CASINO COMPANY EARNINGS: MGM exec takes swipe at NBA - Business

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May. 04, 2007
Copyright © Las Vegas Review-Journal

CASINO COMPANY EARNINGS: MGM exec takes swipe at NBA

Casino giant says Strip business down, blames All-Star festivities

By HOWARD STUTZ
REVIEW-JOURNAL

$1.63 BILLION
MGM MIRAGE REVENUE FOR FIRST QUARTER

$1.57 BILLION
REVENUE FOR THE SAME QUARTER LAST YEAR

$168.2 MILLION
MGM MIRAGE NET INCOME FOR FIRST QUARTER

$144 MILLION
NET INCOME FOR THE SAME QUARTER LAST YEAR

Visitors look at floor layouts of residences at the sales office for MGM Mirage's $7.4 billion Project CityCenter on Wednesday.
Photo by John Gurzinski.

The model of MGM Mirage's $7.4 billion Project CityCenter is shown on Wednesday. Four developments with a combined 2,700 units are being offered.
Photo by John Gurzinski.

MGM Mirage executives used the company's Thursday morning quarterly earnings conference call to deliver a broadside on Las Vegas' hosting of the NBA All-Star Game in February.

MGM Mirage Chairman Terry Lanni said fans attending the game and subsequent All-Star related events did little gambling during the four-day weekend, Feb. 16-19, disrupted regular hotel and casino operations and kept other customers from venturing into the company's 10 Strip resorts.

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"They came for purposes other than attending the game and they weren't very good for Las Vegas," Lanni said. MGM Mirage operates such properties as Bellagio, MGM Grand, The Mirage, Treasure Island and Mandalay Bay.

In a subsequent interview with The Associated Press, Lanni referred to the NBA fans as "gang-bangers."

"On the day of the game itself, we had very little drop (gambling revenues) and in talking to our casino hosts, a number of people stayed in their villas and suites. They felt uncomfortable," Lanni said.

Both Lanni and MGM Mirage President Jim Murren made their views known to NBA Commissioner David Stern during the conference call. Murren said Stern could "keep his All-Star Game out of Las Vegas."

Overall, the Strip's gaming win climbed a modest 4.3 percent in February, and gaming analysts blamed the lack of gambling by fans of the All-Star Game for the lower-than-expected increase.

"We think the disruptiveness of the NBA All-Star Weekend did have a tangible negative effect on gaming revenues during the important Chinese New Year and Presidents Day weekend," Bear Stearns gaming analyst Joe Greff said in an investors note.

While the company's Strip gaming revenues took a slight hit, overall Strip revenues for MGM Mirage climbed to $1.63 billion, compared with $1.57 billion last year. MGM Mirage said its revenues benefited from higher-than-average Strip room prices and the continued impact of new restaurants, nightclubs and shows at several company properties.

The casino operator said its net income climbed 17 percent during the three-month period that ended March 31, thanks mostly to the reopened Beau Rivage casino in Biloxi, Miss., which was shut down for a year after suffering heavy damages from Hurricane Katrina in August 2005.

MGM Mirage's net income was $168.2 million, or 57 cents per share, compared with $144 million, or 49 cents, a share last year.

Analysts polled by Thomson First Call expected earnings of 63 cents per share, and the shortfall did not please investors. Shares of the company tumbled $2.94, or 4.3 percent, in trading on the New York Stock Exchange to close at $65.38.

The return of MGM Mirage to the hurricane-ravaged Gulf Coast paid dividends during the company's first quarter. Revenues in Mississippi, primarily from Beau Rivage, the state's largest casino, surged to $142.5 million, compared with $40.9 million a year ago. MGM Mirage also operates a riverboat casino in Tunica, Miss.

MGM Mirage's revenue for the quarter was $1.93 billion, a 9 percent increase compared with $1.77 billion in the first quarter of 2006. Without Beau Rivage, the company's net revenues would have increased only 3 percent. Company gaming revenues grew 4 percent in the quarter, but without Beau Rivage's contribution, overall gaming revenues would have decreased 6 percent.

