Jan. 6--LAS VEGAS -- Ken Rosevear has spanned the globe in his many searches for the next casino hot spot.
And when he finds such a spot, MGM Mirage's president of development likes to go over the top. Way over the top.
"It's not just about building them and they will come," Rosevear said. "You have to build them beyond expectation."
He has developed 29 casinos worldwide. Among his credits: New York New York in Las Vegas, Monte Casino in Johannesburg, South Africa, and MGM Grand Macao in South China.
His next project, on a 72-acre parcel in Atlantic City's Marina District -- the $5 billion MGM Grand Atlantic City Casino -- could be his most ambitious.
"It must be a postcard," Rosevear said during a recent interview inside an executive conference room at the MGM-owned Bellagio that was papered with renderings of his new Atlantic City extravaganza.
His goal: "To make an iconic building that will be recognized as the new skyline of Atlantic City," he said.
For the first time publicly, Rosevear went into detail about what $5 billion affords.
He said the Atlantic City casino is on a similar scale with MGM's $7.8 billion CityCenter complex, which is under construction on the Las Vegas Strip, not too far from Rosevear's Bellagio office.
MGM Grand Atlantic City will be Y-shaped -- like the Mirage, Mandalay Bay and Monte Carlo casinos in Las Vegas -- a shape most noticeable in an aerial view.
It will incorporate design features of other Rosevear-developed casinos. For instance, the casino will have a circular floor plan -- like his New York New York casino -- to keep foot traffic moving.
The golden hues of the three towers will be graduated, the bands of color narrowing as they go up, "as if disappearing into the sky," Rosevear said. Just like the MGM Grand Macao.
But unique to MGM Grand Atlantic City will be a spa rising 450 feet above the ground that links all three towers. Rosevear said such a design "will allow people to walk to the spa directly from the towers." The spa will be two levels with a 360-degree view.
"The idea is to make MGM Grand Atlantic City three times bigger and make it taller, with a combination of permanent and moving shows . . . so that it's an ever-changing, must-see spectacle," he said. "To take it to a new level."
The opulence of MGM Grand Atlantic City and CityCenter speaks to the continuing strength of the casino industry and the unabated national and international spending sprees among some major U.S. gaming companies despite a gloomy economy.
Casino companies that were not acquired by private-equity firms in leveraged buyouts and had their balance sheets burdened with large amounts of debt "have a lot of capacity to develop in good markets where they find opportunity," said Andrew Zarnett of Deutsche Bank AG. "They are able to do $5-billion-type developments at the same time the economy is contracting or getting weaker."
Much of the cash for this came from foreign capital, which flooded into the United States because of the dollar's weakness, noted Adam Steinberg, a gaming analyst with Morgan Joseph & Co. Inc., of New York. The Bloomberg Gaming Industry Index, which measures the performance of casino company stocks, showed they gained nearly 7 percent in 2007, despite a steep November swoon. The S&P 500 index gained 3.5 percent for the year.
MGM Mirage is a major recipient of foreign investment. Dubai World -- a holding company for the Persian Gulf state of Dubai that last year acquired department store Barneys New York Inc. from Jones Apparel Group Inc., of Bristol, Bucks County, for $825 million -- is investing more than $5 billion in MGM Mirage.
In October, Dubai World acquired about $1.2 billion of MGM stock; in November, it paid $2.7 billion for a 50 percent stake in the CityCenter project; and in December, it acquired an additional five million shares of MGM stock for $424 million. And it plans to buy more.
The deal removed more than $3 billion in debt from MGM's books and will enable MGM to fully finance the $5 billion Atlantic City casino, which was announced Oct. 11, and forge ahead on other projects internationally, said chief financial officer Dan D'Arrigo.
"The deal really freed up our balance sheet to allow us to move forward in Atlantic City sooner than we would have been able to before," he said.
At least two more super casinos will be built in Atlantic City during the same time as the MGM casino.
Revel Entertainment Group L.L.C. is building a $2 billion casino on the Boardwalk, and Pinnacle Entertainment Inc., of Las Vegas, is developing a $1.5 billion one on the site of the former Sands Casino Hotel. Like MGM, each is targeting a 2012 opening. A fourth casino, by a private-investor group, has been proposed for the Boardwalk's southern end.
"The days of putting up boring-looking concrete buildings with big signs with big red letters are over," said David G. Schwartz, author of Roll the Bones: The History of Gambling and director of the Center for Gaming Research at the University of Nevada, Las Vegas. "People want the whole fantasy of gambling in a fantasy casino that does not look like an office building. They want to be in a high-class casino."
There is also another driving force.
"The new destinations in Atlantic City, as well as in Las Vegas, have to rise to a new level to attract a broad range of adults who are looking for a new experience," said Michael Pollock, publisher of Gaming Industry Observer and managing director of Spectrum Gaming Group L.L.C., of Linwood, N.J. "It's essentially the way to succeed in the market now."
That is Rosevear's game plan. He enlisted world-renown architect Kohn Pedersen Fox to carry out his vision. He described the new casino as being for everybody.
"This is a very large casino," Rosevear said. "It will be among the largest in the country, so you can't be too narrow in your demographic. That's why I've broken the casino into different areas."
One will be off the Race and Sports Book area; another will be more of a daytime casino; and a third section will feature entertainment with a nightclub.
The casino will have an indoor and outdoor pool, upscale retail and restaurants. The tallest tower -- 800 feet -- will be reserved strictly for V.I.P. guests and will be among the tallest buildings in New Jersey.
Rosevear has been making regular trips to Atlantic City since 1995, when he joined MGM from the former Caesars Entertainment Inc., and when MGM began assembling the 72-acre parcel.
He has 60 acres to work with initially. He said future expansion on the remaining 12 acres could be for residential, another hotel, condos, an entertainment arena, or more retail.
Gambling mogul Steve Wynn partnered with Boyd Gaming Corp., of Las Vegas, in May 1996 to develop the Borgata, near Harrah's and Trump Marina casinos, all in the Marina District. During the predevelopment phase, MGM bought Wynn's Mirage Resorts Inc. in May 2000, and MGM Mirage became Boyd's partner on the project. Instead of building a $750 million casino with 1,200 hotel rooms, they decided on a $1.1 billion Las Vegas-style mega-casino with 2,000 rooms.
"Great developers in the world have to take a little bit of a leap of faith that if they do something so spectacular, the market will respond," Rosevear said.
It clearly did. The vertical, golden-hued Borgata Hotel Casino & Spa debuted in July 2003 and has been Atlantic City's most profitable casino ever since.
"This clearly positions the Marina to compete favorably with other properties in Atlantic City as well as other emerging jurisdictions," said former Borgata chief executive officer Robert Boughner, on having MGM Grand move in next door. "We are delighted that it is now coming to fruition."
The fortunes of the two casinos will literally be linked. MGM Grand will be connected to the Borgata by an enclosed walkway.
(Philadelphia Inquirer, The (KRT) -- 01/07/08)
