If you have been to Vegas in the last year you will know what this project is. Right next door to the Bellagio this mega project has been under way for some time but in the last 9 months has really begun to show life. It’s MGM’s Mega Casino/City within a City known as City Center. With its intuitive structures and its awe-inspiring shapes, city center is the future of Las Vegas and how people experience opulence.

Nearly a year ago mega company Dubai World bought into the City Center Project, and became partners with MGM on the project. The deal set at 5.1 Billion USD was seen as a huge positive step for the project. This was due to MGM’s ever soaring debt and Dubai World’s world wide credibility and financial standing. Dubai World is a share holder in a number of major financial institutions around the world and has a credit rating on the world stage that is second to none. So this merger was seen as a way for MGM to gain sub-prime mortgage rates during this turbulent economic state in the United States.

However on July 29, 2008 Bloomberg reported that the two mega companies had pasted deadlines to acquire 3.5 Billion USD in financing to keep the project on track. This missed deadline starkly outlines the difficulties being seen across the board in the US economy. As it is showing that even major companies such as gaming companies and banks are having difficulties as well.

The two major banks that appear to be holding up the project are Deutsche Bank (major German bank) and Credit Suisse (Swiss Bank). Both of these banks have had major affiliations with MGM and Dubai World in the past. Even to the extent that Credit Suisse was the financial group advising Dubai World about potential investment in City Center. Deutsche Bank has had extremely strong ties to MGM over the last decade, as since 1998 there has not been an MGM project that hasn’t been partially or fully financed by Deutsche Bank.

One of the major problems in this situation is that both these major lending institutions are part of the 27 Billion USD buyout of Harrah’s. As well the Casino industry is showing first quarter losses across the board, due to the sagging economy. The casino industry was once believed to be recession-proof, but over the last 20 years these major casino companies have made a large move, in that the majority of there revenue is no longer gaming driven. That combined with the great number of Indian Casino’s around the US, Las Vegas is no longer the only game in town.

On the stock front this news won’t affect the price of MGM shares as they are already in steep decline due to the sagging economy. In October 2007 MGM shares traded at over $100/share, as of late last week the shares were sitting at $21.65/share and are currently at $28.60/share (in the middle of the trading day July 30, 2008). As of right now the City Center Project isn’t dead in the water as the two companies have come up with just over 2 billion of the required financing. This will leave them with a number of options moving forward.