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Best of Howard Stutz

Gaming Guru

Howard Stutz

Jim Murren kept CityCenter on track

8 December 2009

LAS VEGAS, Nevada -- The thing that seems out of place with Jim Murren is the backpack.

Murren, 48, spent 14 years as a Wall Street analyst and 11 years with casino giant MGM Mirage. For 10 years he held positions as the company's president, chief financial officer and chief operating officer, sometimes simultaneously.

Murren just completed a tumultuous first year as MGM Mirage's chairman and chief executive officer. He is the visionary behind the $8.5 billion CityCenter development, earns $2 million a year in salary and occupies a spacious corporate office inside Bellagio that once belonged to Steve Wynn.

Yet, he totes around his most important papers and documents in an inexpensive backpack.

"I've carried one all my life and I've never bought one," Murren said.

On this day, Murren is using a black OGIO backpack with the M Resort logo. MGM Mirage has an ownership stake in the casino and Murren was given the backpack as an opening- day gift. Another backpack with a Deutsche Bank logo sits off to the side of his desk.

The backpack is part of Murren's personality and character. And the backpack also drove his former boss, ex-MGM Mirage Chairman and CEO Terry Lanni, completely nuts.

"He hated that I used the backpack," Murren said. "Every year, for five straight years, Terry bought me a beautiful briefcase for Christmas. And every year, for five straight years, I had a great opportunity to re-gift a beautiful briefcase."

Murren often jokes that he needs to go to CEO school.

In the first half of 2009, however, Murren gained an education in leading the charge to keep both MGM Mirage and CityCenter out of bankruptcy.

It took all of Murren's skills learned over 25 years and the work of countless advisers and MGM Mirage executives to pull both the company and world's largest-ever privately-financed development out of the abyss.

CityCenter was within hours of shutting down at the end of March if a temporary financial solution wasn't reached. MGM Mirage might have followed the project into bankruptcy if a short-term solution for its $13 billion debt load hadn't been crafted.

"For me, the financial crisis and solving CityCenter were easily the most difficult times in my professional life," Murren said. "Not only did we have to navigate the internal issues, we had to keep people motivated and keep our businesses vibrant."

It was stressful -- Murren jokes that he now has gray hair for the first time in his life -- but he remained essentially the same person.

"I'm a guy from a middle-class family who loves sports, loves hanging out with people and I love working and construction," Murren said. "That's who I am."

His closest friends say surviving the turmoil over the past year increased Murren's leadership skills. Stephen Cloobeck, chairman and CEO of time share developer Diamond Resorts, said Murren was driven by making sure the company's employees and families were protected.

"Jim is not an arrogant leader. He's caring, he listens and he understands," said Cloobeck, who is also chairman of the Nevada Cancer Institute, which was founded by Murren and his wife, Heather.

Cloobeck, who often sees Murren every few weeks, said he only talked by telephone with him during the financial crisis.

"I don't think anyone can really understand what Jim went through unless you went through it yourself," Cloobeck said. "Because of this experience, I believe Jim will become a legendary gaming executive. CityCenter will be successful."

Murren realizes his professional career is tied to the success of CityCenter, although he said 14 years as lead gaming analyst for Deutsche Bank and his work with MGM Mirage, which included negotiating the $6.4 billion buyout of Mirage Resorts in 2000 and the $7.9 billion acquisition of Mandalay Resort Group in 2005, should also rank as career achievements.

Murren, who studied urban planning and art history at Trinity College in Hartford, Conn., approached the company's board in 2004 with the idea of a creating a New York-style urban metropolis on 67 Strip acres. Seeing that vision come to fruition is gratifying.

"This is truly an investment for the future," Murren said.

His first 12 months as CEO was not your typical endeavor. He already spent a year as COO, embarking on a corporate restructuring that streamlined the company and began the process that produced $800 million in annual cost savings.

Many of the changes took place before the economy tanked and signs of the recession were starting to appear.

"I was well aware that the economy was rapidly deteriorating," Murren said. "I was also aware the financial markets were evaporating. The third challenge was a morale issue. People were scared and we needed to be a compassionate and frequent communicator."

After the first of the year, Murren set out to solve CityCenter's financing issues. The $775 million sale of Treasure Island brought in some much needed cash.

He thought progress was being made until 6 a.m. on March 22. Murren was working out in the Bellagio gym when an company executive walked in and showed him a news report on his BlackBerry that MGM Mirage's 50-50 joint venture partner, Dubai World, had sued the company seeking to get out of their multibillion-dollar agreement.

Murren said he was floored. The partnership had several meetings in preceding weeks and he didn't recall a hint of trouble.

The immediate problem was that CityCenter general contractor Perini Building Co. was owed an equity payment of $200 million in five days or else construction on project would have stopped.

