MGM angles for dominance in Detroit

August 06, 2002 8:43 AM
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Landing a new location and a new license, MGM Grand is ready to take Detroit gaming to the next level.

In a bit of last-minute theater, MGM nailed down the old Detroit Edison site just north of its current temporary casino on the east side of the Lodge Freeway. The move gives MGM better access and improved visibility downtown.

"We love the site,’’ said MGM Grand Resorts President John Redmond. "The Edison site has better pedestrian access, better visibility and connectivity to the city.’’

MGM had considered re-locating to the site of a former state office complex. But, in the final analysis, the company opted for the Edison location. "We think it’s a superior site to the state plaza,’’ Redmond said, noting that it’s near the junction of the Lodge Freeway and Interstate 75, a few blocks from the old Tiger Stadium.

Winning city council approval for the move, MGM Grand will erect its first hotel and expand its casino. Executives said they will submit construction plans within 120 days. The project’s pricetag is pegged at about $500 million.

Two competitors ”” Greektown and MotorCity ”” also got the green light to expand near their existing locales. All three are planning 400-room hotels. And all expect to be completed prior to 2006, when Detroit hosts the Super Bowl.

The MGM-Mirage property figures to be the first among equals. The Detroit Free Press’ rating of the three temporary gambling halls praised MGM’s "frequent imaginative casino promotions."

"The facility is spacious and appealing; of the three temporary casinos, it has the most expansive, opulent, brightest and least claustrophobic feel,’’ the Free Press stated. Redmond and Co. want to hold that advantage at MGM’s new digs.

MGM’s Detroit casino is one of MGM Mirage’s most profitable. Even without a hotel, it supplied about 10 percent of the company’s revenues and 14 percent of its operating earnings during the first quarter of 2002.

But observers note that because of the last-minute site decision, MGM’s rivals have a head start. MotorCity announced that it will begin construction this fall near its current site northwest of downtown. Greektown, which is moving closer to Comerica Park, plans to break ground by late spring.

The casinos’ deal with Detroit, approved Friday, means a big payday for the city. Over the next 30 years, gamers have agreed to funnel nearly $2 billion into municipal recreation programs and facilities.

All told, the casinos are expected to bring in much more than the $100 million in wagering tax revenue now generated from the estimated $1.1 billion in gross revenue annually.