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April 25, 2019

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MGM’s Murren unwavering in defense of CityCenter

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Jim Murren

Audio Clip

  • Jim Murren, MGM Mirage chairman and chief executive, on how a shortfall in CityCenter financing led to the partners putting in more cash.

Audio Clip

  • Murren describes how the budget for CityCenter fell from more than $9.2 billion to $8.5 billion.

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  • Murren explains why MGM Mirage still has bullish prospects for CityCenter.

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  • Murren on why property sales aren’t necessarily going to solve the company’s financial woes.

Cosmopolitan/CityCenter (6-3-2009)

The CityCenter project on the Las Vegas Strip. Launch slideshow »

After engineering last week’s rescue of CityCenter from the brink of bankruptcy, the urban planning major who created the concept for the resort complex — and has shouldered the blame for the way it has imperiled MGM Mirage — defended the company’s investment in the $8.5 billion project.

MGM Mirage CEO Jim Murren said in an interview that CityCenter’s critics, including competitors, “just don’t get it” and will be proven wrong when it attracts new visitors to Las Vegas.

MGM Mirage would be more secure had it taken a safer route, building, say, a hotel tower addition or a single gaming resort. Many investors and other MGM Mirage stakeholders, including local residents whose livelihoods are tied to the company, feel betrayed by its sorry fortunes.

Although few would expect Murren to join those calling CityCenter a financial albatross, fewer would have expected him, in announcing a financial guarantee to complete the project, to come out swinging.

“We didn’t get here at MGM Mirage because we were bought out and investors made a bucketful of money,” he said. “We got here because we had a vision for Las Vegas that included a never-before-attempted type of development. We were building the largest development project in the United States right in the middle of skyrocketing construction costs, which no one envisioned, and then during a severe recession, which nobody predicted.”

Murren doesn’t believe Las Vegas’ “build it and they will come” business model is dead. At least not as it applies to CityCenter, which will fight for business alongside resorts offering half-price rooms when it opens this year.

“You have to differentiate between capacity that’s going to bring people to our community and capacity that’s going to absorb existing tourists,” Murren said. “The consumer here is extraordinarily spoiled and we love that. They want something that they haven’t seen before, they want something different, and they’re not going to come if it’s just more of the same.”

Murren, who began his career as a Wall Street analyst after graduating from Trinity College, where he studied art history and urban planning, remembers analysts who lost their jobs for incorrectly predicting the downfall of Las Vegas resorts, including the expensive Mirage in 1989, the cluster of new properties that opened in the early 1990s and another boom in the late 1990s.

Even in hindsight those predictions seem logical. It was Las Vegas and its development-fueled growth that seemed to defy logic.

“We’re all getting weary of stories around the world about the demise of our town,” Murren said. “I think the people who are counting us out as a community are going to be wrong.”

Murren doesn’t think CityCenter will open in the same economy Las Vegas finds itself in today. He cites scattered bright spots on the Strip, including Saturday’s sold-out Hatton-Pacquiao fight and improved booking trends at some properties.

Anecdotally, some casinos have indicated that April rebounded somewhat from a depressed January through March.

Like many pundits, Murren predicts improvement in 2010, adding he expects visitor traffic in Las Vegas to rise by 4 or 5 percent next year. CityCenter will end up “catching the upswing in the global economy and the U.S. economy,” he said.

Consumed by a recession, Las Vegas still can’t escape the fact that new attractions are needed for some visitors to return. Las Vegas, for better or worse, needs momentum.

“We could have easily sat back ... and said, ‘That’s enough for now’ and maintained our buildings. But what would that have done? What would we be anticipating in 2010? A hoped-for global recovery that all ships rise with the tide? That’s not a very good story.”

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