LAS
VEGAS -- After last week's news of a planned megamerger between
casino giants MGM Mirage and Mandalay Resort Group, tourist Frederic
Finney of Boston stared down the Las Vegas Strip and griped that
he's starting to feel like a thimble.
"Yeah, you know, a thimble -- one of the little silver playing
pieces in the Monopoly game," said the 62-year-old retiree,
who makes monthly visits to Las Vegas to gamble and see his
grandchildren. "Soon you'll have no choice of whose big red
plastic hotel you stay at because they'll all be owned by the
shoe."
Indeed, the classic board game was originally set in Atlantic
City, but it's that other great American gambling mecca that's
about to become incredibly difficult to glide by without at
least stopping in at the properties of one particularly adept
player.
The impact of the deal on Las Vegas is likely to stretch into
all realms, handing the merged corporation dominance over not
only the gambling market but also the convention business. MGM
Mirage would control 10 resorts accounting for half, or 36,702,
of the current 72,000 rooms there -- including a Monopoly-like
seven resorts in a row on the west side of the Las Vegas Strip.
MGM Mirage owns such famous resorts as Bellagio, New York-New
York, and Treasure Island, while Mandalay Resorts includes Mandalay
Bay, Luxor, and Excalibur. MGM Mirage would operate 22,000 slot
machines and 1,050 gaming tables there.
"It just seems like too much," Finney said. "You have to wonder
what will happen if the entire Strip is run by a few people.
I don't see how it can be good."
Yet prominent Vegas observers say they doubt most tourists
will care or have any idea who owns the casinos. Both companies
have strong reputations for customer service and have already
shown with their current holdings that they understand that
tourists want each resort to have its own feel and sensibility,
said Anthony Curtis, publisher of the Las Vegas Advisor newsletter.
"I don't think the customer will notice anything at all,"
Curtis said. "It's not like MGM Mirage was something subpar
to Mandalay Bay. . . . "
Vegas4Visitors.com owner Rick Garman dismissed concerns that
the new behemoth would limit entertainment options so as to
avoid competing with itself.
"I can't imagine MGM not booking a big-name act just because
there's a big name already playing at Mandalay," Garman said.
One arena where the merger's impact is likely to be felt nationally
is in the convention business. The year-old Mandalay Bay Convention
Center is the fifth-largest exhibit hall in the country at 1.5
million square feet and has used its easy access to 20,000 hotel
rooms as its most appealing draw to meeting planners. Now, with
another 15,000 rooms to offer at a variety of prices, the new
conglomerate should be able to steal away even more major trade
shows from other cities. Las Vegas, for years the top convention
city in North America, may enjoy another boost.
"If Boston and Mandalay Bay are going after the same convention,
there's no comparison in terms of the hotel capacity whatsoever,"
said Michael Hughes, research director for Tradeshow Week magazine.
"It means Boston and other cities will have to make more detailed
and more aggressive marketing plans to compete."
The merger, which the boards of both public companies approved
June 16 but which still requires shareholder and regulatory
approvals that will take at least six months, would allow MGM
Mirage to supplant Harrah's Entertainment Inc., as the world's
largest gaming company. MGM Mirage has agreed to pay $71 per
Mandalay share -- a $4.8 billion cash buyout -- as well as assume
$2.5 billion in debt. MGM Mirage also would pay $600 million
for bonds that can be converted into Mandalay stock.
In all, the combined company would operate 28 casinos in five
states and Australia that recorded a combined annual revenue
of $6.8 billion last year. "With all of the additional resources
we'll gain from this transaction, we'll be better able to compete
across all segments of the gaming and leisure market," MGM Mirage
chairman Terry Lanni said in a conference call with analysts.
For Vegas nostalgia buffs, the merger represents yet another
giant advance in Wall Street's control of what some refer romantically
to as the "old Vegas," the days of independent, privately held
-- and frequently Mafia-run -- gambling joints where casino
hosts knew everybody by name. Many analysts expect a flurry
of other mergers as rival companies try to stay competitive
with the MGM Mirage juggernaut, although Harrah's, Caesars Entertainment
Inc., and the Venetian resort owner Las Vegas Sands Inc., declined
to comment on the merger.
"Gambling is national now, and the owners of gambling are
stockholders and people who live in other places than LV," Bill
Thompson, a professor in the Gaming Studies Research Center
at the University of Nevada at Las Vegas. "There is very little
concern for the quote-unquote good of Las Vegas community."
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