Twilight of the gods?

It’s been obvious since jump street that MGM Resorts International bit off more than it could chew when it upsized its ambitions for the old Boardwalk site into a civic citadel, a Valhalla on the Strip. Behind CEO Jim Murren‘s sanguine rhetoric about the advantages of refinancing $1.8 billion in CityCenter debt lies quite a different story, according to documents obtained by the Wall Street Journal. Nobody knows their way around CityCenter quite like Pulitzer Prize-winning reporter Alexandra Berzon, who has uncovered internal deliberations in which MGM and partner Dubai World mulled closing a pair of the metaresort’s hotels and shutting down Cirque du Soleil’s excruciating Viva Elvis. (Whoever thought that Criss Angel‘s notorious Believe might outlive an Elvis Presley-themed Cirque show?) Interestingly, the Las Vegas Review-Journal‘s Mike Weatherford has reported that MGM did not, in fact, “extend” The Lion King but bought it out of the final 12 months of its Mandalay Bay contract.

If the $1.8 billion in debt can’t be restructured, CityCenter “could be in default on the loan as early as mid-2011,” Berzon writes. For his part, Murren casts the drastic moves considered — and discarded — as spitballing, a part of the cost-cutting process. The fact that such dire measures were seriously considered, however, would tend to indicate a problem of unusual severity. In the case of MGM, another worry for Wall Street has been a lack of cash on hand — a sagging rampart that Murren has been busily shoring up through a spate of recent moves, including the early retirement of a debt owed by MGM Grand Paradise to its corporate parent.

For an exercise of “new urbanism,” CityCenter has always come up short on the trappings of urban life. By mid-August, action was belatedly being taken to add such rudimentary amenities as a grocery store. However, $1 million in cost savings in coming in ways that customers may not appreciate: less money spent on the Aria buffet and a huge reduction in dealers. For a casino as exceptionally dependent on table play as Aria, the last measure appears quixotic in the extreme. Unsold condos continue to be a cast-iron albatross around CityCenter’s neck and Mandarin Oriental has been very slow out of the gate. Murren tells Berzon that performance is improving and, hey, new resorts take time to gain traction. That’s a much different tune than he was singing one year ago, when CityCenter was going to be the “quantum leap” that ginned up Vegas visitation by 5% or more.

(Incidentally, the WSJ timeline following CityCenter’s November 2004 inception to its current struggles could also serve just about perfectly to trace the trajectory of the rise and fall of the Vegas bubble.)

“Uncomfortable” silence. That’s what Las Vegas Sands CEO Sheldon Adelson is said to have maintained during his most recent investor call when the subject of Macao was discussed. (Other accounts differ.) Allegations of wrongdoing flung at Adelson by sacked Sands China CEO Steve Jacobs may have something to do with Adelson’s alleged reticence. The difficulty of moving $4.1 billion Venetian Oriental forward amid contradictory Macanese government mandates might also be clouding Sheldon’s mood. He needn’t worry too much: Wall Street is forecasting a 19.5% ROI from Venetian Oriental in its first year.

Wynncore Encore? Ever-resourceful Steve Wynn has designed his Cotai Strip™ casino in such a way as to have 12 acres left over. Since the land is leased from the Macao government, he can’t flip it to sub-concessionaire Melco Crown Entertainment — so does he give it back or build Casino #4. I’d guess the latter, wouldn’t you?

After all, casino revenue leapt 48-50% last month, reaching $2.4 billion and sparking a rally in gaming stocks on the Hong Kong bourse. The record level of business was particularly good for MGM and partner Pansy Ho, who moved into fifth place, a few tenths of a percentage point ahead of Galaxy Entertainment (which has far more casino product). Melco Crown (14%) also edged past Wynncore Macau, while Sands China (19%) ran second only to our old chum Stanley Ho, who retains fully a third of the Macanese gambling market.