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Carrow's Not Likely to Survive Merger, MGM Mirage Exec Sees 'Higher and Better Use'

14 July 2004

By Phil Hevener

MGM Mirage's Big Apple-themed New York-New York resort could get some new polish if the gaming company's $7.9 billion acquisition of Mandalay Resort Group is completed as proposed.

During a recent interview, MGM Chairman Terry Lanni cited the Strip resort as an "unusual example" of one of the opportunities that could be created by the largest proposed merger in the history of the gaming industry.

Although Lanni can't publicly discuss anything more than possibilities for now, he did note that the New York-New York represents one of the "unique aspects of this deal."

"We own the two acres next door to New York-New York," Lanni said. "There's a Carrow's restaurant on this site, and while MGM Mirage owns the ground on which Carrow's sits, a sublease of the Carrow's operation was purchased by Victoria Partners," a joint venture of Mandalay and Mirage Resorts.

Victoria Partners created and opened the Monte Carlo, the resort just north of New York-New York and the two adjoining acres.

MGM Grand bought Mirage Resorts and its half of Monte Carlo in 2000, but the Carrow's sublease remained vested with Mandalay, the managing partner at Monte Carlo.

The idea of the sublease at the time was to keep MGM Grand's New York-New York from expanding to the north and intruding on the appeal of Monte Carlo.

A MGM Mirage-Mandalay merger, however, would almost certainly change that attitude, and some sort of future connection or integration of the two Strip resorts would make sense.

The Carrow's sublease goes to 2008, with the possibility of extending it by another five years.

But Lanni suggested that's not likely to happen.

"I have no problem with Carrow's restaurants, but I believe there is a higher and better use of that land. It is fair to say that if it is our decision to make about extending that sublease, it will not be extended."

The merger deal now being submitted to regulators means MGM Mirage may eventually control three of the four corners at Tropicana Avenue and Las Vegas Boulevard -- one of the busiest intersections in the world. The MGM Grand, New York-New York and Mandalay's Excalibur occupy three of the corners. MGM will not have the 34-acre site where Aztar Corp.'s Tropicana sits.

Although Lanni sidestepped a question about whether his company would be interested in buying the Tropicana property, he did note that the Mandalay purchase provides "significant" development opportunities, including the two acres north of New York-New York. There are 22 acres of vacant land next to Mandalay Bay and 16 acres opposite Luxor on the Strip.

Copyright GamingWire. All rights reserved.


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