As one of the most iconic gambling brands in Vegas history, MGM Casino failures are something that many people don’t associate with the company. However, in reality, the story of MGM Resorts and its predecessors is full of bankruptcies, bad management decisions, and poor investments.
From Metzger’s shady practices and Kirby’s mismanagement to the $9 billion company debt that forced a recent reorganization, MGM Casino history has been far from smooth. In this guide, we’ll look at some of the biggest MGM casino failures and the reasons behind them.
The First MGM Casino Failure | Kirk Kerkorian & the Original MGM Grand
The original MGM Grand opened its doors in 1993 and cost $125 million to build. It was located on the current site of the CityCenter complex and quickly became one of the hottest destinations in Vegas, attracting celebrities and high rollers from all over the world.
However, the initial success wasn't enough to save the casino from failure. Just three years later, the MGM Grand filed for Chapter 11 bankruptcy, citing increased competition and higher-than-expected operating costs as the main reasons for its financial troubles.
According to some reports, the real reason for the bankruptcy was Kirk Kerkorian’s aggressive expansion strategy. The businessman borrowed heavily to fund the purchase of several Las Vegas casinos, including the MGM Grand, but failed to generate enough revenue to service the debt.
As a result, MGM Grand Resort Inc., which operated the casino, defaulted on its loans and had to file for bankruptcy. The property changed hands several times before being acquired by MGM Resorts International in 2000. Today, the new MGM Grand is thriving, but the original site remains empty as MGM Resorts and Infinity World Development Consultants work out the details of the planned Paradise Park project.
Imperial Palace and Its $75 Million Loss
Just two years after the bankruptcy of the original MGM Grand, another Imperial Palace Inc. casino followed suit. This time, it was the turn of the Imperial Palace to fail, racking up a whopping loss of $75 million in 1995 alone.
At the time, the 3,400-room resort was owned by Bally’s Manufacturing, which tried to sell it off to pay down debt associated with its acquisition of Ames Department Stores. However, potential buyers were put off by the casino’s dismal financial performance, leaving Bally’s with few options.
Fanduel Casino Alternatives in NY - Best Alternative to FanduelIn the end, Bally’s decided to keep the Imperial Palace, coming up with a series of cost-cutting measures to try and turn things around. These included laying off staff, reducing operating hours, and cutting back on maintenance and renovations.
It took some time, but the efforts paid off, and the Imperial Palace was back in the black by 1997. Since then, the property has changed hands several times, with Harrah’s Entertainment ultimately acquiring it in 2003 and tearing it down to make way for the current LVH-Las Vegas Hotel & Casino (formerly known as LVH-Las Vegas Sands).
While the Imperial Palace may be gone, its legacy lives on as a reminder of the challenges facing the Las Vegas gaming industry and the importance of sound financial management.
MGM Grand at Foxwoods | The Risky Joint Venture That Went Bust
In 1996, MGM Grand Aria at Foxwoods opened its doors, marking the first foray into the casino industry for both MGM Mirage and the Mashantucket Pequot Tribal Nation, which owns the Foxwoods Resort Casino in Connecticut.
At a cost of $475 million, the 38-story hotel featured more than 1,000 rooms, numerous restaurants and bars, a spa, and a casino with 115,000 square feet of gaming space. For MGM Mirage CEO Terry J. Heston, the joint venture was an opportunity to expand the company’s reach beyond Las Vegas and tap into the growing Northeast market.
However, the celebration was short-lived. In January 2000, MGM Grand Aria at Foxwoods filed for Chapter 11 bankruptcy, citing increased competition and higher-than-expected operating costs as the primary reasons for its financial woes.
Despite its prime location in the heart of downtown Hartford, Connecticut, the casino struggled to attract customers and generate profits. Analysts pointed to the opening of new casinos in the area, including Mohegan Sun, as well as changes in state gambling laws that allowed tribal casinos to offer slot machines off reservation land.
For MGM Mirage, the bankruptcy was a setback, but the company learned from its mistakes and continued to grow and diversify its portfolio. Today, MGM Grand at Foxwoods operates under a different name and is still going strong. While the past may have been rocky, the future looks bright for this iconic casino.
casino games online no downloadTexican Court – The $130M Lawsuit Over a Never-Built Casino
Not every MGM casino failure involved an existing establishment. In the late 1990s, MGM Mirage got involved in a project that never came to fruition, leading to a costly legal battle.
The Texican Court was supposed to be a $250 million casino-hotel complex in El Paso, Texas, developed by the San Carlos Apache Tribe. MGM Mirage signed a management agreement with the tribe, agreeing to operate the casino if it received the necessary approvals from state and federal authorities.
