Wednesday, March 25, 2009

How big, and how much, is CityCenter?

Sorry to revisit stuff we've covered before here, but I was struck this morning once again by the fact that the media is all over the place with the price of CityCenter. Howard Stutz in the Review-Journal refers to it as a $9.1 billion project, but Liz Benston and Lisa Mascaro, both of the Las Vegas Sun, put the figure at $8.7 billion in different stories.

Benston's piece even includes this explanation:

Dubai World says at the time of the joint venture agreement, MGM Mirage estimated CityCenter would cost $7.5 billion. MGM Mirage has since increased that estimate by about $1.2 billion, with further increases likely despite recent moves to scale back some aspects of CityCenter, the lawsuit says.

So I wrote to Alan Feldman, MGM Mirage's spokesman. As recently as Jan. 8, he told VegasHappensHere.Com: "The safest apples-to-apples would be our previously stated $9.2b less the just announced $600m in savings" from shortening The Harmon. I asked at the time if that meant $8.6 billion was the current figure and Feldman said yes.

Well, that was two months ago. Today, inquiring about who's right now, Feldman replied via e-mail: "The Sun is correct. $8.7 total, $1.2 of which we are hoping to finance."

Okey dokey, then, although the Sun and Feldman can't both be correct because the Sun was operating off of figures given to Dubai in 2007 and Feldman said two months ago that the figure was $9.2 billion less $600 million. See how this can make you crazy? And this is a PUBLICLY traded company!

To Feldman's credit, back in January he did offer this caveat: "This is a number that you need to understand is moving. We continue to bid stuff, we continue to get new pricing. We talk about these numbers as if they're fixed but they're really not."

I am not casting aspersions on Stutz or any other reporter here, so please don't take it that way. These numbers change by the week or month. It's dizzying. Especially when you receive two newspapers in one every morning and the same thicket of newsprint offers different numbers. So the best I can suggest is that journalists, every single time they write about this project, ask Feldman what the current figure is.

MEANWHILE, how BIG is CityCenter? Well, in April 2007, VegasHappensHere.Com puzzled over that, too. Different reports had it at 76, 66, or 67 acres. MGM Mirage's original literature when the project was announced said 66 acres, a New York Times reporter called it 67 acres and other media were using 76 acres.

At that point, Feldman responded: "Please use 76. There's some technical debate internally, but 76 is in use far and wide and it's not inaccurate."

Okey dokey again. But then I noticed recently that the press was using 67 acres and the signage at the condo-sales kiosk for CityCenter at the Mirage said 67 acres, too. So today I asked again. Feldman's response: "Acreage: 67 acres."

Well, where'd the other 9 acres go?

"I believe some land was transferred to Monte Carlo for a parking garage."

Must be some parking garage at 9 acres. I pressed Feldman to explain further and he said he didn't have the time. I suggested holding off on this post until tomorrow if it would make a difference. He said it would not.

So there you have it. Make of that what you will. What I make of it is that numbers are very loosey goosey in this project so critical to the welfare of Nevada that U.S. senators need to get involved in to saving it even as MGM Mirage also insists it is totally capable of paying to finish construction so chill out, Mr. Dubai Dudes and Mr. Wall Street Dudes.

No wonder, then, Dubai is so uncomfortable. None of the numbers MGM Mirage provide ever come with comprehensive explanations. The 10,000 employees that CityCenter will hire? Who knows if that's a real figure, either?

7 comments:

Anonymous said...

In Stutz's defense, he may be including the $400 million cost of the land in his $9.1 billion figure. I don't think MGM Mirage counts that toward the project cost, IIRC.

David McKee

THE STRIP PODCAST said...

oh, that's possible. i have no doubt the figures come from somewhere. it's confusing and it's always changing. Bloomberg uses $11b or something because the land value is supposed to be $2b or something.

Anonymous said...

Who gives a rats ass? 67-76 acres? I'm sure its like he said, some land was re-alloted. And when you're talking about 9 billion, who cares if you're off a hundred million, or two, here and there. Vegas has always suffered from this problem. Bellagio has been listed as costing 1.6 to build, others stated it at 1.8. Venetian, was the same way. I've seen it listed at $1.5B up to $2.0B. Not sure I get the point to this story, but I do love most of your post. So keep up the good work.

mike_ch said...

I noticed that you're referring to yourself as your URL throughout this story instead of in the first-person.

Frustrated with the RJ, much?

THE STRIP PODCAST said...

actually, i was advised that for google rankings purposes i should link to 'valued words' more, rather than click 'here'.

this matters, btw, because this is a massive project that we're being told is critical to the viability of our very city. it's a publicly traded company and when statistics on every conceivable aspect keeps shifting, it's smart for journalists to (a) try to get some consistency so as to not confuse the public and (b) wonder what other numbers are unreliable.

Anonymous said...

10,000 employees. I thought it was 12,000 that they were hiring?

GregoryZephyr said...

Millions billions may not be such a big deal to the average Joe, but when looking at ratios that matter to investors and lenders such as Return on Investment or Return on Equity, it's important. Once the place opens, the "Return" part of the equation is easy enough to measure. If the denominator, though, fluctuates all over the place, it makes it impossible to calculate an accurate number.