We put MGM Resorts’ plans to create a facility for Cirque du Soleil in Toronto through a reality check.
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Recently, the Toronto Star reported that MGM Resorts International, one of the giant Las Vegas-based conglomerates currently lobbying Toronto City Hall on the benefits of building a casino-resort in Toronto, has included a facility for Cirque du Soleil as part of its bid.
MGM has a long-standing relationship with the Canadian theatrical circus juggernaut — currently presenting its newest show Amaluna under a big top in Toronto’s Port Lands — having partnered with them to produce eight shows at MGM properties in Las Vegas.
MGM’s senior Vice President of Public Affairs, Alan Feldman is quoted as saying, “Our colleagues at Cirque would love to have a permanent home in Toronto. They see, as we do, this incredible cosmopolitan global destination, one that would work very well for them,” and added it could be a circus theatre, themed nightclub or “several things.”
Whether or not a casino is a good idea for Toronto at all is a topic for a whole other post and is outside the scope of this article. I want to focus the discussion on MGM’s Cirque du Soleil claim.
The carrot they’re dangling to councillors (and Torontonians by proxy) is the vision of a resident Cirque du Soleil show for Toronto much like the ones at the resorts in Vegas, anybody who has seen a resident Cirque du Soleil show knows they are an order of magnitude larger and more elaborate than their touring counterparts.
But before we get carried away by visions of lithe acrobats, clowns and contortionists let’s do a bit of a reality check:
Firstly, Cirque has historically entered into 10-year contracts with its partners for resident shows with some financial arrangement to split the up-front production costs as well as the ticket revenue after the show opens. A 10-year timeframe is simply unrealistic for the Toronto market.
There was a time before strict 9/11 border security and passport requirements, when a weaker Canadian dollar ensured a steady stream of US tourists that could sustain a long-running show. Phantom of the Opera was able to run for ten years under these favourable conditions.
In recent years, resident or “sit-down” productions of hit Broadway/West-End shows like We Will Rock You, Jersey Boys and Rock of Ages have only managed runs of two years or less. Long running shows are simply no longer an economic reality in Toronto, we don’t have the tourism numbers to sustain them.
In Vegas, some shows have a unique arrangement where they don’t necessarily have to make money. In 2004, MGM partnered with Cirque du Soleil for the Robert Lepage-directed high-tech action-epic KÀ which reportedly cost $220M (2004). While Cirque keeps its ticket sales numbers close to its chest and doesn’t release public financial statements, by simple calculations it’d be nearly impossible to recoup the show’s staggering initial development cost through ticket sales alone.
MGM likely runs KÀ as a loss-leader, while the show costs money to run beyond what it earns in ticket revenue, it relies on the fact that ticket-buyers will also spend money on other things at the resort such as concessions, merchandise, restaurant meals, shops and hotel rooms not to mention dropping their cash in the one-armed bandits and table games.
Could a model like that work here? There’s a key difference between MGM’s Vegas property and any potential Toronto casino. MGM owns its Vegas properties and reaps all the revenue generated whereas they would only be a “private operator” contracted to run the facility in Toronto and paid a set fee for doing so by the Ontario Lottery and Gaming Corporation. MGM would be less likely to incur the financial risk of running a money-losing show as a loss-leader if they don’t directly benefit from the increase in gaming revenue.
For its part Cirque du Soleil has stayed mum on the whole deal and hasn’t made any public statements on a resident Toronto project one-way or the other.
This isn’t the first time Cirque du Soleil has been down the path for a downtown waterfront casino proposal in a Canadian city. In 2005, Cirque was part of a partnership to build a new resort facility for the Casino de Montréal in that city’s Peel Street Basin. Cirque pulled out of the project after the negative publicity from the fierce public outcry against that project. This Toronto project could be history repeating itself.
Quite honestly, the promise of a new “facility” for Cirque shows rings a bit hollow. There is no dearth of availability for Cirque du Soleil in Toronto; one of the company’s most lucrative touring markets. In the past two years alone Toronto has hosted Totem, Banana Shpeel, Quidam, Michael Jackson IMMORTAL and Amaluna.
The second part of Feldman’s statement that the project could be a nightclub “or something”, has some precedent. Cirque has moonlighted in creating upscale “ultra lounge” nightclubs. It partnered with Vegas-based Light Group to create the Beatles-themed Revolution Lounge at the Mirage resort as a tie-in for it’s show LOVE playing at the resort.
However, if you’re making grandiose statements about bringing Cirque du Soleil to the table as a partner for a casino-resort project anything short of a full-fledge resident show would be an utter disappointment.
Unfortunately for Feldman, the facts just don’t bear out his vision. It seems MGM is just name-dropping Cirque du Soleil which is disingenuous at best and downright misleading and dishonest at worst.