COLUMN: Steve Miller
Las Vegas Tribune
September 9, 1999
MGM defends $50 million dollar gift to Detroit
I finally have found the time to get around to responding to several ill-conceived remarks that were made about me by John Redmond, vice chairman for the MGM Grand Detroit, and Alex Yemenidjian, president and Chief Operating Officer of MGM Grand Inc.
These gentlemen's statements were inspired by a press release I authored for the Nevada Coalition Against Gambling Expansion that criticized the $50 million dollar gift MGM Grand Inc. gave to minority owned businesses in Detroit in exchange for the "privilege" of being one of the three casinos licensed there. Their remarks were made in a Feb. 1, 1999, article by Jeff Schweers in the Las Vegas Business Press entitled "Corporate isolationism vs. expansionism."
I was a gaming regulator from 1987 through 1991. During that time I voted on the licensing and regulation of dozens of large and small casinos. To Messrs. Redmond and Yemenidjian's obvious dismay, this experience makes me eminently qualified to comment on the gambling industry whether here or outside Nevada.
In Mr. Schweers article, he mentions that Steve Miller believes that "Charity begins at home," and that the $50 mil. gift to Detroit was a "slap in the face" of the loyal Las Vegas citizens that made the 5,000 room Las Vegas Strip MGM the success that it is. He went on to quote me saying, "This (Las Vegas) is the place that deserves the $50 million that they're offering Detroit," and that Las Vegas is being "shortchanged."
Schweers also states that "Miller is not happy that the MGM Grand has created a $50 million business development fund (for Detroit) to provide financial aid to "undercapitalized and fledgling businesses run by minorities and women." The fact that it's being done in Detroit and not here is what has him (Miller) fuming."
In an obvious effort to shoot the messenger, Mr. Redmond responded to my allegations by saying, "Miller does not know what he is talking about. There's a lot of things MGM does to invigorate local business here in Las Vegas." Redmond goes on to give the example of $10 million quietly donated to Nevada Partners, a private, nonprofit group that has helped get thousands off welfare. (More on this donation later in this article.)
Then Mr. Yemenidjian made several remarks in response to my statements that "Local casino companies should plow their profits back into the local (Las Vegas) economy, not invest it in developing other out-of-state markets that eventually could compete with Las Vegas for tourists," and my statement that "If they do (invest outside Nevada), they should pay the same gross gaming revenue taxes here that they have to pay in Biloxi, Atlantic City and Kansas City." To these remarks, Yemenidjian proclaimed that my arguments were unrealistic and "childish."
He went on to say that that MGM is "not taking money from Las Vegas to Detroit." MGM "will be borrowing from local (Detroit) banks to capitalize the operation and using those sources and local profits that are Detroit-based to fund that." He also claimed that "to not expand outside Nevada would mean corporate death."
But Mr.Yemenidjian was not finished criticizing my views. He then stated "Obviously politics and commerce don't mix very well, he (Miller) doesn't understand the commerce side and is taking a myopic view of the political side." He finished his comments by saying "Miller is advocating a position that not only prohibits expansion, but prohibits companies from using part of their profits to participate in economic and social development: Don't go to Detroit, but if you do and you make money, don't use the money to help the community and be a good corporate citizen."
It seems strange that men who consider my viewpoint as "childish" would become so preoccupied criticizing it! Since they did, I will take a few paragraphs to expand on my position regarding their extra-Nevada "generosities."
In Nevada, our largest business enterprise, gambling is not required to provide economic incentives to, what MGM Grand Inc. refers to in Detroit as, "undercapitalized and fledgling businesses run by minorities and women" -- or other legislated corporate good will in order to gain a "privileged license." Such a privileged license in Nevada - as is the case in Detroit, Atlantic City, and Biloxi -- is designed to limit competition. Such "limited competition" offered outside Nevada is an often-used excuse by defecting Nevada casino operators for gleefully paying higher gambling taxes elsewhere.
(Nevada has a locked-in 6.25% gambling tax; Detroit - 18%; Biloxi - 13%; Atlantic City - 8.5%. Las Vegas also has the most crowded schools, highest crime rate, and fewest acres of park space than the other cities mentioned -- along with a $141 million dollar state tax deficit.)
