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New U.K. Gaming Deal Set

19 Nov 2003

Las Vegas Sun

by Liz Benston

LAS VEGAS -- Las Vegas casino resort giant MGM MIRAGE said today it formed a joint venture with a prominent U.K. soccer team to potentially build a casino and entertainment complex adjacent to a soccer stadium in an up-and-coming region of northeast England.

The company also is in discussion with other entities about developing similar redevelopment projects elsewhere in the United Kingdom, which is expected to deregulate its gambling laws in the coming years to allow for more casinos as well as Las Vegas-style casino floors.

The agreement with Newcastle United PLC marks the third deal that MGM MIRAGE has announced in the United Kingdom in about six months. The company also hopes to own or develop casinos in London and Bristol, located in western England.

The project is envisioned as a redevelopment project for the city of Newcastle and could possibly include commercial and retail outlets, apartment units, a hotel and entertainment venues as well as a casino of about 100,000 square feet. It would be located in the Newcastle city center next to St. James Park, home of the second largest soccer stadium in England's Premier League with a capacity of more than 52,000.

Newcastle was a coal mining and heavy industry town that "like many Rust Belt towns in the U.S. has undergone a dramatic gentrification and remodeling," MGM MIRAGE President and Chief Financial Officer James Murren said today.

"It's become a hot and exciting place to live," he said. MGM MIRAGE would provide the equity investment and would own and operate the project in facilities leased from the 50-50 joint venture. Newcastle United PLC, the holding company of the soccer team, would offer the land. MGM MIRAGE didn't say how much it would invest in the complex or estimate the timing of the project but said it was contingent upon "timely implementation" of proposed gaming law reforms and obtaining required planning approvals.

MGM MIRAGE hasn't finalized the scope of the project, making cost estimates difficult, Murren said. The company also hasn't determined whether it would develop the non-gaming elements of the complex in addition to the casino, now the focal point for MGM MIRAGE, he said.

The announcement marks the first deal a U.S. casino company has struck with a U.K. soccer team, though the Financial Times newspaper in Britain has reported that MGM MIRAGE has discussed a casino project with Manchester United -- one of the country's best known teams. Murren declined to say exactly how discussions were initiated with Newcastle but said the company is often approached by various entities to talk about casino projects.

"We have a very active development effort in the U.K. and we're very visible. Our intentions are very well known there," he said.

MGM MIRAGE's interest in Newcastle could be politically motivated, gaming analyst Sebastian Sinclair said.

MGM MIRAGE may be expecting the British government to consider using casinos to redevelop areas like Newcastle, he said. Casino companies don't yet know where the government will eventually allow casinos to be built because the new gambling rules are still under development, he said.

"Gaming is often used as a tool for economic development," said Sinclair, of Christiansen Capital Advisors.

Murren declined to comment on reported discussions with Manchester United.

"We have ambitious plans for the U.K. -- deregulation and taxation levels permitting -- and we are looking at other opportunities across the country to develop casino facilities of varying sizes, including, where market conditions warrant, large scale hotel-casino destination resorts,"

MGM MIRAGE Chief Executive Terry Lanni said in a joint statement with Newcastle United.

Newcastle United Chairman Freddy Shepherd said he expects the development to become "a focal point" by creating "vibrant mixed-use development at the heart of the city."

MGM MIRAGE is considering other redevelopment projects in the U.K. involving existing buildings or revitalization zones, Murren said.

"It's all meant to be part of an economic infusion into the country," he said. "I think this is the impetus by which Parliament will debate (gambling law reform) anyway and we'd like to be a part of it."

Last month MGM MIRAGE announced a joint venture with a special events company in the United Kingdom to potentially build a casino and entertainment complex in the heart of London. MGM MIRAGE said it would initially invest more than about $250 million to convert a portion of space at the Olympia Exhibition Centre with owner Earls Court and Olympia Group. Earlier this year MGM MIRAGE became one of the first movers in Britain when it purchased a 25 percent stake in a U.K. company with a casino under construction in Bristol and plans to build others.

Copyright © Las Vegas Sun. Inc. Republished with permission.

 
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