Kirk Bets A Billionby
No one will ever accuse Kirk Kerkorian of being cheap. In his younger days, the 76-year-old billionaire used to jet off late at night with friend Cary Grant to drop thousands at the tables in Las Vegas. But that's chump change compared with what Kerkorian's 73%-owned company, MGM Grand Inc., is spending to make its $1.03 billion, 5,005-room MGM Grand Hotel & Theme Park--opening Dec. 18--the hottest joint in an already bustling Vegas.
Start with the estimated $20 million Barbra Streisand will get for her two New Year's performances. Then throw in Frank Sinatra, Don Rickles, and Kenny Loggins, who'll split another $1 million or so for their gigs at Kirk's place over the Christmas-New Year's week. Add an exhibition tennis match between Andre Agassi and Jimmy Connors on opening day and millions more for advertisements, including a high-tech spot that cost $1 million to produce. "In all, we'll be spending in the tens of millions," says MGM President and Chief Executive Robert R. Maxey.
The big bucks are meant to help the Grand claw its way ahead of a slew of new megacasinos in Vegas. In November, Mirage Resorts Inc. opened its $475 million pirate-fantasy Treasure Island hotel and casino, just down the Strip from Circus Circus Enterprises' new $375 million Pyramid-shaped Luxor. With the addition of the MGM Grand, there are now a staggering 86,645 rooms in the city--a 13% jump from 1992, for a market where tourism is running only 6% ahead of last year.
AMERICANS IN VEGAS. With $473 million of debt on its books, Kerkorian's new joint must generate sales of more than $1.2 million each day just to cover interest and operating expenses. Analysts say that only a few casinos--such as the Mirage and Donald Trump's Taj Mahal--have drawn that sort of business, and that was before the new competition crowded the strip.
No other hotel matches the Grand's scale, though. Its 171,500-square-foot casino is 70% larger than the Mirage's, and it has nearly 2,000 more rooms. The Grand has its own 40-megawatt power plant, a clinic with 12 full-time doctors, and a buffet that can serve 11,000 meals a day. MGM Grand executives have told investors that they expect 2 million gamblers and their kids to pay $25 apiece to ride the 12 rides at its 33-acre theme park--generating $58 million a year.
Sound risky? Kerkorian has twice built casinos and sold them at big profits. Chances are, he'll attract a fair share of gamblers through his doorway's seven-story lion's head. They'll sit at a pool and beach area the size of two football fields and, soon, catch a $30 million special-effects show. "We're going to get everyone to come to our place because we're selling them entertainment," says MGM President Maxey. To make it work, the Grand will also have to sell them on spending some serious money.