An example of such competitive gaming limitation in Las Vegas is the 200-hotel room minimum requirement for the issuance of a new unlimited gaming license. This requirement to build rooms has all but stymied competition for the original casinos on Fremont Street.
Without the 200-room requirement in the privileged license competition would have developed by now on East Fremont St. and Las Vegas Blvd. near downtown. The downtown casinos made sure this would not happen when they sponsored their self-serving law in the 1980s.
Casinos similar to the original Golden Nugget, Circus Circus, and Lady Luck -- that did not originally have hotel rooms -- would have by now had the opportunity to open in competition to the politically powerful Golden Nugget, El Cortez, and Horseshoe. Outrageous political campaign contributions put an end to such competition years ago. Example: Bob Stupak's "Titanic" project being declared as "outside the Gaming Enterprise Zone" even though it was to be located on the Strip.
To say that competition is legislatively limited in Detroit, Atlantic City and Biloxi -- and not in Las Vegas -- is pure baloney!
In Nevada, asking casinos to help to provide financial aid to "undercapitalized and fledgling businesses run by minorities and women" is not in good political taste, nor is it politically correct to ask the casinos to help pay for building new schools, building new parks, or enhancing law enforcement agencies. An example is political consultant Sig Rogich's involvement in the selection of a new Superintendent of Schools -- a Superintendent who allegedly must promise to be silent on the subject of raising gaming taxes to pay for education.
The casinos in Nevada - instead of donating $50 million to provide financial aid to "undercapitalized and fledgling businesses run by minorities and women" here -- have instead contributed countless millions of dollars to Nevada political campaigns so that mention will never be made of the Strip paying their fair share for local social projects and services. Instead our limp-wristed local politicians and bureaucrats are paid off to advocate raising property or sales taxes, or borrowing against bonds, as the only funding source available.
The new majority of voters: new Las Vegas residents are propagandized by people like Rogich, Elaine Wynn, and Gov. Guinn into believing such self-serving crap! Meanwhile our new hero, Mayor Oscar Goodman, is too squeamish or indebted to open his mouth on the subject.
To make short-shrift of Redmond and Yemenidjian's other excuses for their Detroit largesse (bribe): it should be known that Kirk Kekorian's charitable trust, the Tricinda Foundation -- not MGM Grand Inc. -- made the quiet $10 mil. donation to Nevada Partners.
Tricinda is a nonprofit corporation as is also Nevada Partners. Unfortunately Nevada Partners, though very worthy, does not represent "undercapitalized and fledgling businesses run by minorities and women," as is the more virtuous case in Detroit. Nevada Partners is an entitlement program to get some people who may be considered less than virtuous off welfare.
Nevada partners does not offer financial incentives to existing local minority owned businesses that need a little monetary help to get jump-started -- businesses owned by ambitious people who are fine examples for a community -- like as in Detroit. To help one group and not help the other more ambitious group promotes stereotyping and is considered raciest to some in our local minority business community.
MGM Grand Inc. -- given their Detroit example -- is still definitely shortchanging Las Vegas minority owned businesses.
MGM Inc. gave Detroit businesses $50 million dollars -- businesses that have done nothing to help MGM in that city compared to what Las Vegas' "undercapitalized and fledgling businesses run by minorities and women" have done to help MGM succeed here.
In difference to the statements of the MGM honchos, ambitious Las Vegas minority business owners were definitely more deserving of the $50 million gift than their Detroit counterparts who have done nothing to help MGM Grand Inc.!
Furthermore, the Detroit funding DID come from Las Vegas! MGM failed to mention that the collateral for their Detroit bank loans was based in Nevada!
And, last but not least, Yemenidjian's nonsense about "To not expand outside Nevada would mean corporate death" does not deserve to be dignified with a response.
And they had the gall to call my criticism "Childish!"
Steve Miller is a former Las Vegas City Councilman and is the State Coordinator of the Nevada Coalition Against Gambling Expansion. Visit his website at: http://www.stevemiller4lasvegas.com