MGM Mirage to build second Project CityCenter near Circus Circus

MGM Mirage to build second Project CityCenter near Circus Circus

Circus Circus Hotel in Las Vegas
The North end of the Vegas strip has being going mad recently, with four new multi-billion dollar casino and hotel resorts currently under construction, and another one about to begin now that El Ad has bought the ageing Frontier and has plans to knock it down and build, yup, another multi-billion dollar casino and hotel!

All this construction work has been encircling the aged Circus Circus hotel, which already looks a bit shabby, but will soon look as bad as The Frontier does compared to its shiny new neighbours The Wynns.

Any thoughts that Circus Circus would be next on the implosion list are soon quashed, however, as its owners, MGM Mirage, are already spending $7.7 billion on Project CityCenter further south of the strip (between the Monte Carlo and The Bellagio), and not even the mighty MGM Mirage could afford to splash out on two huge multi-billion dollar projects at the same time…

…could they?…

MGM Mirage’s plans for Circus Circus

MGM Mirage's land ownership around Circus Circus Las Vegas

Well, as it happens, MGM Mirage do have plans for Circus Circus. Back in April, they bought two plots of land surrounding the hotel: a 25.8 acre plot opposite The Sahara for $444 million, and a smaller 7.6 acre plot for $131 million directly opposite the main Circus Circus hotel itself (see map, above, courtesy of ReviewJournal).

Before I continue, just think of those numbers: $131 million for just 7.6 acres! That’s $17 million per acre! Yet this still pales into insignificance compared with El Ad’s purchase of The Frontier, which cost them a staggering $33 million per acre. It’s no wonder the new hotels are being built tall with thousands of rooms and hundreds of condo units in them – it’s the only way they’ll get their money back.

With its latest deals in the bag, MGM Mirage now owns the entire 100 acres of land north from Circus Circus drive (just opposite the main Circus Circus hotel) up to Sahara Avenue. The question now is: what does it plan to do with all that land? Demolish Circus Circus? Not quite.

A new development around Circus Circus

Having committed $7.7 billion to building Project CityCenter, and then splashing out another half a billion on these new land deals, demolishing Circus Circus and building yet another multi-billion dollar project might be a step too far even for the world’s second largest casino operator. Although small compared with some of the leviathans of the strip, Circus Circus is still a huge hotel, with 3,770 rooms. Just the act of imploding it would be hugely expensive, let alone the cost of building a new hotel in its place.

Instead, MGM Mirage President and Chief Financial Officer Jim Murren has said “We intend to do with Circus Circus what we’ve done with the rest of our properties…We’re going to put some money into it and enhance and expand it over time. Circus Circus will be a gateway to our new development, similar to what Monte Carlo is to Project CityCenter.”

Hang on a minute – “new development”?

Yes, MGM Mirage haven’t just bought two strips of land for car parking – they have ideas for the new plots of land – big ideas!

A focus on middle income customers

MGM Mirage plan to demolish the tacky low-rise motel and recreational vehicle park that ajoins Circus Circus, which will free up another 44 acres to add to the new 34 acres they’ve just bought. According to Murren, “This land assemblage creates a very interesting and exciting opportunity for our company to create an integrated resort complex on the north end of the Strip.”

He sees a huge opportunity in mid-range resorts now that other mid-end resorts such as The Stardust and The Frontier have either been imploded, or soon will be. All the other major developments on the north end of the strip are super-luxury hotels, yet middle-income customers still want somewhere to stay on the strip – somewhere much more affordable.

Project CityCenter mark 2

model of Project CityCenter, Las Vegas
Enter MGM Mirage’s latest plans. Although not yet fully revealed, the company plans to build a new mega-resort of some form on the land, which, according to ReviewJournal, will be similar to, and potentially larger than, Project CityCenter (above), with a newly-refurbished Circus Circus sitting firmly at the head of the new project.

Although no timetable was released for the new project, Murren suggested that work could begin on it before Project CityCenter was completed (currently scheduled for November 2009).

Financing the new development

MGM Mirage majority shareholder, Kirk Kirkorian
So just how is MGM Mirage going to afford all this? Well, MGM Mirage is 56% owned by billionaire Kirk Kirkorian (left), and he’s just announced he’s in discussions to personally buy the Bellagio hotel and Project CityCenter from the company.

MGM Mirage would still manage the properties, so it could still manage the brands and the properties themselves, while the extra influx of cash could be used for other developments – namely, Circus Circus and its adjoining land.

All this means that despite spending billions on new projects, MGM Mirage is far from done, and intends to invest yet more billions in even more grand projects. Circus Circus is safe (at least for now), will get a new, and much needed lick of paint, there’ll still be hotels on the strip that mere mortals can afford, and another shiny new multi-billion dollar development is in the pipeline.

The north end of the strip is certainly where the action is right now, and MGM Mirage intends to be right there in the thick of it!

[Source: ReviewJournal, LasVegasSun]

Trackbacks/Pingbacks

  1. Videos of The Stardust Implosion - June 1, 2007

    […] As the pic above shows, you’ll at least get to see Echelon Place’s shiny new Shangri-La Tower, but that’ll be your lot, looking south. Still, with MGM Mirage planning to build another huge mega-resort on the other side of Circus Circus, you might get a better view looking north after 2010 – that is, of course, if Circus Circus itself isn’t imploded before then! […]

  2. MGM Mirage and Kirzner to build Atlantis mega-resort next to Circus Circus? - June 22, 2007

    […] MGM Mirage purchased over 30 acres of land next to its Circus Circus hotel on the north end of the Vegas strip back in April. This gave the company over 100 acres of contiguous land in a rapidly developing area of the strip. Rumours were rife that MGM Mirage could be planning to build another resort on the scale of the $7.7 billion Project CityCenter. […]

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