closely with our partners, bWin Party and Boyd Gaming. We were one of the early entrants into the licensing process in our state. We are working with our partners in every state that is contemplating online gaming at this time.
We have been working on our software systems, our hardware systems and our marketing. We have people in our company dedicated solely to that effort. They're coordinating with our partners.
We have not yet determined when the roll-out date would be.
Did you see the roll out of Station Casinos' online poker website this week?
I did read about it.
We have high regard for individuals in the company at Station and UFC. They're strong partners with us from the UFC perspective, and that's a very strong brand.
We contemplated when we were crafting the deal with bWin Party and Boyd that a federal solution was not a certainty, and that is why the partnership contemplates operation federally or on a state-by-state basis.
Is there still a possibility of federal legislation? I think there is. We're all disappointed that it hasn't occurred already but the federal government has begun to recognize that if they do nothing and sit on the sidelines, they'll watch states roll out online gaming in a variety of forms.
Will you be at the Mayweather-Guerrero fight this weekend?
I'm not going because my wife has summoned me back east to her university for a fundraiser. But I will be very focused on my iPhone as I'm getting minute-by-minute updates.
We're proud that Floyd Mayweather has fought nowhere but at MGM through his career. I think it's going to be a great fight.
I'll be back next week for the Rolling Stones concert. I would not miss that.
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