"MGM Mirage's first quarter results fell below expectations, though management did not issue specific guidance," Deutsche Bank gaming analyst Bill Lerner said. "Gaming results were soft but have improved, while nongaming revenues were impressive and remain a growing segment."

MGM Mirage updated investors on residential sales at the company's $7.4 billion Project CityCenter, where four developments totaling 2,700 units are being offered. So far, the company has recorded sales of $1.1 billion out of an expected total sales of $2.7 billion.

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Please enter your name Name: Please enter your email Email: Please enter a comment COMMENTS : (word count limit is 300) You have reached the maximum number of words allowed Current Word Count: Note: Comments made by reporters and editors of the Las Vegas Review-Journal are presented with a yellow background. stanley sum wai lee wrote on February 02, 2008 04:57 AM: Re:Wish to boost your business with high traffic for potential earning? Hi, i am full time surfing & advertiser help to promote your business to boost up your earning. Currently i am using top 10 traffic exchange to boost up visitor to your website. It was not the joke!At the same time, your site would have high ranking and you can check for www.alexa.com It is much efficient rather than advertise your website in google... If i perform task as 1000 credit per day, it would auto deliver about 1000 visitor to your site per day! Therefore, remember 1000 credit = 1000 visitor Why not giving your self a try ? PLEASE DO NOT HESITATE TO CONTACT US IF YOU ACCEPT MY OFFER.WE ARE PLEASE TO ANSWER YOU... WE WORK ALMOST 24 HOURS ron wrote on May 06, 2007 04:47 PM: Let's hope we never get an NBA team or another all-star game. Five people shot, 400 arrests, terrible traffic and a dangerous gangster-rap crowd in town all weekend. We can watch any team we want on big screen tv's in hundreds of places in town. We don't need a team to set up residency here, increasing our sprawl and traffic. We have a unique city with the world's greatest casinos providing plenty of entertainment. We don't need the NBA to drag us down to the level of any other overgrown city in the country. We can't even fill up the Thomas & Mack for the UNLV Runnin Rebels. I sent email complaints to the Mayor, but he continues with his efforts to bring pro sports here. Perhaps he should move back to Philadelphia if he needs so badly to live in a city with Pro Sports. Note to "Larry": gang-bangers make enough money through illegal activities to get here... it doesn't cost much money to cram into a car or a motel room. To "Bruce": Gambling has been here for ages... get over it... we like it that way. I can't imagine why families or senior citizens would want to patronize over-paid athletes. Matt wrote on May 04, 2007 08:09 PM: When I heard Las Vegas was going to host this, I knew we were in for trouble. There was chaos all up and down the Strip that whole weekend. Violence and gunfire at nightclubs, large groups of people dining in restaurants and walking out without paying the bill, loud obnoxious music. You name it. I hope that Mayor Goodman and everyone else has learned a good lesson from this. To Bruce: Get real! What "senior citizen" do you know that's going to want to attend an NBA event and hob-knob with a bunch of ghetto thugs? Seriously?!? Larry wrote on May 04, 2007 01:33 PM: Lanni, for your information gang-bangers don't have the cash to visit the strip or attend an NBA game, so the individuals that were visible were working class citizens trying to have some fun. David R Huntington wrote on May 04, 2007 11:00 AM: Care to comment on the success of your NBA Allstar weekend, Mr Goodman? Mickeba Sage wrote on May 04, 2007 10:08 AM: So happy to see Terry Lanni make this comment. NBA fans ARE increasingly becoming gang-banger types, the league is appealing to this fringe element and it's hard to even be a fan any more. The behavior of so many NBA players is appalling, and the activities surrounding the All-star game were clearly bad for Las Vegas. Bruce wrote on May 04, 2007 06:23 AM: Wake up Mr. Lanni, not everyone that sets foot in Vegas is here to have their wallet drained by a hotel/casino. This might actually be a good idea since it probably would give families and younger people something to do other than fall under the spell of the casinos. Geez, think about it, it might even give senior citizens something to do as well, and contrary to your opnion, the city will make money out of it as well. Not everything that happens in Vegas evolves around buttoning(playing slot machines). Get over yourselves, you didn't invent entertainment, I never considered gambling entertainment, just an addictive waste of time...