David Mckee's Stiffs & Georges - Michael Gaughan

The casualties mount

Thu, 01 Oct 2009 14:54:00 -0700

Just yesterday I was lamenting the dearth of possible fallback positions for entertainers bounced from this or that casino. Heck, even the formerly volatile V Theater is enjoying its first stable lineup of shows since forever.

Sadly, we can add Scarlett and her Seductive Ladies of Magic (aka Abraca-Sexy) to the casualty list. With Charo literally and figuratively ailing, the Riviera's formerly robust lineup of shows is getting Slim-Fasted in a hurry.

Hopefully, somebody else can find a spot for Scarlett and her red bikini. Or she might take a cue from Bobby Slayton, who's literally getting out of town. So might Barry Manilow. However, we ran this down for a Question of the Day last week and the smart money has him taking up residence at the long-empty Paris-Las Vegas showroom. If Manilow can't break the jinx on that theater, nobody can.

I hope WizardOfVegas.com gets my Vintage Vegas review up before the show becomes history, because this Zowie Bowie extravaganza is an act of the so-bad-it's-good variety. It has the potential to go into posterity as one of the great Strip trainwrecks of all time.

Despite not having seen Vintage Vegas, Steve Friess channels the experience uncannily well: "I missed, for instance, what must have been a pretty disastrous opening night at the Monte Carlo for Zowie Bowie and its Vintage Vegas act ... even our most obsequious of entertainment scribes trashed them ... the idea here is that a major theater on the Strip is now given over to the alleged romance of Old Vegas. When it fails, I wonder, will anyone (else) suggest that maybe it wasn’t the execution that flopped, but the fact that people are bored with the effort to relive a bygone era?"

Having witnessed the completely pointless Rat Pack covers of spicy-as-mayonnaise Matt Goss, I'm inclined to agree. The 'retro' shows that work best -- like Rick Faugno's once-a-month showcase at South Point -- are ones in which the artist takes familiar material and makes his/her own. For Faugno, the songs associated with Frank Sinatra or Fred Astaire are as fresh and vital today as 50 years ago, and it comes through in his performance.

Much the same could be said for the Motown covers of Human Nature, a fantastic act that's literally crimped by management's determination to pack the absolute maximum number of tables into the Imperial Palace showroom. Memo to Rick Mazer: If you take 8-12 tables out, people will actually get up and dance, instead of merely wishing they could.

Speaking of showrooms, is there a smaller, crappier one than that at O'Shea's? You have to feel sorry for the performers who are relegated to this broom closet. Given the general disrepair evident at the Irish-themed casino, my best guess is that Harrah's Entertainment has decided to just let the place to go to hell until such time as they're ready to gut it and make it an anchor of their proposed off-Strip retail/restaurant mall.

Reality check

Tue, 18 Aug 2009 20:10:00 -0700

It's sackcloth-and-ashes time at the Las Vegas Review-Journal, which ran another "The end is nigh" story about falling gambling revenues. (The Aliante Station Effect appears to have petered out in North Las Vegas.)

Yes, we're all the way down, down, down ... to 2004 levels. If we take the Wayback Machine five years into the past, we find the Nevada Gaming Control Board reporting a 6% increase in revenue from June 2003. And June '04 was an "off" month for a year that was distinguished by double-digit growth in casino revenue.

Aliante Station: played out?

That same August, the cost of the MGM Mirage takeover of Mandalay Resort Group inched past the $8 billion mark. "[B]ut Wall Street analysts ... said the merger still makes sense for investors and the combined company," wrote the R-J's Rod Smith. Weeks earlier, regulators signed off on the $1.3 billion Boyd Gaming/Coast Casinos merger; Station Casinos, Las Vegas Sands and MGM were all recording record-setting financial performances, and Harrah's Entertainment was girding itself for the conquest of Caesars Entertainment. Heck, the industry was feeling sufficiently bullish to absorb a 0.5% hike in the privilege tax. Read one headline, "State gaming revenue on a roll."

Had the industry lived within its means, today's narrative would be quite different. The Las Vegas Sun helpfully charts the inflation and collapse of the casino bubble, which lasted a good three years, peaking in October '07.

Unfortunately, when what went up eventually had to come down, some companies discovered themselves overexposed and with no margin for error. The likeliest victims, though, are the marginal, standalone properties which might find themselves squeezed out of existence as aggressive discounting by MGM and Harrah's brings quality Strip hotel rooms into the "affordable" realm (Or, as Phil Satre puts it, when the A-level product is priced below the B-level product.)

