MGM mulling Las Vegas Cosmopolitan deal

Feb 24, 2009 5:02 PM
Gaming Insider by Phil Hevener |

A proposal that would give MGM MIRAGE the unfinished Cosmopolitan on the Las Vegas Strip and the financing it needs to complete its adjacent CityCenter has recently been under consideration.

The deal would also have MGM giving up one of its Strip giants – perhaps Mandalay Bay or The Mirage. An agreement, if it happens, would have to be announced immediately, probably within the next few days since MGM is a public company.

On the other hand, it may suffer the same fate as other examples of this let’s-make-a-deal approach to big thinking, something that sounds interesting over lunch but collapses on closer inspection.

MGM bosses were said to be carefully considering the proposal and its possible consequences during the last few days. A decision one way or the other was expected early this week.

The Cosmo, which was conceived almost five years ago has been moving slowly, very slowly toward completion, perhaps by next spring.

Cosmo developers began discussing their grand plans nearly five years ago in early 2004. It was described then as a $1.5 billion venture.

The figure has spiraled steadily upward. Developer Ian Bruce Eichner was saying at the time of the October 2005 groundbreaking that he envisioned "something different … the likes of which Las Vegas had never seen before."

What it has grown into is an all too familiar example of a half-finished project in need of sound thinking … and money.

What are the arguments for letting either The Mirage or Mandalay go?

Mandalay currently has a heavy orientation toward conventions, a Strip business niche that is expected to be slow for at least the next several years. Also, Mandalay is some distance removed from the expected future heart of MGM operations on the Strip at the CityCenter and Bellagio complex.

As for The Mirage, some of the same thinking applies with respect to its distance from CityCenter. Also, the pending purchase of Treasure Island by Phil Ruffin means there is a lot of unwinding of various systems that will be necessary as the TI passes into the hands of a new owner.

Why not let another owner do the unwinding?

One thing this plan does is illustrate MGM’s strength and flexibility for finding answers to its needs even as its earnings remain under heavy pressure.

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