CityCenter Partner Sues MGM Mirage

The gaming giant's Dubai-based partner turned to litigation after doubts were raised about the 67-acre project's future.

A lawsuit has been filed that rasises concerns about the future of one of the Las Vegas Strip's most iconic new hotel developments, MGM Mirage's massive CityCenter Las Vegas.

MGM Mirage has been sued by Dubai World, its partner in the massive development, alleging that the gaming firm has breached the terms of the agreement on the nearly $9 billion CityCenter Las Vegas project. Touted as the largest casino project in history, CityCenter's 67 acres of casinos, hotels, condos and retail spaces are due to begin opening at the end of this year.

Dubai World's subsidiary, Infinity World Development Corp., filed the lawsuit in Delaware Chancery Court on Monday, asking to be relieved of its obligations in the 50-50 joint venture with MGM Mirage. The company cites MGM Mirage's statement last week that "there is substantial doubt about our ability to continue as a going concern," and that it "cannot provide assurance" that it would be able to pay for its half of the CityCenter project, as a breach of the terms of their agreement.

According to Dubai World, this lawsuit is a move to help ensure that deadline is met rather than a serious attempt to walk away from CityCenter. "What we are attempting to do is complete this project," George Dalton, Dubai World's group general counsel said on a conference call with reporters on Monday. "Our concern is for the long-term health of the project."

While the size and ambition of CityCenter has been a source of excitement in the corporate travel market since it was announced, the souring economic climate and MGM Mirage's own financial and management difficulties have created mounting challenges for the project. At the beginning of this year MGM Mirage announced that due to miscalculations during construction, the Harmon Hotel property in CityCenter would be 28 floors instead of 49, although that faux pas came with a substantial silver lining: The company saved a reported $200 million in construction costs on floors that were were planned as residences not hotel rooms, in a city hit particularly hard by the housing bubble's collapse.

What the practical repercussions of this lawsuit will be remains unclear and at the time of this article, MGM Mirage had released no formal statement and could not be reached for comment.