After years of running MGM Grand Detroit in a renovated downtown building that once housed the IRS, MGM Mirage executives are tired of calling casinos temporary properties.
"We started calling it our 'temporary' facility," MGM Mirage President Jim Murren said on Monday. "It seemed a little more fitting."
MGM Mirage acquired MGM Grand Detroit, worth $800 million, this morning, eight years after opening Detroit's first venture, doubling the size of its casino, adding hotel rooms and providing amenities the company could not provide.
Merren is unfazed by the praise for the resort, one of three casinos operating in Detroit.
"In Atlantic City, this facility is going to give the Borgata a chance to make money. In Streep, it's going to be a very relevant property," said Merren. "In Detroit, it's another galaxy in the competition sector."
MGM Mirage has done well in Detroit even with temporary facilities.
Through August, MGM Grand Detroit reported adjusted earnings of a total of $329.8 million, outpacing Motor City and the Greektown Casino, according to the Michigan Game Control Board. For the first six months of 2007, MGM Mirage said the casino represented about 5 percent of the company's overall financial situation.
Merren said the company does not provide investors with projections, but it is safe to say MGM Grand Detroit will be a much larger piece of MGM Mirage pie.
The casino will grow to 100,000 square feet with 98 table games (up from 72) and 4,500 slot machines (as opposed to 2,840 in the middle casino). The 18-story hotel tower will house 400 rooms. The former casino did not have a hotel. The new building will offer a variety of dining options, including two restaurants run by celebrity chef Michael Mina and one run by Wolfgang Puck. MGM Grand Detroit will also offer several entertainment options, a lounge, and 20,000 square feet of spa.
Also, MGM Mirage's game tax rate will fall from 26% to 21% due to the size of the casino.
"Our middle-of-the-road properties had some limitations," Merren said. "While we had good earnings and cash flow, I think we're going to actually do better because of all the options we can offer. We're taking all the real estate owners into our rooms because we're proud of what we've done with them."
The property is the first new resort built by the gaming company in nearly a decade. MGM Mirage has grown over the past few years through acquisitions, notably the $6.4 billion acquisition of Mirage Resorts in 2000 and the $7.9 billion acquisition of Mandalay Resorts Group in 2005.
Also, MGM Grand is a brand that the company plans on using for other businesses around the world, both in gaming and non-gaming. MGM Mirage has licensed the brand to the Mashantucket Pquot Tribal Nation in Connecticut, which is building MGM Grand Foxwoods in addition to Foxwoods Resort.
MGM Mirage is expected to open its $1.1 billion MGM Grand Macau in December. "It's a brand that translates well into many languages, and we're a brand that intends to market aggressively worldwide," said Merren.
MGM Mirage announced the Detroit resort's opening date for August, but plans came close to being scuttled by the Michigan budget crisis. On Friday, a judge ruled that Detroit's three casinos would remain operational even if the state shutdown was enforced and government-paid game supervisors overseeing casino operations were removed. A year ago, a New Jersey budget agreement shut down casinos in Atlantic City for several days.
"When Atlantic City casinos were forced to close, the effect was felt before and after the actual closure because customers weren't sure of the timing," Deutsche Bank game analyst Bill Runner said on Monday.
Game analysts have been optimistic about MGM Mirage's prospects for months, especially because of two joint venture deals with the Persian Gulf state's holding company Dubai World. The deal has brought new capital inflows to casino operators.
Bear Stearns gaming analyst Joe Gref on Monday offered MGM Mirage shares $109 per share, 22% above last week's close. 안전한 파워볼사이트
The old MGM Grand was closed Sunday to allow employees and companies to be relocated to new facilities. MGM Mirage increased the casino's workforce to 3,000, making the company one of Detroit's top 15 employers.