MGM Mirage Scales Back on City Center Project
MGM Mirage is scaling back its massive City Center project under construction on the Las Vegas Strip as part of its emerging strategy to cut costs, raise cash and sharpen focus.
The gambling giant said it will delay the opening of the 400-room Harmon Hotel & Spa by one year until 2010 and cancel 200 residential units it planned to build there.
The changes will shave $200 million from City Center's cost. The company had previously announced that design changes to the project would save $400 million, reducing the total budget to $8.6 billion from $9.2 billion.
MGM Mirage owns City Center with Infinity World Development Corp., a subsidiary of Dubai World, a major investment arm of the Persian Gulf state of Dubai.
The companies said the rest of City Center -- which includes a 4,000-room hotel and casino, a Mandarin Oriental hotel, two condo towers, a condo-hotel and a retail complex -- will open as planned in late 2009.
For more than a year, Las Vegas has struggled with declining profits as consumer spending has plunged and the number of visitors has declined.
Casino companies have laid off thousands and scrambled to cut costs to be able to pay down billions in debt they took on to build gambling palaces when demand was soaring. Analysts and casino operators have said they expect 2009 to be another difficult year.
Last month, MGM Mirage agreed to sell its Treasure Island casino and hotel to Kansas billionaire Phil Ruffin Sr. for $775 million.
Tamara Audi, Wall Street Journal
