The CEO who nearly lost his shirt in Vegas tries his luck in Washington
Jim Murren, chief executive of MGM Resorts International, in the lobby of his new $1.4 billion resort-casino in National Harbor, two days before opening night. (Photo by Michael Robinson Chavez/The Washington Post)
Outside the window of James J. Murren’s office in the Bellagio casino on the Las Vegas strip, 7,000 construction workers were building a project of his creation.
Dubbed CityCenter it was, at $8.5 billion and 67 acres, the largest privately funded development in U.S. history, designed to include a 4,000-room casino resort mixed in with condominium units, shopping and restaurants run by celebrity chefs.
Dubbed CityCenter it was, at $8.5 billion and 67 acres, the largest privately funded development in U.S. history, designed to include a 4,000-room casino resort mixed in with condominium units, shopping and restaurants run by celebrity chefs.
As a lower-level executive, Murren had persuaded his company, MGM Resorts International, to build it. By the time he assumed the role of MGM chief executive in December 2008, the global economy was collapsing, and CityCenter threatened to take Murren and MGM down with it.
Advisers urged Murren to put CityCenter into bankruptcy and lay off the workers toiling away outside his window. News crews swarmed to report on its demise. If MGM toppled, he’d be responsible for leveling a company with 20 casinos and 61,000 employees, the biggest employer in Nevada.
“That was the most surreal moment of my life,” he said.
This week, as MGM opened the $1.4 billion resort casino at National Harbor in suburban Maryland’s Prince George’s County, Murren basked in the glow of chandeliers and redemption. His rocky arrival atop the MGM empire could not feel further off.
An urban studies and art history major in college, Murren has refined the role of a casino chief executive, designing properties as destinations that offer much more than slot machines and blackjack tables by spending heavily on design, artwork, environmental sustainability and entertainment.
MGM National Harbor’s 3,000-seat theater will present Bruno Mars, Cher and Boyz II Men. The resort displays $30 million worth of art, including pieces by Bob Dylan. There are 15 places to eat and drink and the first fashion boutique by “Sex and the City” star Sarah Jessica Parker.
The opening in Maryland has been all he could hope for. Gov. Larry Hogan (R) and Prince George’s officials applaud the 4,000 jobs and the anticipated $40 million to $45 million a year in additional county tax revenue. Investors are singing his praises.
It was even a bit of a homecoming for his wife, Heather, a Maryland native he married in Saints Philip and James Catholic Church in Baltimore.
It’s the kind of reception he expected 10 years ago with CityCenter, which he imagined would redefine the famed strip in Las Vegas.
Instead the project and Las Vegas as a whole emerged as symbols of the bluster and greed that had kneecapped the American economy.
Three months into Murren’s tenure as chief executive, everyone with a stake in the company was taking a beating. MGM’s stock traded for more than $96 a share in fall 2007; by early March 2009, it had cratered to $1.81.
Members of Congress, union leaders, bankers and investorsdemanded to know what Murren was going to do to save the once-proud owner of the Bellagio, MGM Grand and Mandalay Bay, especially given that casino revenue accounts for about 45 percentof Nevada’s budget — and MGM revenue alone for about 12 percent.
“We had a lot of pain in the valley,” Murren said. “Unemployment skyrocketed to around 15 percent. MGM was the largest employer in the state. Everyone was looking to MGM for some kind of reassurance . . . getting calls from the governor, getting calls from the federal [congressional] delegation because the state’s budget is built on the gaming industry.”
It’s difficult to imagine Murren, 55, facing another crisis as serious as that one, but as dealers and bartenders begin dealing cards and serving cocktails 24 hours a day at the Maryland casino overlooking the Potomac River, the casino business is once again facing headwinds.
More states are opening their doors to casino gambling, and the competition is watering down profits. And Murren’s latest bets, including on a sister company in China, could be susceptible to anti-trade rhetoric by the president-elect, Donald Trump, a man Murren pointedly did not support in the election.
Murren dreamed up the 67-acre, USD $8.5 billion mixed-use CityCenter project, the largest privately financed development in the country. When the financial crisis arrived, the project almost took down the company. (Photo by Ethan Miller/Getty Images for CityCenter)
‘Well, why not?’
The Murrens enjoyed sparkling careers as Wall Street analysts before leaving for the desert. Life was good. As a managing director at Merrill Lynch, Heather made more than her husband and was profiled in Fortune Magazine. They had a son and enjoyed the high life in Manhattan and a 20-acre farm near his home town, Fairfield, Conn.
But Murren, a football and baseball player in high school, had been encouraged by MGM to get off the sidelines and into the industry he was analyzing. Heather, three months pregnant with their second child, backed the idea.
“The thought of us moving to Las Vegas, a place she had only been once for 24 hours — I expected her to say that was flattering but no way,” Murren said. “But she said, ‘Well, why not? What’s the worst thing that could happen?’ ”
During three in-person interviews over more than a year leading up to the opening of MGM National Harbor, Murren spoke with hardly an interruption from his public relations handlers. He never asked to go off the record. He admitted that he worked in an industry that his mother could not abide.
“My mom would just as soon pull her hair out than put money into a slot machine,” he said. “She would consider that a complete waste.”
