Do you think analysts are fired because of client pressure
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March 30th, 2010 at 4:55:25 PM
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Was Robert LaFleur bounced because he was overly critical of MGM Mirage?
Do you think that MGM MIRAGE (or other entities) can get a financial analyst fired for being overly critical of their cash cow?
It simply is not humanly possible to sell enough hotel rooms, or restaurant meals, or gaming to cover the financing on $11 billion construction project. I believe that the corporation was hoping to average at least $1 million for the 2,440 condo and condo-hotel units bringing in about $2.5 billion. It turn that many millionaires were expected to spend a fair amount of money in the restaurants, gaming and shopping.
Even then, there is simply an upper limit on what you can charge for rooms at ARIA. Currently rooms at Monte Carlo are half the price of ARIA, and it is simply a hallway away. I realize that some people will not consider Monte Carlo, but as the ratio approaches three times more and more people will wonder if it is worth the extra money.
Bellagio is the revenue leader and the operating income leader of the MGM-MIRAGE properties. But it is also the cost and expense leader as well. In 2008 costs topped $1 billion dollars. The ratio of operating income at the Bellagio is 3.27 times the operating income of The Excalibur. The average daily room rate is 3.34 times as high, and gross revenue is 4.0 times as high. It costs a premium in expenses to keep wealthy clients happy.
Bellagio has a construction cost of $1.6 billion in 1998. So you can see the dramatic difference in financing costs.
A finance analyst should be reasonably skeptical of the corporations ability to bring in that many residents. Long before the depression and the huge cost overruns MGM MIRAGE stated categorically that the key to the financial success of this project was the residents.
Do you think that MGM MIRAGE (or other entities) can get a financial analyst fired for being overly critical of their cash cow?
It simply is not humanly possible to sell enough hotel rooms, or restaurant meals, or gaming to cover the financing on $11 billion construction project. I believe that the corporation was hoping to average at least $1 million for the 2,440 condo and condo-hotel units bringing in about $2.5 billion. It turn that many millionaires were expected to spend a fair amount of money in the restaurants, gaming and shopping.
Even then, there is simply an upper limit on what you can charge for rooms at ARIA. Currently rooms at Monte Carlo are half the price of ARIA, and it is simply a hallway away. I realize that some people will not consider Monte Carlo, but as the ratio approaches three times more and more people will wonder if it is worth the extra money.
Bellagio is the revenue leader and the operating income leader of the MGM-MIRAGE properties. But it is also the cost and expense leader as well. In 2008 costs topped $1 billion dollars. The ratio of operating income at the Bellagio is 3.27 times the operating income of The Excalibur. The average daily room rate is 3.34 times as high, and gross revenue is 4.0 times as high. It costs a premium in expenses to keep wealthy clients happy.
Bellagio has a construction cost of $1.6 billion in 1998. So you can see the dramatic difference in financing costs.
A finance analyst should be reasonably skeptical of the corporations ability to bring in that many residents. Long before the depression and the huge cost overruns MGM MIRAGE stated categorically that the key to the financial success of this project was the residents.
March 30th, 2010 at 8:46:25 PM
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Maybe if the firm the analyst worked for was a larger investment bank that did sell-side work for MGM. Of course, any investor who basis their investments on analysts from investment banks is a fool. Buy-side only firms could be relied upon, but a smart investor does their own analysis.
April 1st, 2010 at 7:43:14 AM
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Donald Trump was roundly criticized for calling City Center a total catastrophe .
Fountainbleau went bankrupt largely because banks were convinced that there was no chance of selling their 1000 condo-hotels. Like city center these new projects are not viable as hotels and casinos only. If they can't sell their condos then they won't make it. City Center has 2400 condos for sale.
Fountainbleau went bankrupt largely because banks were convinced that there was no chance of selling their 1000 condo-hotels. Like city center these new projects are not viable as hotels and casinos only. If they can't sell their condos then they won't make it. City Center has 2400 condos for sale.
April 1st, 2010 at 8:11:00 AM
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It's all about timing. Both Citycenter and Fountainbleau were both planned in the middle of the Las Vegas housing bubble. From about April 2005 to September 2007 the median selling price of a Las Vegas home was over 300,000 while the median selling price of a Condo was around 200,000.
Today, the median home selling price is around $135,000, off 55%, while the median condo price is in the 60K-65K range, off about 70%. CityCenter has been forced to cut their prices as well.
But back to the topic. I hope that analysts are not fired due to client pressure.
Today, the median home selling price is around $135,000, off 55%, while the median condo price is in the 60K-65K range, off about 70%. CityCenter has been forced to cut their prices as well.
But back to the topic. I hope that analysts are not fired due to client pressure.
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You want the truth! You can't handle the truth!
April 1st, 2010 at 10:53:30 PM
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Quote: pacomartinDonald Trump was roundly criticized for calling City Center a total catastrophe .
Well, if anyone knows about financial catastrophes, it's Donald Trump.
