Monday, December 7, 2009

Murren Is OK With Locals Skipping Aria

One of the quotes that fell out of my 4,100-word L.A. Weekly opus on CityCenter in the editing phase was this from RateVegas.Com owner Hunter Hillegas: "It's almost as though if Jim Murren could have built Aria without a casino, he would have." Murren, of course, is the MGM Mirage CEO.

I asked CityCenter president Bobby Baldwin about that notion and he found it "completely ridiculous."

Baldwin: He has an affinity to making money and he knows he couldn't make any money at CityCenter if he didn't have a powerful casino-resort. So there was never any discussion of having no casino at all in there.

Friess: Right, but you are a gambler. You understand the appeal of gambling.

Baldwin: So does Jim Murren, even though he's not a gambler. ... He knows that the casino component of any casino-resort is the economic driver of its economic results. So he's acutely aware of that.

OK. So Murren knows it's necessary. That's not the same as liking it and most of the company's planned future expansion outside of Las Vegas aims to rebrand MGM Mirage as a hospitality company with non-gaming hotels in Dubai, Egypt, China and elsewhere.

The reason I bring this up is because Jon Ralston asked Murren today about his admission -- boast? -- to me that he'd never been in Encore or Palazzo. Here's that quote to me in its entirety:

I’ve never been in Encore, when did it open up? I’ve never been into Palazzo. It’s not that I don’t care, I just don’t need to go. But I do know – I have nothing against either one of those guys, especially Steve Wynn, I like him a lot. But [CityCenter] is not going to be, for most people, the same as just another resort opening up. I know it won’t.

Now, it's not just that he's saying he's never been in but that he seems proud that he doesn't even know when the last most significant events in his marketplace occurred. That would seem strange in and of itself -- surely the head of Coffee Bean knows when a new Starbucks opens nearby, right? -- but now comes Murren's further explanation of the remark to Ralston in a TV interview for Ralston's "Face To Face" show. According to Ralston's transcript of his interview with Murren, which should air tonight on Las Vegas One, Murren said:

"I live in Summerlin. I have a great community. I coach my kids. I have a lot of restaurants out there. If I didn't work in the resort community, I probably wouldn't come down here much. That was my point. That is my point as a counterpoint to CityCenter. I really believe it is not a casino-hotel. I really would not be upset at all if people never visit Aria that live here. ... ."

Whoa, whoa, WHOA! Baldwin said Aria's casino is the economic engine of the whole she-bang and Murren knows that. But Murren doesn't even care if his neighbors ever see it and, if he didn't have to because he gets millions to do so, he might never bother either! This is not a ringing endorsement of the most significant financial element of your new endeavor, is it?

So let's remove Aria from CityCenter. Without it, you're left with four buildings containing private residences, two of which are also hotels that contain no shows or casinos. And you have a 500,000-square-foot "retail and entertainment district" with some of the most expensive products anyone can sell anywhere in the world, not exactly a locals-friendly shopping experience. Plus a whole lot of terrific art and an oft-mentioned pocket park that Murren recommends as a neat place to sit even though there's no place (yet) to sit. (Note to fellow journos: There is only one pocket park at CityCenter. One. So "pocket parks" is not accurate. Thanks.)

Again, there are lots of elements of CityCenter I love. But it is worrisome when a massive gaming company is being piloted by someone who isn't personally aware of his competition and seems so personally uncomfortable with the heart of his business.

I asked Steve Wynn about this, too. In the old days, it was customary for the casino moguls to walk one another around their properties pre-opening. It was standard for them to attend one another's openings, too. And here's what Wynn replied when told of Murren's statement:

"He didn’t ask me! I’d love to give him a tour. He can have anything he wants. He can go in the back of the house, he can go in the accounting room, he can look at the financial statements. Oh, hell, if he called me up if he wanted to know what the daily operating expenses were, I’d tell him. Absolute open book."

Wynn has walked CityCenter or at least the Crystals, by the way, with his former
protege Bobby Baldwin. No idea what he thought of it, though. His company did this on Sunday...