Murren said he is most proud that company executives did not react emotionally, at least not in a public setting. He set out to convince the MGM Mirage board and the company's lenders to make the payments. It was touch and go that he would be successful.

"It was like we were having board meetings by the hour," Murren said. "Convincing the banks was a tough one. It was my belief that if we did not save CityCenter, we could not save MGM Mirage. We had too much of ourselves already invested into this."

Murren said the company was prepared to shut down the project. Temporary fencing had been secured, the Las Vegas Police Department had been briefed, and MGM Mirage's own security force had been prepared. The plan was to close the site at 4 p.m. March 29.

But with hours to spare, the banks approved the payment.

A month later, a new deal with Dubai World was reached and CityCenter was fully funded. But MGM Mirage was not out of the woods.

It was well into May before a $2.6 billion recapitalization was completed and corporate finances were secure through 2010. But there was no celebration. Everyone was exhausted.

Through it all, Murren said he relied on the advice of two people; Heather Murren, his wife of 19 years, who herself was a successful Wall Street analyst, and Kirk Kerkorian, the 92-year-old Los Angeles billionaire who is MGM Mirage's largest shareholder.

Heather Murren stepped down as CEO of the Nevada Cancer Institute and other board positions to concentrate on the couple's children. She also wouldn't sleep if her husband was on a late night-early morning conference call.

"Heather was unbelievable," Murren said. "She's smarter and a better analyst than I was. She's more intellectually robust. She was a constant adviser."

Kerkorian would call Murren almost every day. The conversations were never long and they never went into great detail. They came mostly at night when Murren was home. They served more as a morale boost than anything else.

"The subject matter was always the same. 'How are you doing? Did you work out today? How's Heather?' Like most people, he prefers Heather," Murren said. "There was great empathy there. He was somebody I relied upon a lot."

Murren said he never spoke with Lanni during the ordeal, but did receive a hand-written note from his former boss when it was all over. Lanni told Murren he was proud of what he had accomplished.

With CityCenter now opening, Murren said he's focused on what it takes to make the company successful.

"I'm having a really good time," he said.


In the early stages of trying to finance the remaining construction costs for CityCenter, Jim Murren turned to his former employer with an idea.

The chairman and chief executive officer of MGM Mirage approached Deutsche Bank about acquiring the Cosmopolitan development adjacent to CityCenter. In exchange, MGM Mirage and joint venture partner, Dubai World would give Deutsche Bank some equity ownership in CityCenter.

Also, Deutsche Bank would provide the joint venture with a loan of $1.2 billion to complete CityCenter.

"I thought it was a clever idea," Murren said. "Nobody else did."

Deutsche Bank, where Murren spent 14 years as a Wall Street analyst, acquired the Cosmopolitan in August 2008 when the its original developer, Bruce Eichner, defaulted on a $760 million loan. The Germany-based lender, which has American headquarters in New York, is completing the once $3.9 billion hotel, casino and condominium complex.

Murren thought Deutsche Bank would consider cutting its losses.

"Deutsche Bank owned this thing. They were stuck building it," Murren said. "We would have the joint venture buy it, button it up and shut it down. We would make it phase two of CityCenter, whenever the market decided the time was right."

He thought Deutsche Bank would jump at the deal because the bank would gain ownership in CityCenter.

"Instead of cash, Deutsche Bank gets a big piece of CityCenter," Murren said. "And they lend me $1.2 billion rather than put another $2 billion into the Cosmopolitan. They lend money to a vastly better project and they get out of a nightmare they don't know how to manage."

After a month of negotiations, the idea fell apart.

"As things happened, there were too many cooks in the kitchen, too many elements and we ran out of time," Murren said. "We would still be negotiating if we didn't pull the plug. In hindsight, I'm glad we did."



Jim Murren did not want to be known as the CEO who shut down the financially troubled CityCenter project.

Rather than his reputation suffering, Murren was more concerned about the feelings of others if CityCenter had to be halted, namely Kirk Kerkorian, MGM Mirage's largest stockholder, and Bobby Baldwin, who was tasked with building the $8.5 billion development.

"Mr. Kerkorian had redefined this town three times," Murren said. "When we showed the board the initial concept, he got it right away. He said, 'we have to do this for the community.' I would have felt very sad for him."

Baldwin took charge of CityCenter from the outset.

"We asked Bobby to tackle something no one has done before," Murren said. "What's the upside? A lot of problems, we're not sure if it's going to work, it's never been done before and there's no playbook."

Murren said he wouldn't have known what to say to the 500 MGM Mirage employees working on CityCenter if the project had to be halted.

"After four years, 'Sorry, we ran out of gas.'?" Murren said. "I would have been sad for all of them."

Jim Murren kept CityCenter on track is republished from