However, opposition from local governments and interest groups made it difficult for the project to move forward. In 1999, a federal court ruled that the casino violated Texas law and ordered the closure of the Apaches’ existing Spirit Mountain Casino.
Undeterred, the tribe pressed ahead with plans for the Texican Court, but without the required licenses, construction couldn’t begin. Frustrated by the delays, MGM Mirage sued the Apache Tribe for $130 million, claiming breach of contract and losses incurred as a result of the failed project.
The case dragged on for years, with both sides accusing each other of bad faith and mismanagement. In the end, a settlement was reached, with MGM Mirage receiving an undisclosed amount in compensation. The Texican Court remained just a plan on paper, and the Apache Tribe turned its attention elsewhere, eventually opening the Apache Gold Casino in Arizona in 2002.
For MGM Mirage, the Texican Court fiasco was a lesson in due diligence and risk management. The company learned the hard way that entering into agreements without proper safeguards can be costly, both financially and reputationally.
MGM Grand Atlanta – The Abandoned Casino Plan That Cost $160M
Another abandoned casino project that cost MGM Resorts dearly was MGM Grand Atlanta. Announced in 2007, the proposed $725 million development promised a 26-story tower with 400 hotel rooms, a 125,000-square-foot casino, and a range of amenities, including restaurants, bars, and retail spaces.
However, the global financial crisis hit just months later, putting the brakes on the project. With the economy in freefall and uncertainty surrounding Georgia’s gambling laws, MGM Resorts decided to pull out, paying a termination fee of $16 million to the developers.
While $16 million might not seem like a huge sum compared to the original price tag, the abandonment of MGM Grand Atlanta sent shockwaves through the investment community. Analysts questioned MGM Resorts’ ability to manage risks effectively and raised concerns about the company’s expansion strategy.
Borgata Poker Open Schedule | Events & ResultsTo add insult to injury, the developers of MGM Grand Atlanta sued MGM Resorts for $144 million, alleging breach of contract and negligent misrepresentation. The case was settled confidentially, further fuelling speculation about the true cost of the botched project.
Today, the site where MGM Grand Atlanta was supposed to rise remains empty, a stark reminder of the dangers of overexpansion and misjudging market conditions. For MGM Resorts, the lesson learned was to be more cautious when venturing into unfamiliar territories and to have contingency plans in place for unexpected events.
CityCenter | The Most Expensive Quasi-Bankruptcy Ever
When CityCenter opened in December 2009, it was hailed as a game-changer for Las Vegas. Costing $9.2 billion to build, it was the most expensive private real estate project in the history of the world. Spanning 67 acres, the development consisted of three hotel towers (ARIA, Vdara, and Mandarin Oriental), two condominium towers, a Crystals shopping mall, and numerous public spaces.
But behind the glitz and glamour lurked deep financial troubles. MGM Resorts and its partner Dubai World poured billions into the project during the Great Recession, hoping to ride out the economic storm. However, as occupancy rates fell and losses mounted, it became clear that drastic action was needed.
In November 2010, MGM Resorts and Dubai World agreed to restructure CityCenter’s debts, avoiding a formal bankruptcy filing but effectively implementing the same principles. Under the terms of the deal, MGM Resorts would take on $4.1 billion of CityCenter’s debt in exchange for a 90.1% stake in the property. Dubai World would retain a 9.9% share and continue to develop the nearby Arabian Gulf mega-project.
While the quasi-bankruptcy allowed CityCenter to weather the storm, it came at a heavy price. MGM Resorts’ balance sheet was burdened with billions of dollars of debt, and the company’s credit rating took a hit. Some analysts argued that the handling of the situation lacked transparency, fueling doubts about MGM Resorts’ financial acumen.
Despite these challenges, CityCenter has since shown signs of recovery. ARIA reported record revenues in 2022, and Vdara was named the best hotel in Las Vegas by U.S. News & World Report. Crystals continues to attract high-end tenants, and the public spaces remain popular with locals and visitors alike.
Looking back on the CityCenter saga, there are lessons to be learned about risk management, transparency, and the importance of adapting to changing circumstances. For MGM Resorts, the experience underscored the need to be nimble, innovative, and focused on creating value for all stakeholders.
MGM China Holdings Limited Bankruptcy Rumours During COVID
The COVID-19 pandemic presented unprecedented challenges for the global hospitality industry, and MGM Resorts was no exception. But while most of the company’s US properties bounced back relatively quickly, its overseas arm, MGM China Holdings Limited, found itself in hot water.
With Macau’s casino industry heavily reliant on Chinese high rollers, the border closures and travel restrictions caused by the virus had a devastating impact on MGM China’s bottom line. Reports emerged suggesting that the company was struggling to service its debt and that a bankruptcy filing couldn’t be ruled out.