RT @Brian_Fey: I'd like to see a scan of that.  I'm sure its ... on Twitpic

...though. The Twitterverse lauded Wynn's class but I'm sure MGM Mirage did the same for Encore and Palazzo. And I found the second sentence in that full-page R-J ad a little loaded:

"Most of all we wish the thousands of people that will staff CityCenter a happy and secure future."

Oh, and one more thing. You think maybe if I wore a disguise and pretended to be Murren, Wynn would show me all that stuff, too? Worth a shot, no?


Anonymous said...

Completely fascinating, Steve. I really don't understand Murren or this project. If I wanted Park Avenue and NYC or some "urban environment", there are planes that travel to the East as opposed to the Southwest.

It would be good to learn the numbers of the retailers after a year and how much their sales are on a per square foot basis.

I do have a question: Does City Center stand over Bellagio, cast shadows on Bellagio? I love the Bellagio, and don't really think she is over-rated or even close to done with her productive life, but if they have truly diminished her it will be a sad day.



Jeff in OKC said...

Obviously, gaming is the foundation of Las Vegas and it subsidizes all those gleaming new "resorts". Why would anyone want to build a property that doesn't maximize that incredible opportunity? And why would the leader of the largest employer in Nevada (and the company that employs the highest percentage of any states workforce in America) appear to be ashamed of what made the company? The future of MGM may be in non-gaming areas in other markets, but Nevada will never, and should never, attempt to function without it. Sometimes it sounds like Murren is getting too big for his britches. :-)

Anonymous said...

This isn't a surprise. Murren showed his arrogance /ignorance with building City Center without having the financing locked in. Now with this "he doesn't need no stinkin locals", or that he should see what his competition is doing, just proves it again.

Jim appears even more oblivious because he must not be paying attention to his own company, either. MGM's locals specials feature Aria & Vadara at the top of the hotel rooms and Aria on dining's list.

It only makes sense to have offerings for locals, particularly in this age of the web and a tight market. Locals blogging, FBing, tweeting and making recommendations to friends is advertising that's hard to beat. The Wynn-ster has it figured out, and obviously someone at MGM, just not the guy supposedly running the show.


SG: Bellagio stands tall. No shadows of any sort.

Jeff: Glad to hear you chime in. Sometimes you think I'm taking some minor remarks out of context or making too much of it. In this case, I take it, you don't think so?

Anon: Keep in mind that Wynn Las Vegas really was not interested in local traffic when it opened. It was a long time before they involved locals in deals for show tix, for instance. That mountain was built to insulate the guests from the riff-raff. But they figured out that SOME of that riff-raff are your best advertising.

This comment has been removed by the author.
Anonymous said...

Sounds like Murren basically acknowledged my premise.

I wasn't being serious - of course they were gonna build a casino for the reasons that Baldwin cited - just seems like Murren's not all that fond of them when it comes to his own entertainment choices.

Maybe not unreasonable but an interesting factoid for a casino operator.

- Hunter

Anonymous said...

Steve, I don't think Wynn had locals as a focus when he opened,nor does he now, but he didn't say he would exclude them or didn't need their business. I know I received my share of invites back then.

The point is that this is a totally different economic situation than when Wynn opened. All the operators have had open arms for locals, including MGM. Obviously from the link I provided, someone at MGM has enough sense to include locals, even if Murren says he could care less about them. That isn't a sign of a smart businessman, and not keeping up with your competition is another red flag, particularly when you have a big nut to crack to cover the debt service.

mike_ch said...

I just can't connect with people like our first poster, "SG", who complains that he can go to NYC if he wants to see NYC and then gueshes about Bellagio. If you want that, why not go to the Italian lakeside? You can go there, too, you know. Also, Paris, Venice, and Egypt.

I had a brief love for Murren but man is this article a downer. How could anyone who likes Manhattan and the atmosphere there look around the McManion-sprawl of Summerlin and promote it as an ideal community? G'uhhh...

Anonymous said...