Research shows that about 2 million Americans are addicted to gambling, and as many as 20 million bet so much and so often that it affects their professional and social lives. Slot machine technology has grown ever more sophisticated about drawing people in and keeping them.
He said that the biggest problem his industry faces is one of misperception and that he doesn’t know why casino workers are viewed as less patriotic than steelworkers or coal miners.
“Generally, the greatest opponent of my industry is lack of information,” he said. “There is no doubt we are going to find people who believe this is not an acceptable form of entertainment. But the vast majority of Americans are completely affirmative on this industry. They like the shows. They like the food.”
During the process that authorized the National Harbor casino, when MGM beat out competing firms for the first license in Prince George’s, residents more often asked about jobs, traffic and what games the casino would offer than they did about the ills of gambling.
Two interested parties in the National Harbor complex, developer Milton V. Peterson and Prince George’s County Executive Rushern L. Baker III (D), were initially opposed to a casino, but they were converted.
Casino giants such as MGM have entered the mainstream in part by focusing less on gambling and more on real estate development, building getaways that offer betting but aren’t consumed by it. Less than half of MGM’s revenue now comes from gambling.
That was the idea behind CityCenter. Murren pitched the project to the MGM board in 2004, before he became chief executive. Dubai World, an investment arm of the Dubai government, signed on as a 50-50 partner. Construction began in 2006 when the economy was sailing along.
After the financial markets crashed, casino operators rushed to cut costs and MGM laid off 9,000 people. The effect on the Las Vegas economy was so disheartening that the Murrens drew the curtains on their windows at home to block out views of the strip.
The low point for Murren came on a Monday morning call from Dubai. MGM and Dubai World each owed a $100 million construction payment due that Friday; MGM’s partners were calling to say they wouldn’t be paying.
Murren and his team spent the week trying to borrow $200 million, working through the night to find the money to keep the project alive through conversations with bankers and investors from Europe, the Middle East and Asia.
As the week wore on, MGM officials drew up the bankruptcy papers so they could be delivered at the end of the week and acquired enough chain-link fencing to surround the entire site.
That Thursday the windows on his first-floor office at Bellagio, near the CityCenter site, rattled. It was a noise he’d never heard before.
“I go outside and look up, and there are five helicopters circling CityCenter to film, for the evening news, the largest construction bankruptcy in the United States because the rumor was out we were going to shut it down on Friday,” he said.
By a hair, the banks opted that day to keep paying the construction bills. Most of CityCenter is now open, anchored by the Aria casino resort, though it will probably never reach Murren’s initial projections. Hundreds of the condo units never sold for anywhere near as much as MGM had envisioned. And one of the buildings, the $400 million Harmon hotel, was so poorly built that it was never occupied and was demolished last year.
MGM’s stock may never again reach the highs it did before the bust, but it has ridden the Vegas revival to over $30 a share. After the company’s earnings came out last month, Barron’s wrote that “the stock could climb 20 percent or so over the next 12 months” building on a 30 percent jump during the previous year.
Prince George’s County Executive Rushern Baker joins Murren, Maryland Gov. Larry Hogan and Mike Miller, Maryland Senate president, for the opening of MGM Thursday night. (Photo by Bill O’Leary/The Washington Post)
In trouble with Trump?
Murren is a Republican who runs his company according to some very Democratic-sounding ideals, among them a focus on environmental design and an unwavering commitment to diversity.
For the National Harbor project, MGM received recognition from the U.S. Green Building Council, and 80 percent of its hires are minorities. The company is often ranked among the best places to work for minorities, and last year, MGM, now a $17.5 billion company, donated $1 million to the Smithsonian’s National Museum of African American History and Culture.
“These jobs in many cases are the first jobs legal immigrants have when they come to the United States — or a second or third chance for people,” he said. “They progress rapidly. They provide great benefits. It’s a pathway to the middle class.”
In a speech at the National Press Club the week before the National Harbor casino’s opening, Murren spent more time discussing African American artists and the work he will display at the National Harbor casino than anything else about the place.
Although he voted for Republicans Ronald Reagan and John McCain for president, there was no way Murren could back Trump, particularly as the GOP nominee railed against not only immigration but also free trade, a foundation of Murren’s expansion into China.
There, MGM Resorts owns a controlling interest in MGM China, which has opened one casino in Macau and has another in the works in Cotai, which is part of the Macau autonomous region.
A crackdown on gambling by the Chinese government, however, has jolted casinos there, driving down gambling revenue from two years ago. Murren acknowledged that the industry was “mightily struggling.”
“Long term, I feel very good about Macau, but it’s been a period of indigestion,” he said.
As for the state of his relationship with the president-elect, Murren said he has met Trump, who co-owns a Las Vegas hotel, but doesn’t know him well. He said he is ready to work with Trump, who also tried his hand at the casino business — and produced a string of bankruptcy filings — in Atlantic City.
“It never occurred to me there would be any vindictiveness around anyone supporting Secretary Clinton over an election that [Trump] won,” Murren said, referring to the Democratic nominee, Hillary Clinton, a former secretary of state.
In any case, he doesn’t seem worried. Asked at the National Press Club whether he knows when to hold them and when to fold them, Murren said: “You don’t want to sit across the table from me.”
Posts
No comments:
Post a Comment