The blaze that destroyed the MGM Grand Hotel’s casino could result in a billion-dollar loss that would spell financial ruin for the parent corporation, local casino officials speculated Saturday.
"This disaster is just a lawyer's delight," declared a Las Vegas accountant with close ties to the casino business. He said “mountains of suits” are likely to result from Friday’s blaze.
Top MGM officials have secreted themselves and refused to respond to efforts to reach them for comment on the company’s ability to survive the disaster.
"Whatever MGM has in insurance probably isn't even going to touch the liability that may result in this situation," said a former member of the Nevada Gaming association.
MGM’s resort and movie-making business were recently spun off into separate corporate entities, and the corporate offices for MGM Grand Hotels Inc. are located in the 26-story resort ravaged by the early morning fire.
MGM Hotels consists of the hotel-casino here and another in Reno. The company has at lest temporarily shelved plans to build a casino in Atlantic City.
Local businessmen were hesitant to be quoted by name, but a former gaming controller who is not in the casino industry said, “The casino here was by far their biggest money maker. The one in Reno was not nearly as good.”
The total loss to MGM could eventually reach the billion-dollar mark, according to three other casino officials.
MGM hotels spokesman Bill Bray said corporate officials were not prepared Saturday to talk about rebuilding plans.
“We only got back into the building today,” he explained Saturday, “and we still have quite a people problem.”
The MGM was opened in late 1973 and was built then for $100 million, financed in part by the sale of $50 million in collateral trust bonds.
According to MGM Grand Hotel Inc.’s 1980 annual report, its revenue for the fiscal year ended Aug. 31 was $307.1 million, with net income of $33.9 million. Both figures were records for the company.