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Gaming Guru

Jennifer Robison
 

MGM Mirage, chamber reconcile to battle budget

29 January 2010

LAS VEGAS, Nevada -- It ranks among the toughest breakups in a city with its fair share of seamy divorces.

Like plenty of splits, it had everything to do with money.

But with the economy in the tank and the state's revenue plummeting, MGM Mirage and the Las Vegas Chamber of Commerce have called an end to their seven-year separation. Nevada's biggest hotel-casino operator said Thursday that it is rejoining the state's largest trade association to create a unified front against a looming state legislative session that promises pitched battles over budgets and taxes.

Jim Murren, chairman of MGM Mirage, announced the move in his keynote speech at Preview Las Vegas, an economic-forecasting event the chamber holds every January.

"The gaming sector is undoubtedly an unquestionably crucial component of the Las Vegas economy," Murren said. "But gaming cannot go its own way in seeking solutions for Nevada's problems. We must redefine the relationship between gaming and the larger business sector and reject the 'us vs. them' mentality that has crippled this community for so long.

"We won't all agree on every element of the solution, but certainly we can all agree that we must work together to define our objectives, generate an agenda, craft a plan of action and then pledge our resources to promoting the promise of progress."

It's a decidedly different tone from 2003, when MGM Mirage's then-Chairman Terry Lanni took the chamber to task for the group's "fundamentally unfair" opposition to a new business tax.

As the Nevada Legislature considered ways to cover an $833 billion revenue shortfall, MGM Mirage executives advocated a gross-receipts tax that would have applied to nearly every company in Nevada. The chamber campaigned against the levy, saying that it would hurt Nevada's low-tax reputation and that it would unfairly apply to startups and other companies that had yet to turn a profit.

The chamber got its way when the Legislature dropped the gross-receipts tax and went instead with a payroll tax that added nearly $10 million a year to MGM Mirage's tax bill. Lawmakers also boosted the gaming tax from 6.25 percent to 6.75 percent.

So MGM Mirage left the chamber, taking $125,000 in annual dues with it.

The resort operator also ditched its membership in the Nevada Development Authority and the Nevada Resort Association, with Lanni asserting that the company could represent its interests better than trade groups could.

MGM Mirage rejoined the resort group when it bought association member Mandalay Resort Group in 2005. MGM Mirage hasn't rejoined the development authority, but MGM Mirage spokesman Alan Feldman said the company is "certainly supportive of what they're doing."

Bill Thompson, a gaming professor at the University of Nevada, Las Vegas, said MGM Mirage's decision will let Nevada's largest business interests present a united front on the eve of a special session Gov. Jim Gibbons plans to call to address the current budget shortfall. The Economic Forum forecasting group said on Jan. 22 that the state faces a revenue shortage of at least $580 billion. Taxes are also sure to be the key issue in the regular legislative session scheduled to begin in early 2011.

"(MGM Mirage) made their point, had their little tantrum and left. Now they're coming back," Thompson said. "That means casinos and businesses in Las Vegas will be on the same page. They fight each other over customers, but there's no reason to fight each other over public policy."

Asked whether a coalition of big gamers and other major businesses would create an insurmountable force that would drown out the voices of individual Nevadans, Thompson demurred.

"The way I see it, our interests are the casinos' interests," he said. "If they make money, our state makes money. Without them doing well, we have a hard time. They have to show reasonableness so the public can join them, but the best way is to set forth a plan to raise revenue and include a modest increase in casino taxes. Then the public would be with them."

MGM Mirage was just one of several major local companies that reduced or withdrew support of the chamber after the 2003 tax tiff.

Locals-gaming giant Station Casinos pulled out of the chamber and asked its vendors to curb involvement in the group. The Howard Hughes Corp., which is developing Summerlin, and the Greenspun Corp., which developed Aliante and owns the Las Vegas Sun, both cut their chamber funding.

Station hasn't rejoined the chamber, and company officials declined to comment for this story.

From MGM Mirage's vantage point, though, Nevada faces "as close to a life-and-death decision as MGM Mirage itself did in the spring," Feldman said, referring to the company's near-bankruptcy while it was building CityCenter. In returning to the chamber's fold, MGM Mirage wants to avoid bickering over taxes and cut straight to framing solutions in a larger debate: What kind of vision should the state's leaders craft for Nevada's future? MGM Mirage executives want to work with the chamber to develop goals for tomorrow. From there, the two will "take apart every program" in the state and weigh where each will fit into any rebuilding effort, Feldman said.

It's too early to say whether MGM Mirage officials will renew calls for a gross-receipts tax, Feldman said, but he added that the outcome of any joint analysis will include a mix of suggestions. And he said he expects that the renewed partnership will survive disagreements this time.

"Our company's hope is that, as a community, we've grown up enough now that we can have a pretty candid discussion of our differences, and not throw in the towel and take our ball and go home," Feldman said. "We've got to join forces and find common ground. That doesn't mean that we'll agree on everything. But we've got to give it a try. We simply can't stand on the sidelines and just snipe at each other. That serves no purpose."

MGM Mirage's renewed membership comes as the chamber prepares for a leadership change. Kara Kelley, the group's president and chief executive officer for the past decade, announced in September that she would retire in April to spend time with family and chase new career opportunities.

But Feldman emphatically said Kelley's pending departure is merely coincidence.

"It may have more to do with our change in leadership, with Jim (Murren) as chair, and the relationships he has," Feldman said. "He feels pretty strongly that we've got to be doing this together. If we're separate, it's not going to work."

MGM Mirage, chamber reconcile to battle budget is republished from Online.CasinoCity.com.