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FTC nudges MGM into early notice

Nov 23, 2004 4:53 AM

The timing of MGM Mirage’s announcement to build a high-rise cluster of hotels and residence towers may have been influenced by the Federal Trade Commission’s continuing review of MGM’s bid for Mandalay Resorts.

A well-connected source believes FTC questions about the impact of the merger on long-term job prospects may have inspired MGM to make its "CityCenter" announcement now as opposed to much later.

MGM officials say the timing was just the way things fell. Months of preliminary study had been completed and the plan approved by the MGM board.

Nevertheless, the timing had some industry watchers scratching their heads, coming as it did, at a time when the impact of combining MGM Mirage with Mandalay Resorts to create a bigger than ever conglomerate is being carefully studied.

Mergers or take-overs of this size typically result in the loss of a certain number of jobs, as functions are combined, streamlined or otherwise reshaped to optimize anticipated efficiencies.

This is not rocket science; it is simply the way these things work. So what does MGM Mirage have in mind for growing the local job market?

We know more about that now that they’ve announced CityCenter.

That’s an issue regulatory authorities were bound to address as the merger’s impact on the Las Vegas Strip corridor is evaluated.

Why else would MGM Mirage choose a moment like this to outline a plan for additional rooms and amenities that won’t see customers for another six years or so?

MGM Mirage’s announcement also signals — though not overtly — that it is preparing to sell some of its high-profile Las Vegas properties. Insiders report that the long-term project provides additional reasons for believing MGM Mirage may eventually accept offers for one or more of its existing properties, probably The Mirage and Treasure Island.

Rumor has it that Harrah’s Entertainment would jump at the chance to acquire these two properties as a nice complement to its proposed Caesars acquistion. Additionally, there is good reason to believe MGM would like to keep enough room under an "impact cap" to acquire other real estate.

Is Jack Binion back?

Let’s suppose there’s validity to the rumor that Jack Binion wants to climb back into the casino business.

He can do this somewhere along the Las Vegas Strip, unless the terms of his non-compete agreement with Harrah’s have been radically altered during recent months.

His best bet is he may become a joint venture partner in whatever Boyd Gaming decides to do with the 60 acres on which the aging Stardust is located across the Las Vegas Strip from Wynn Las Vegas.

Binion is a long-time, good buddy of Michael Gaughan, who heads the Coast Casinos operation that was absorbed into Boyd earlier this year.

It’s also safe to assume that Binion, something of a consummate diplomat, has forged a good working relationship with various Boyd operators during the years he operated the Horseshoe on Fremont Street.

Binion, I’m told, could invest up to a billion dollars in a new project, under terms of the non-compete restrictions, although he’s barred from using the Horseshoe or Binion labels on another gambling hall.

But the name’s not that important. He’s still got the kind of reputation that makes a world of difference.

We’ll see what happens after the winter ski season, which Binion plans to enjoy in earnest.

Harrah’s wants ruling

Harrah’s Entertainment wants New Jersey casino regulators to decide whether its planned purchase of Caesars Entertainment will consolidate too much power in the hands of one company.

But it is very unlikely members of the Casino Control Commission there will even look at the issue until the FTC has signed off on this blockbuster merger.

Still, you can’t fault Harrah’s for asking. The extent to which Harrah’s may be seen as dominating this East Coast market is a very real issue there.

Harrah’s may be seen as dominating Atlantic City the same way MGM may be seen as dominating Las Vegas.

This presupposes both mergers are eventually approved in their present form.