BP earmarks $20 billion for spill damages

MGM Resorts International (MGM)is all but certain to file a loss of business claim against BP because of the oil spill that has tarred tourism-based economies along hundreds of miles of coastline from Florida to Texas.

Senior Vice President Alan Feldman told me a large part of the issue is determining the time frame on which a claim will be based. Tests of the last several days suggest the well may have been successfully capped, but a permanent solution awaits the answers to still unknown issues. Those issues include the extent to which oil still in the Gulf continues affecting business interests.

MGM’s Beau Rivage on the Gulf in Biloxi is the largest resort hotel in the southeastern U.S. There is no question that any combination of circumstances that make the Biloxi beach and the Gulf less appealing to visitors is going to make the Beau Rivage and probably other Gulf Coast casinos less attractive to visitors.

An insider at another of the companies with gaming operations in the affected area did not say yes and he did not say no. What he did say was this:

"I think it is safe to say we’re keeping all our options open."

Does this mean you might file?

Taking a breath he said it again, "It means that we are staying tuned to what’s happening, keeping our options open."

One of the problems faced by casino companies that might consider filing claims is deciding whether diminished business is the result of the spill or a lousy economy, and how is the impact by either or both of these influences to be measured?

For instance, is a given Gulf Coast beach empty because of the gooey tar balls or is it empty because unemployed consumers cannot afford the vacation or spending they could a year ago?

Keeping all options open also probably means closely watching the reaction of other casino companies, such as MGM, to see what it does and then deciding whether one reaction fits all companies.

A fishing company that shuts down because the Gulf of Mexico has been closed to fishing is one thing, but it can also be argued that this closure and the subsequent loss of jobs produces a ripple effect that can be felt along a so-called food chain.

Las Vegas saw a similar economic train wreck after 9/11 when the airline industry was shut down for several days and the ripple effect was felt throughout the travel industry.

Sounds like the lawyers should have fun with this but with BP sitting on a $20 billion fund to pay for damages attributable to the thousands of barrels gushing from the blown out well daily for much of the last several months, it is easy to imagine a lot of businesses putting together their best arguments.