By Suzette Parmley, Philadelphia Inquirer Staff Writer

Posted Thursday, October 11, 2007.

ATLANTIC CITY – MGM Mirage said yesterday that it would place a huge bet on the future of this seaside resort with the biggest casino project in Atlantic City’s history: a massive 3,000-room hotel, casino and entertainment complex with a $5 billion price tag.

When MGM teamed up with Boyd Gaming Corp. four years ago to build the $1.1 billion Borgata Hotel Casino & Spa in this city’s Renaissance Pointe, it redefined Atlantic City’s skyline and completely altered the East Coast gaming market.

But MGM’s announcement on October 10, 2007 of the MGM Grand Atlantic City raises the bar considerably, and rivals or surpasses in cost the world’s most expensive casino projects under construction in Las Vegas and Singapore.

And it is doing so even as the city’s casinos have seen their revenues eroded by new competition from slots parlors in Pennsylvania and New York. The Casino Control Commission said yesterday that revenues at the city’s 11 casinos fell 10.6 percent in September, the seventh consecutive monthly decline.

The new project, on a 72-acre tract north of the Borgata, is destined to be the largest hotel and casino in Atlantic City, with three hotel towers, 3,000 rooms and suites, and the largest gaming floor, with 5,000 slot machines and 200 table games. It will be Atlantic City’s tallest building.

The company’s board of directors approved the plan yesterday. The new casino resort will have a construction budget of $4.5 billion to $5 billion, not including the value of the land and associated costs, according to the company. MGM, which owns some of the most prestigious casinos on the Las Vegas Strip, including the Bellagio and Mandalay Bay, is also building the $7.4 billion CityCenter mega-resort on the heart of the Strip. The project, like MGM Grand Atlantic City, features high-end retail space, a spa, entertainment venues, condominiums and hotel towers.

MGM Mirage shares lost 1 percent of their value yesterday, closing at $98.75 on the New York Stock Exchange. The shares recently reached a 52-week high of $100.52.

MGM, as co-owner of the Borgata, has made no secret of its desire to eventually build on the land next to the casino, considered one of the most precious pieces of remaining undeveloped property in Atlantic City.

MGM chairman and chief executive officer Terry Lanni said in an interview last month that his company planned to seek the necessary environmental permits to build there by early next year.

“Our company has carefully considered the possibilities for our landholdings in Atlantic City,” Lanni said in a statement issued yesterday. “We believe the success at Borgata demonstrates the eagerness for further evolution of the nation’s second-largest gaming market.”

The Borgata, Atlantic City’s top-grossing casino, will open a $400 million hotel tower next year. Lanni said he wanted to continue to build on offering high-end amenities to the resort as slots competition from Pennsylvania and New York intensifies.

Lanni said some of his competitors in Atlantic City “have not distinguished between quality product and merely a gaming house and complimentary programs. You need to create a quality product with the best retail, the best entertainment, the best condos and hotels with condos.

“If something like that is built, you rely less on giving things away,” he said. “People are willing to pay for quality.”

Lanni said the Bellagio – one of MGM’s premiere casinos – gets about 75 percent of its revenue from nongaming attractions.

Groundbreaking for MGM Grand Atlantic City is expected sometime in 2008, with a 2012 anticipated opening. MGM plans to build on about 60 acres of the site, setting 12 aside for future development, which may include a residential component.

Two other major casinos are being built on the Atlantic City Boardwalk: a $2 billion casino by Wall Street firm Morgan Stanley next to the Showboat, and a $1.5 billion casino on the site of the former Sands Casino Hotel by Pinnacle Entertainment Inc., of Las Vegas. Both companies are also aiming for 2012 openings, which will bring the number of Atlantic City casinos to 14, including the MGM project.

Former Caesars Entertainment Inc. chief executive officer Wallace Barr is also considering building a boutique casino on the southern end of the Boardwalk with a group of local investors.

Ken Rosevear, president and CEO of MGM Mirage development, who was behind New York New York in Las Vegas and MGM Grand Macao in South China, said MGM Grand Atlantic City will exceed anything he has done so far. One dramatic feature: an 85,000-square-foot spa suspended by, and connecting, the three towers – 450 feet above the ground.

“The concept is, it will be so compelling that it will be a must-see with all the competition out there,” he said.

Anna King of Northeast Philadelphia, who frequents Atlantic City on weekends, welcomed the news.

“It can only help Atlantic City,” King, 72, said while behind a slots machine at Harrah’s Chester Casino & Racetrack yesterday. “These places have hurt them, so they have to do what they can to keep my business.”

——————————————————————————–

MGM Grand
Details of the proposed casino hotel in Atlantic City.

Groundbreaking: 2008.

Opening: 2012.

Construction cost: $4.5 billion to $5 billion.

Acres: 60, of a 72-acre site.

Buildings: Three towers.

Rooms: More than 3,000.

Slot machines: 5,000.

Gaming tables: 200.

Theater: 1,500 seats.

Retail space: 500,000 square feet.

Hotel rooms in Atlantic City now: 14,517.

Hotel rooms in Las Vegas: 130,000.

SOURCES: MGM Mirage, Inquirer research.