When TBW and I were in Las Vegas a few weeks ago to see the World of Concrete exposition, we stayed at the Bellagio Hotel. Next door, MGM Mirage is building, “The sort of project God would build, if He had the money,” according to one of the casino competitors quoted in The Economist. The $8.6B City Center project circles the drain, perhaps to become one of history’s great design and construction failures. Dubai World is a joint venture partner and has sued and refused to provide the next $200M payment.
I’ve written about this project before, the concrete crews changed some rebar layouts in the foundations and the building inspectors claim the construction inadequate. They all compromised by changing from 80 stories of condos to 40 stories. I can only imagine what that does to the pro forma.
Many of the casinos expanded, believing that Las Vegas was immune to the effect of an economic downturn. Turns out, they aren’t. The gambling revenues fell 10% last year and look to continue to decline this year. With lots of vacant room now, the City Center project will expand that glut…if MGM Mirage avoids bankruptcy, actually gets the financing done and opens the facility.
In a classic construction management dispute, Dubai World claims in its lawsuit that construction costs have spiraled out of control. MGM Mirage claims all the budgets have been approved by the partners. As in, “Oh, did you expect me to look at that when I signed it?”