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Non-Tech : MGM Grand Hotel and Casino Symbol MGG

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To: battle beast who wrote (29)7/24/1997 8:36:00 AM
From: Randy Atkins   of 96
Don't know at this point. There could be many scenarios; some could be great for MGG, others not so good.

Keep in mind that this is just a shelf at this point, i.e., the money is "on the shelf"; MGG may use the money for whatever purpose they choose, and in any amount. I suspect a chunk will go to build the new Marriott. This will put MGG with a total of over 7,000 rooms! MGG will be by far the largest hotel in the world.

The problem for MGG RIGHT NOW is that the street believes that Las Vegas has overbuilt. This is not true, but the street believes it and what the street believes is what determines the share price. One of the attractive features of MGG is that it has relatively less debt than the average for the sector. I'm not sure how the street will view going in debt to build more rooms that don't get rented...

The REAL problem for Las Vegas is a MAJOR bottleneck at McCarren. The reason that Las Vegas is only 85% occupied is because the customers can't get there. Gamblers are impulsive. Used to, you could pick up the phone on Friday night and hop a plane to Vegas on Saturday morning. Can't do it anymore. There's not enough seats on the plane. This will be worked out over time as LV is currently building new terminals as we speak. But for right now, it is too hard for patrons to get to LV.

The additional debt will most certainly be delutive if MGG doesn't add to the bottom line. BUT Las Vegas is the convention center of the world. MGG wants to be the place where every conventioner lays his/her head at night. It could pay off in spades for the shareholders.
In Las Vegas, bigger is definitely better. Ever since Ben Siegel built the Flamingo and ran out the sawdust joints, it's who can put on the biggest show that gets the business. The battle is between MGG and MIR. Siegel was a visionary. So is Kerkorian. Did you know that just about every group in LV passed on the New York venture? Kerkorian saw it, and it is paying off big time.

More than the debt issue, what we REALLY need today are some good numbers, and a positive phone call.

Sorry for the ramblings...

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