MGM out

Mar 30, 2010 7:07 AM

MGM MIRAGE’s (MGM) Atlantic City exit agreement could have been worse, a lot worse.

Yes, the company must sell its half of the Borgata, Atlantic City’s most profitable resort, but it can make very good use of that cash, paying down debt. And MGM can re-apply in New Jersey 30 months after the sale of its half interest, probably to Borgata partner Boyd Gaming.

But contemplating an eventual return to South Jersey is probably way down on the company’s list of things to get stressed about.

Even without the Pansy Ho controversy, there is no way MGM would have had an appetite for launching its own Atlantic City project in the next several years. CityCenter will be getting most of its attention for a while. So will Macau and the rest of Asia.

The shape of the world has changed dramatically since MGM first talked about all it expected to accomplish on land near the Borgata. It will probably take several years for any company with the ability or desire to invest a billion dollars or so to assess the domestic casino industry’s changing landscape in the Northeast and come to whatever conclusions seem logical.

The creation of new gaming jurisdictions and the evolution of existing ones is a process that unfolds over time and the fate of efforts to get Revel completed and open will say a lot about what does or does not occur in Atlantic City.

MGM MIRAGE would almost certainly have earned a favorable response from the Casino Control Commission, which was ready to have a hearing on the DGE’s recommendation that MGM be forced to choose between Atlantic City and its Macau partnership with the daughter of the eternally controversial Stanley Ho.

Let’s see now, Atlantic City or Macau … Hmmmmm, that decision probably took all of several seconds. MGM went with the money, as any public company would and the Division got to take a stand on its shaky platform of principles, a stand that cost the area millions in tax revenues, thousands of jobs and the presence of one of gaming’s best-known brands.

The DGE’s obsession with beating up on Pansy Ho has had the effect of offering MGM cover for making a withdrawal from New Jersey, taking the several hundred million it will net from the Borgata, putting it to good use elsewhere and maybe coming back to New Jersey in a few years, assuming there is the scent of opportunity and the regulatory tone is right.