Inside Asian Gaming

INSIDE ASIAN GAMING | August 2008 doubling the number of high-limit gaming tables to increase its share of the high-end junket business. Lanni said MGM Mirage had about 8% of the Macau market in the second quarter, which had increased to about 9.5% in July. “We’re not pleased with our past performance and we’ve had disappointing results,” he said. “We’ve taken the necessary steps to improve the property.” Trump Plans Panama Casino Trump Entertainment Resorts is planning to open a new casino in Panama, as part of a US$400 million resort development it’s building in Panama City with a local Panamanian developer. Company CEO Mark Juliano said the deal is still being negotiated, but would give the company much-needed flexibility. The casino would be Trump’s first outside the US. The company currently has three in Atlantic City, but is selling one, Trump Marina Hotel Casino. Boyd Suspends Echelon Project The tightening capital market and weakening domestic demand led to casino operator Boyd Gaming Corp announcing that it will stop work for ninemonths to a year on aUS$4.8 billionmega development, The Echelon, on which it broke ground last June. The mega resort is slated to include a 140,000-square-foot casino, nearly 5,000 guest rooms in five hotels, two theatres and about 750,000 sq. ft of meeting and exhibition space. It is one of several suspended projects serving as reminders of the troubles facing the Las Vegas casino resort market. While slowing consumer spending pressured Boyd’s core gamblingbusiness,the capitalmarket crunchprevented the company from obtaining financing for key portions of the development. Boyd, which had a US$3.3 billion budget for its portion of the project, said it plans to resume construction in three to four quarters if credit market conditions and economic conditions improve. Citigroup analyst Joshua Attie said the delay in Boyd’s project removes what had been a significant financial risk and said the decision shows “financial discipline” by the company’s 44 Briefs International Briefs MGM Mirage Says Financing Fears Overdone The Las Vegas Gaming Wire cited MGM Mirage executives as saying Wall Street’s concerns about MGM Mirage’s delay in completing financing for its massive CityCenter development are overblown. During the company’s second-quarter earnings conference call, in which MGM Mirage reported a 68% decline in net profits, company officials said they had secured commitments for US$1.65 billion of the necessary US$3 billion in financing and said they would complete it by the end of September, if not sooner. MGM Mirage is working on obtaining the rest with Dubai World, its joint venture partner in CityCenter. “Ithinkit’sbeenoverdoneintermsofinterestonthis,”MGMMirage President and Chief Operating Officer JimMurren said in response to one of several questions about the financing for the US$9.2 billion CityCenter.Murren said MGMMirage could have closed the financing earlier, but not at terms the company was willing to pay. Even when the financing is complete, MGM Mirage and Dubai World, the investment arm of the Persian Gulf state, will have to split the funding of an additional US$2 billion next year. MGM Mirage officials said some of the funds may come from the closing of sales of the more than 2,400 residential units at CityCenter, rather than cash reserves. CityCenter will include a 4,000-room hotel- casino, multiple boutique hotels and high-rise condominiums, retail, entertainment and dining on a 77-acre Strip site. Although MGM Mirage reported net income in the second quarter was US$113.1 million,compared with US$360.2 million in the same quarter a year ago, revenue only declined 2%, to US$1.9 billion from US$1.94 billion a year earlier. A year ago, MGM Mirage’s results included US$63 million earned from residential sales at the company’s Signature high-rise condominiums at the MGM Grand. In the 2008 second quarter, MGM Mirage recorded US$19 million of insurance recovery income related to the Monte Carlo fire in January. In a statement,the company said the overall trends it experienced at its 10 Strip resorts were similar to those experienced during the first quarter of 2008. Visitors continued to stay at MGM Mirage properties in large numbers, but room rates were lower and the current economic conditions led to lower visitor spending. The quarter did have some bright spots for MGMMirage.Bellagio, which opened 10 years ago, reported its highest-ever quarterly revenue and led the Las Vegas market with property cash flow. In an interview following the company’s earnings call, MGM Mirage Chairman and CEO Terry Lanni said he remembers when bad times in the gaming industry meant casino companies were reporting losses. “You can take a look at us and our competitors,” Lanni said. “We’re still making money, although not as much as we have in the past.” Lanni spent a good portion of his prepared remarks discussing the company’s MGM Grand Macau, which opened in December. The resort reported an operating loss of US$5 million and MGM Mirage has moved to shore up the sagging results, such as nearly