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MGM Mirage exec takes swipe at NBA

4 May 2007

LAS VEGAS, Nevada – MGM Mirage executives used the company's Thursday morning quarterly earnings conference call to deliver a broadside on Las Vegas' hosting of the NBA All-Star Game in February.

MGM Mirage Chairman Terry Lanni said fans attending the game and subsequent All-Star related events did little gambling during the four-day weekend, Feb. 16-19, disrupted regular hotel and casino operations and kept other customers from venturing into the company's 10 Strip resorts.

"They came for purposes other than attending the game and they weren't very good for Las Vegas," Lanni said. MGM Mirage operates such properties as Bellagio, MGM Grand, The Mirage, Treasure Island and Mandalay Bay.

In a subsequent interview with The Associated Press, Lanni referred to an element of the NBA fans as "gang-bangers."

"On the day of the game itself, we had very little drop (gambling revenues) and in talking to our casino hosts, a number of people stayed in their villas and suites. They felt uncomfortable," Lanni said.

Both Lanni and MGM Mirage President Jim Murren made their views known to NBA Commissioner David Stern during the conference call. Murren said Stern could "keep his All-Star Game out of Las Vegas."

Overall, the Strip's gaming win climbed a modest 4.3 percent in February, and gaming analysts blamed the lack of gambling by fans of the All-Star Game for the lower-than-expected increase.

"We think the disruptiveness of the NBA All-Star Weekend did have a tangible negative effect on gaming revenues during the important Chinese New Year and Presidents Day weekend," Bear Stearns gaming analyst Joe Greff said in an investors note.

While the company's Strip gaming revenues took a slight hit, overall Strip revenues for MGM Mirage climbed to $1.63 billion, compared with $1.57 billion last year. MGM

Mirage said its revenues benefited from higher-than-average Strip room prices and the continued impact of new restaurants, nightclubs and shows at several company properties.

The casino operator said its net income climbed 17 percent during the three-month period that ended March 31, thanks mostly to the reopened Beau Rivage casino in Biloxi, Miss., which was shut down for a year after suffering heavy damages from Hurricane Katrina in August 2005.

MGM Mirage's net income was $168.2 million, or 57 cents per share, compared with $144 million, or 49 cents, a share last year.

Analysts polled by Thomson First Call expected earnings of 63 cents per share, and the shortfall did not please investors. Shares of the company tumbled $2.94, or 4.3 percent, in trading on the New York Stock Exchange to close at $65.38.

The return of MGM Mirage to the hurricane-ravaged Gulf Coast paid dividends during the company's first quarter. Revenues in Mississippi, primarily from Beau Rivage, the state's largest casino, surged to $142.5 million, compared with $40.9 million a year ago. MGM Mirage also operates a riverboat casino in Tunica, Miss.

MGM Mirage's revenue for the quarter was $1.93 billion, a 9 percent increase compared with $1.77 billion in the first quarter of 2006. Without Beau Rivage, the company's net revenues would have increased only 3 percent. Company gaming revenues grew 4 percent in the quarter, but without Beau Rivage's contribution, overall gaming revenues would have decreased 6 percent.

"MGM Mirage's first quarter results fell below expectations, though management did not issue specific guidance," Deutsche Bank gaming analyst Bill Lerner said. "Gaming results were soft but have improved, while nongaming revenues were impressive and remain a growing segment."

MGM Mirage updated investors on residential sales at the company's $7.4 billion Project CityCenter, where four developments totaling 2,700 units are being offered. So far, the company has recorded sales of $1.1 billion out of an expected total sales of $2.7 billion.

MGM Mirage exec takes swipe at NBA is republished from