"They are going to get crushed by the competition going forward."
Origanlly posted By BeeeJay 1/5/10 at 8:49 p.m.
I spent some time at the Bellagio with some of my Wall Street friends a while back. It was an eye-opening experience.
Finding a stock analyst with a "feel" for gaming is difficult. The personality attributes are mutually exclusive. What would really impress me is a stock analyst who say, "Oh I don't know, spend 3 months a year as an undercover guest in these properties..."
I can tell you no one who spends much "upper middle class" time in Vegas is buying any MGM-Mirage stock, unless they need some capital losses.
Let me tell you why. The most profitable cross-sections of business in Vegas are the highest end and the lowest end. Harrahs does well by getting mass numbers of low rollers into their grind joints while not spending a dime on upkeep. Throw a couple chicken wings on the buffet and Grandma Diamond is happy to drop her couple hundo every few weeks.
On the other end of the spectrum we have the bigger players who will normally go with a Wynn, Palazzo, Encore....etc. Of course Harrah's throws their Caesars and Paris at those people but only the old timers from the pre-Harrah's acquisition days put up with those crap properties and fossilized cocktail servers and dealers. Then you've got MGM-Mirage with Bellagio which they have done as well as could be expected maintaining a gradual decline as it got further from Wynn's influence and fell into the hands of a company without the expertise to run 5-star resorts. So I can see MGM-Mirage's theory in going all out with CityCenter to regain some of the market share stolen from Bellagio by Wynncore and VenPalazzo. But this is their biggest failure yet!
First, they went wrong on the concept. Its too modern and not luxurious enough. Second, they made every possible mistake imaginable in engineering the property for actual OPERATION. Yes it is visually stunning, but no one wants to sit on cold metal while waiting 2 1/2 hrs to check-in after waiting 45 minutes for Valet service, that after driving around 5 laps trying to figure out how to get in while bouncing their Mercedes off a couple walls. The casino is too dark. The spa is too basic. The restaurants serve uninspired food. But the worst sin of all? They interviewed over 100,000 applicants and THIS IS WHAT THEY HIRED??!?
With the CityCenter disaster in full bloom MGM-Mirage has stuck inself in a no-mans land of competing against both cheaper properties and more luxurious properties. They might have a chance to pull that off in a better economy OR if they had even reasonably decent service. But they don't, so they won't.
Vegas WILL DO JUST FINE, but the MGM-Mirage shoulda stuck with 3-star props like NYNY or MGM Grand which is what they do best. They are on life support now, and they are going to get crushed by the competition going forward.
Chuck Jaffe (MarketWatch - Sunday, January 03, 2010) - Regardless of whether the stock and bond markets can sustain their momentum in 2010, the mutual fund industry and fund investors like the T. Rowe Price Group, appear destined for a year of bad news.
Joseph Fath, portfolio manager for T. Rowe Price who bet big on the success of CityCenter last year by scooping up MGM stock (7% of the company and is its largest outside stakeholder) had said, "This is a consumption nation. As people's balance sheets get better, they will spend more."
In this economy?
Other MGM Mirage Posts
MGM MIRAGE (NYSE: MGM) - Living on a Prayer in 2010 (Despite "Upgrade")
http://tobuds.com/blogs/blog2.php/2010/01/13/mgm-mirage-nyse-mgm-living-on-a-prayer-i
Casinos Won't Recover - What it Means for MGM Mirage
http://tobuds.com/blogs/blog2.php/2010/01/11/casinos-won-t-recover-what-it-means-for
MGM Mirage on Life Support - 2010 Not a Happy New Year
http://tobuds.com/blogs/blog2.php/2010/01/07/mgm-mirage-on-life-support-2010-not-a-ha
MGM Mirage - City Center is Doomed in 2010 to Cannibalism
http://tobuds.com/blogs/blog2.php/2009/12/31/mgm-mirage-city-center-is-doomed-to-cann
James "Jimmy" Murren - CEO MGM Mirage, Has A Magic Dream
http://tobuds.com/blogs/blog2.php/2009/12/29/james-jimmy-murren-ceo-mgm-mirage-has-a
MGM's Kirk Kerkorian's CEO (Jim Murren) - A Con Artist?
http://tobuds.com/blogs/blog2.php/2009/12/21/james-j-murren-chairman-of-the-board-and
MGM's Mister Kerkorian is a Very Wise Man
http://tobuds.com/blogs/blog2.php/2009/12/21/mgm-s-mister-kerkorian-is-a-very-wise-ma
Also see > CityCenter, Infinity World Development, MGM Mirage, Tracinda, Kerkorian
http://m.lasvegassun.com/news/2010/jan/04/eastern-giant-has-faith-mgm-mirage/
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