|By Howard Stutz, Las Vegas
Review-JournalMcClatchy-Tribune Regional News
Apr. 15, 2008 - MGM Mirage, the Strip's largest casino operator, is laying off some 440 management employees at both the property and corporate levels, a response to the souring national economy but also part of a corporate belt-tightening program begun last year.
MGM Mirage President and COO Jim Murren said Monday that management and supervisory level staff reductions were part of a process that will save MGM Mirage about $75 million annually. Most of the local workers were told of the cutbacks Monday.
The employee reductions were company-wide but the bulk of layoffs took place in Las Vegas where MGM Mirage operates 10 Strip resorts and is building the massive $8.4 billion CityCenter development. MGM Mirage also operates casinos in Michigan and Mississippi.
"This is part of a company-wide program that we actually began in September," Murren said. "The fact of the matter is that our business, week to week, is improving. This was something, irrespective of the economy, that we needed to do."
In February, MGM Mirage said it reduced the job hours or laid off roughly 150 employees at Circus Circus. The company was one of several casino operators that took steps to reduce hours or cut back its casino work force at the time.
MGM Mirage employs close to 66,000 workers nationally. Murren said the company also cut back on contracts with outside consultants and vendors, such as for advertising, that saved significant dollars.
"The management cutbacks were less than one-third of the total savings," Murren said. "We recognized late last year that this was something we had to do."
Murren understands that many analysts will equate the job cuts with the economy.
"There is a parallel path occurring, but we need to stay ahead," Murren said.
Last week, the Gaming Control Board reported that gaming revenues in February fell almost 4 percent statewide and more than 3 percent on the Strip.
Meanwhile, the stock prices of the major gambling companies have fallen, some as much as 20 percent, since January.
Falling stock prices and gambling revenues are viewed as signs the slowing economy is affecting the Strip, once viewed as impervious to outside financial concerns.
"Trends are weakening and it is still not clear whether this is already in the stock prices," Goldman Sachs gaming analyst Steven Kent said last week in a note to investors. "The combination of full valuation and estimates going lower would suggest at best the stocks may be listless and more likely that they will consolidate here or move lower before potentially moving higher once all the bad news is in the stock prices."
On the Strip, average daily room rates are down as much as 19 percent from a year ago. In a report to investors on Monday, Bear Stearns gaming analyst Joe Greff, who surveyed most of the major Strip resorts for room prices, said any near term recovery is not on the horizon.
"The results of the survey reflect the impact of a slowing economy on travel to and spending on the Strip," Greff said in a note to investors. "When it stops is tough to forecast with any great precision, though we think this continues through the summer."
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