I just can't connect with people like our first poster, "SG", who complains that he can go to NYC if he wants to see NYC and then gueshes about Bellagio. If you want that, why not go to the Italian lakeside? You can go there, too, you know. Also, Paris, Venice, and Egypt.

Mike - I can't get to those places in under 5 hours and reasonably Vegas is 1 hour 40 minutes and I get a lot quickly and easily and Vegas gives me more choices during the course of a day. Whether that makes sense or "connects" I don't know. People are different and have different tastes and thinking.

I am also thinking back to following from Steve's piece:

"To understand what MGM Mirage has built and why, you can begin with the sort of flack Murren took from his New York City friends when, in 1998, at age 36, he left his gig as a top equity analyst to become the chief financial officer for what was then MGM Grand Inc. He was a child of Gotham, growing up in suburban Connecticut and being taken into the city by his mother for doses of high culture “as often as possible.”

The notion of uprooting for a life in Vegas “was preposterous to my friends and family,” Murren said in an interview last month. “Why would you move to such a place as this, when you have all this in front of you, all the museums, all the cultural options, all the educational options?”

Are these really the people one builds a 8.5 billion project that has and relies on a CASINO for? The people who historically looked down on Vegas are the ones the most expensive resort in the City's history is built for? Are the stores that are opening in the mall not available where these people live or the places that they currently travel to? What's going to get these people to add Vegas as a destination and then maybe drop some money gambling when, as described above, that doesn't seem to be their interest?

The other thing that is strange are the quotes from Murren, both in Steve's piece and the Ralston quote that Steve uses, in that they seem disinterested and academic. He isn't an analyst any longer. He is a principal/developer. Those are different hats.

Obviously the market will bear out the vision or not.


GregoryZephyr said...

Saying he wouldn't mind if locals don't visit is not really saying he wants to keep locals out. I think his point was that it was not designed to attract locals--no movie theater, bowling alley, etc. Whether City Center is a success is not dependent on locals in the same way that, say, Orleans is. My impression is that he wanted to create a contemporary "Rockefeller Center" of Vegas and he's kind of done that albeit with hotel rooms instead of offices. In some ways it is really a resort themed to look like a modern city in the same way that NYNY is a resort themed to look like Manhattan.

atdnext said...

OK, OK, I've been defending Jim Murren for the last few days on City Center... But this is just lame-brained! Especially in these hard economic times, doesn't Murren want to fill up Aria, Vdara, & Mandarin Oriental with as many paying customers as possible? By dismissing locals like that while looking disgustingly snooty, he's just handing over those possible customers to Boyd & Station on a silver platter! I guess if he really doesn't want me at City Center, I should just stay at The M & GVR and just ignore him altogether?

Of course I won't, but I'm sure many of the already angry detractors will just use this as more reason to avoid City Center at all costs. I guess he still hasn't yet learned from all of Steve Wynn's past mistakes. Even Wynn & Encore are now offering "locals' specials"! I still hope for City Center's success (since Las Vegas needs more success for a change!), but I'm also hoping Jim Murren thinks twice before being so dismissive toward the community he says he's so proud of.

Anonymous said...

Now on the front of the Sun's site is an article where Murren claims locals WILL make a special trip just to visit his creation. Yes, now his project WILL bring out the locals, while all the other properties only attract those who may have the obligation of entertaining visitors. Of course he wouldn't bother to visit his own properties if he didn't work there.

I'll stand by my comments in my earlier posts. The man is oblivious combined with arrogance and ignorance. An elitist bean counter that only wants to crunch stats and reports. A true businessperson stays in tune with their business, customers and competitors. He should be dealing with these real, live entities as they are always in a state of flux. Wynn is right, Bobby Baldwin would have been a better choice than to have this narcissist at the helm.


Anon: Murren has ALWAYS said locals WILL come to CityCenter. He's always said they'd come to see the art, shop, sit in his pocket park, soak up the ambiance. That, at least, is consistent, if not questionable.


Anon: Murren has ALWAYS said locals WILL come to CityCenter. He's always said they'd come to see the art, shop, sit in his pocket park, soak up the ambiance. That, at least, is consistent, if not questionable.