Item 8.01. Other Events.

Today, Morgans Hotel Group Co. (the "Company") paid its $15.0 million obligation to complete the acquisition of the leasehold interests in three restaurants at Mandalay Bay from the existing tenant. The acquisition is part of the recently announced transaction with MGM Resorts International, which also includes the conversion of THEhotel at Mandalay Bay to Delano Las Vegas, to be managed by MGM Resorts pursuant to a licensing agreement, and the management by The Light Group, the Company's 90% owned subsidiary, of a yet to be announced nightclub at Mandalay Bay. The payment was funded by a borrowing under the Company's revolving credit facility.

In order to obtain long term contracts, the Company may contribute capital in various forms to certain hotel and food and beverage projects. The capital may be in the form of equity investments, key money and cash flow guarantees. In making investment decisions regarding upfront cash payments, the Company generally seeks to have its upfront capital returned in three to four years through the income generated by the investments, although there can be no assurance that its investments will produce these projected results. The $15.0 million payment in this transaction is consistent with this strategy taking into account the projected income from the restaurant, hotel and nightclub venues.

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