Jim Murren , former MGM CEO , was the prime visionary behind Project CityCenter
In a phrase coined by Stefan Al , CityCenter was to be Las Vegas ’ premier example of “ starchitecture .” Where once Las Vegas ’ architecture was derided , the likes of Daniel Libeskind , Rafael Viñoly , Caesar Pelli and Sir Norman Foster , architects behind some of the world ’ s most iconic buildings , were engaged to lead selected design elements . None had designed a casino or worked in Las Vegas previously .
MGM ’ s stock price was $ 43 when the project broke ground on April 3 , 2006 , financed predominantly with an existing credit agreement with Bank of America , cash generated by the recent asset disposals , condo sales and ongoing operational profits . The budget had already grown to $ 7 billion .
Despite owning half of the Strip , MGM had only built and opened the two MGM Grand properties — the first MGM in 1973 , and the “ green ” MGM Grand , which opened in 1993 . But the enlarged MGM Mirage team had plenty of development chops .
When the development team first met , there was a whiteboard with the opening date of December 1 , 2009 . The architects and MGM team continually iterated to meet the project vision , as set out by Murren and translated into an operating resort by Baldwin .
Some of the even more outrageous designs ultimately made way for merely the grandiose . Aria was the centerpiece casino resort , featuring 4,004 rooms . The condo-hotel , Vdara , was to be a 1,495-suite property to the northwest of the campus . The Mandarin Oriental , a 47-story tower designed by Kohn Pedersen Fox , with 225 apartments and 392 hotel rooms , was to be on the southeast of the site . The Murphy / Jahn-designed Veer Towers were to contain 670 apartments and sit adjacent to Crystals Mall . The retail area was originally conceived as an urban pedestrian hub . However , as the project developed , concerns emerged over the Las Vegas heat , especially summer . The final design of Crystals , with protruding angular points , is unmistakably Libeskind .
Although collaborative , there were certainly significant individual contributions and ongoing refinements from the leadership team , making the project less a conventional “ design and build ” and more a “ design as build ” project , which saw costs escalating monthly .
A senior executive in the construction process observed the construction program was as sophisticated and innovative as it was ambitious .
“ It was one thing building the Mirage , Treasure Island and Bellagio , which were generally formulaic and conceptually understood . CityCenter , with multiple architects , contractors and unique construction elements was an entirely different challenge . At some points there were over 35 cranes at work , with design points in constant revision . It was a project like none before and none since .”
However , it was matters outside the influence of the project that were to truly unsettle the newly formed foundations .
Crisis
As the calendar headed to late 2007 , MGM ’ s stock price peaked at $ 99 . The cautious gave warning of an overheated debt market , but MGM had apparently mitigated their risk , entering a joint venture with Dubai World , which agreed to a $ 2.7 billion investment for 50 percent of the project .
The ink on the deal was still wet when on September 15 , the bankruptcy of Lehman Brothers triggered the U . S . financial system to collapse .
To many , Las Vegas was at the heart of the crashed sub-prime residential mortgage-backed securities market , thus making CityCenter the center of the epicenter .
MGM ’ s dream became a potential nightmare that could bring down the entire company . It needed cash , fast . MGM sold Treasure Island to Phil Ruffin for nearly $ 800 million . Ruffin had pocketed over $ 1.2 billion from the sale of the New Frontier land only months earlier . The project budget was now $ 9.3 billion .
MGM was not alone in potential exposure . Boyd ’ s Echelon and Elad ’ s Plaza both halted development . Neither restarted . The Fontainebleau sat quiet for over a decade , a cobalt and concrete monolith , punctuating the skyline as a monument to the misery of the moment .
Deutsche Bank , the primary lender to the Cosmopolitan , assumed development of that project , making the call that the best way to recover their defaulted debt was to finish the resort and sell at some point in the future .
Wynn and Sands completed their second towers , but with exposure to the lucrative Macau market providing a lifeline of cash . Caesars completed the Octavius Tower , but ultimately fell into bankruptcy .
And then 2009 proved a challenging year . For example , whereas MGM reported gross revenues of $ 7.2 billion in 2008 , it was to report revenues of $ 5.9 billion in 2009 .
To make matters worse for MGM , construction flaws in the Harmon Tower had rendered that element of the project structurally unsafe . MGM had spent $ 275 million on the tower by the time it was mothballed . On March 6 , 2009 , MGM stock fell to a low of $ 1.87 . How close MGM came to closing the doors is under-appreciated ; the gambler was out of cash , his bankroll exhausted , the pockets were empty , the bank was closed , and the paychecks had stopped . And as costs continued to rise and the stock price fell , joint-venture partner Dubai World started litigation , suing MGM for mismanagement .
Murren had two options : to do whatever it takes to find $ 475 million
SEPTEMBER 2023 www . ggbmagazine . com 41