MGM Resorts moved swiftly to quell the rumours, reassuring investors that a Chapter 11 filing by MGM China was unlikely and that the subsidiary had adequate liquidity to weather the storm. In the end, MGM China avoided bankruptcy, but not before its stock price plummeted and its long-term prospects came under scrutiny.
best real money online poker sitesThe episode highlighted the interconnectedness of the global casino market and the need for resilience in the face of unpredictable events. It also underscored the importance of transparent communication and proactive risk management.
For MGM Resorts, the challenge now is to support MGM China in its recovery while exploring opportunities for growth in other regions, such as Japan and Italy. By learning from the past and embracing the future, the company can continue to be a force to be reckoned with in the casino industry and beyond.
Ocean Casino Bonus Code (& Payout Info) - Get Ocean CasinoKey Lessons From MGM Casino History & Failures
So, what can we learn from MGM Resorts’ brush with bankruptcy and failures? Here are a few key takeaways:
- Diversification is important, but too much of a good thing can be bad. MGM Resorts’ foray into ill-fated projects such as MGM Grand Atlanta and the original MGM Grand taught the company the importance of doing its homework before committing resources.
- Managing risks is a continuous process, not a one-time event. The experience with MGM Grand Atlanta and CityCenter showed that even the best-laid plans can go awry, emphasizing the need for flexibility and agility in the face of uncertainty.
- Transparency matters. The quasi-bankruptcy of CityCenter sparked questions about MGM Resorts’ financial reporting and communication skills. Being open and honest with stakeholders can help build trust and foster confidence in the company’s abilities.
- Leadership counts. The legacies of figures such as Kirk Kerkorian and Jim Murren underscored the pivotal role that strong leadership can play in shaping an organization’s fortunes. Having visionaries at the helm can make the difference between success and failure.
- Adaptability is crucial. The COVID-19 pandemic demonstrated that even the most seasoned players can be caught off guard by unforeseen events. Embracing change, leveraging technology, and putting the needs of customers first are essential ingredients for survival and growth.
By heeding these lessons and drawing upon its rich history, MGM Resorts is well-positioned to navigate the challenges and opportunities of the future. As the company enters its next chapter, let us remember the words of founder Kirsch Baumgarten: “Success is not final, failure is not fatal: it is the courage to continue that counts.”
FAQ on MGM Casino History and Failures
Now that we’ve covered the low points in MGM casino history, here are quick answers to some of the most frequently asked questions on the subject. If you want to learn more about individual casino failures, simply follow the links to respective guides.
1️⃣ What MGM casinos have failed?
Throughout MGM Resorts International's history, there were seven major bankruptcies and failures involving its casinos or assets. They include:
Best Casinos in Michigan of 2023 - Top Ranked MI Casinos- The original Metzger's Las Vegas MGM Grand (now Bally's Las Vegas) went bankrupt in 1987.
- Kirk Kerkorian's Metro-Goldwyn-Mayer Company, owner of the MGM Grand Las Vegas, filed for bankruptcy in 2000 because of excessive debt.
- Imperial Palace, Inc. went bankrupt in 1995.
- MGM Grand at Foxwoods, a joint venture with the Mashantucket Pequot Tribal Nation, filed for bankruptcy in 2000.
- Two abandoned casino projects - Texican Court in El Paso and MGM Grand Atlanta - cost MGM Resorts dearly. The former ended in a $130 million lawsuit, while the latter resulted in an $16 million termination fee.
- CityCenter suffered the most expensive quasi-bankruptcy in history in 2010.
- MGM China Holdings Limited faced bankruptcy rumours in 2020 due to the COVID-19 pandemic's effect on Macao's casino industry.
2️⃣ Why did the MGM Grand Las Vegas file for bankruptcy twice?
Metzger's Corp, the original owner of what is now Bally's Las Vegas (then MGM Grand), filed for bankruptcy in 1976 and again in 1987. Furthermore, Kirk Kerkorian's Metro-Goldwyn-Mayer Company, which owned the current MGM Grand Las Vegas, declared bankruptcy in 2000 due to overwhelming debt.
3️⃣ Is MGM Grand Birmingham open?
No, MGM Grand Birmingham (previously known as Hoover AL) permanently closed its doors in June 2020. The owner, MGM Resorts, put the property up for sale in February 2021. At this point, no buyer has been announced publicly.
4️⃣ Did MGM Grand Atlanta Open?
MGM Grand Atlanta was announced in 2007 but never opened to the public. The economic downturn triggered by the 2008 financial crisis halted the construction work, and in 2008, MGM Resorts International pulled out of the project, paying a $16m breakup fee. Today, the site remains mostly empty.
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