Vegas is mad as hell and not gonna take it anymore.
After President Obama quipped that companies accepting taxpayer bailouts shouldn’t go to Las Vegas, the city responded with a collective, “What are we, chopped liver?” Mayor Oscar Goodman wrote the President a letter asking him to “rectify what I consider a wrong…I haven’t heard back from him yet.”
As if things weren’t bad enough in Sin City. Casino revenues for December were 23 percent below a year ago. Citigroup says room rates are diving—you can get a room during the week at Circus Circus for $25. Convention business is going elsewhere to avoid the “stigma” of a Las Vegas “junket”, even if it costs more to stay in another city, and even if it means paying a huge cancellation fee. Harrah’s convention business is off 30 percent at its Strip properties. The Convention and Visitors Bureau says the town has already suffered $20 million in cancellations this year.
Is it the end of the world? No. People are still coming to Las Vegas. And while this is a one-industry town, Alan Feldman of MGM Mirage says—in a dig at Detroit—“We don’t suffer here from having products that people don’t want.” But like Detroit, it is possible that MGM Mirage could ask for help. Its $9 billion CityCenter project is slated to open later this year, but MGM Mirage and its partner, Dubai World, have yet to find the final $1.2 billion in financing. Negotiations with Deutsch Bank, which bought an adjacent property out of bankruptcy, haven’t come to a successful solution, and MGM Mirage is delaying its 10-K. The company says it may violate some debt covenants, and it’s assessing its liquidity needs.
You could argue that CityCenter is too big to fail.
The mayor calls it the focal point of Las Vegas. It is a series of massive high rises right smack dab in the middle of the Strip. “We cannot afford to have these ghost-like buildings out there that don’t have lights on 24 hours a day,” he told me.
When I asked Alan Feldman if there might be stimulus money available, he laughed and suggested I go to Washington and ask on his behalf. “I’d like to hear that conversation.” On the other hand, he points out that while the federal government is looking for “shovel ready” projects, he’s got one with shovels already in the ground, which employs 10,000 people currently and another 14,000 in the future. “If you want to talk about stimulus money going to something that’s going to create jobs,” Feldman says. “If it came to the point where City Center needed it, what better project could you find?”
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