Starting with a Wall Street Journal article this morning, the fate of MGM’s CityCenter was put into significant doubt. Today was the date that a $200million interest payment was due, $100m from MGMMirage and $100m from Dubai World – MGM’s 50/50 partner on the project. Since Dubai World sued so that they would not have to pay anymore into the project (apparently due to cost overruns) it was widely expected that MGM would not (or could not) make that interest payment.

If the interest payment wasn’t made, the project could immediately have been declared in default, forcing a bankruptcy of the project – putting contractors out of work for who knows how long, and holding up the completion of the project for possibly months.

Fortunately, by the end of the day the Wall Street Journal reported how MGM made the entire interest payment – without Dubai World’s help – and everything is back on track.. For now.

What an amazing turn of events on the project over the past few weeks – MGM even went so far as to hire lawyers to help prepare the project for bankruptcy, I don’t know if they did that as a precautionary measure, or if their intentions were to really let the project fall into bankruptcy.

I’m sure we’ll see more and more news about exactly what went down tonight as the weekend goes on – but it shows just how bad the economic climate has affected Las Vegas. Currently CityCenter is one of the few major projects still under construction in Vegas – some major major projects have been delayed (The Plaza, Trump Tower 2), and even put on hold after construction started (St Regis at the Venetian, Boyd’s Echelon Place).. Except for the Cosmopolitan, CityCenter and FontaineBleau - I don’t believe there are any other major projects currently under construction.

I’m very curious as to how bad MGM’s finances are – I’m surprised they were able to come up with the extra $100 million to cover Dubai World’s portion, but I think with the choice between coming up with an extra $100million or letting the project fall into bankruptcy – they made the right choice. Thousands of construction workers will still have jobs on Monday, and for the time being – the project will continue.

I keep coming back to the line in MGM’s quarterly report which stated that it will not be able to continue as a going concern due to its massive debt and the declining tourism industry.. It hasn’t been said publicly yet – but I wouldn’t be surprised to hear that MGM’s auditors inserted that line – just like the auditors for Las Vegas Sands did the same, then a week or two later, removed it saying they were being too conservative.

Call me an optimist (I do consider myself one) but MGM is not like GM or the other automakers – they are not hemorrhaging billions of dollars every quarter and having their sales volumes decline by 50% even after cutting prices left and right.

I just don’t see MGM just disappearing in its current incarnation. Could it suddenly get taken over? Sure. Could it suddenly announce sales of a number of properties? Sure. Could we wake up on Monday morning with a new name, leadership, and MGMMirage in bankruptcy? I doubt it.

andrew@alconic-inc.com