Valuable perspective is to be had by reading (or watching) this roundtable discussion with three men who dominated much of the gaming industry in the Nineties and early into the new century. Ex-Harrah's CEO Satre has earned the right to be a Monday morning QB. After all, he never did anything so stupid as strapping $30 billion in debt onto his company's back.

Former Station CFO Glenn Christenson seems deeply in denial at many points, though even he concedes, "It wasn’t so long ago that we hated conventions as an industry and now it’s critical to our operations. We’re severely damaged by that loss." But ex-Boyd prexy Don Snyder nails it when he describes "a false sense of security" pervading the industry, adding "I think we all got caught up in that."

2004, meet 2009, where "up" is the new "down."

It's Gaughan

Thu, 16 Jul 2009 11:53:00 -0700

Congratulations to South Point owner Michael Gaughan, the 2009 inductee to the American Gaming Association Hall of Fame. An industry "lifer" who worked his way up from the Royal Inn to the CEO's chair at Coast Casinos, Gaughan has been one of the most consistently successful operators in the business. After 9/11, when other operators were slashing jobs, Gaughan actually added employees. That practically qualified him for on-the-spot sainthood.

He briefly succumbed to the siren song of consolidation and merged Coast with Boyd Gaming. It was a rocky marriage and Gaughan soon decided that the world of publicly traded casino corporations was not his bag. But the "divorce settlement" gave him South Point free and clear, and he maintains a lucrative ancillary revenue stream through 1,308 slots (give or take) at McCarran International Airport.

Gaughan is a man of few words -- but many deeds -- so we hope he's not forced to make a speech. But S&G applauds the AGA's excellent selection of its '09 inductee.

(And there we thought they were going to give it to James Packer.)

You go, Gaughan

Fri, 19 Jun 2009 17:22:00 -0700

South Point Hotel and Casino from Motionbug on Vimeo.

South Point owner Michael Gaughan demonstrates yet again why he's part of that noble but vanishing breed: the casino executive who realizes that you have to spend money in order to make money. Gary Loveman could learn a lot from this guy.

Looking for good news in Vegas

Thu, 12 Feb 2009 17:08:00 -0700

If I wanted to drive myself to strong drink, I could write about depressing, atrocious numbers coming out of Nevada casinos in December. But as that great philosopher, Linus in Peanuts, would remind me, it's better to light a single candle than to curse the darkness. (Next panel: Lucy hollering, "You stupid darkness!") Let's just say that December revenues hew to my saw that when Wendover sneezes, Nevada catches pneumonia and move on.

Two Sundays ago, the Review-Journal ran a pair of stories that warranted mention here at the time but got lost in the shuffle. Time to give credit where it's due, especially as these articles highlight some of silver linings inside the present-day storm front.

Boyd Gaming's is the least-sexy brand among the major casino operators ... but sexiness can be overrated. (See: Station Casinos) Unlike a certain crosstown rival which put all its eggs in the Vegas basket, Boyd has always rejoiced in a diversified portfolio. With Wall Street falling in love with the regional casino market, Boyd is likely to experience newfound appreciation on the Street.

Echelon: Stopped in the nick of time.

No wonder CFO Josh Hirsberg strikes such a sanguine tone. He also fesses up to a number of uncertainties, which is a refreshing change of pace. True, the company has halved its 401(k) matches but it hasn't deep-sixed them altogether, unlike several competitors. Also, it stopped Echelon while it still had the ability to alter the scale of the project, whereas Caesar Palace's Octavius Tower had crossed that Rubicon. It certainly doesn't rank anywhere near as high on the Mortification Meter as MGM Mirage's forced truncation of The Harmon (now to be an ungainly stump) or Las Vegas Sands' abrupt cessation of its St. Regis tower. Boyd's ongoing infatuation with fickle Morgans Hotel Group remains a major puzzlement but let's not belabor that now.

Boyd's chances of coming out the economic tsunami intact look good. Besides, the company has surprised people before. Who would have picked it to be the one that would shake up the Atlantic City market and force everyone else to keep pace?

A project that has the makings of a comparable success story in Las Vegas is M Resort, brainchild of the Marnell family. (You know, the folks who gave The Rio its cachet -- before Harrah's Entertainment took over and "geriatrified" the place.) Admittedly, $1 billion for a 390-room hotel/casino doesn't sound anything like optimal bang for the buck, but M Resort has three things going for it that Station's Red Rock Resort and Aliante Station don't: location, location, location.

Strategically, M's site is killer. It sits just north of the pass through which I-15 flows into the Vegas Valley, as you head in from California. In fact, you see the M tower even before you reach the pass, stunningly framed between the canyon walls. The vista from the north side of M ought to give it must-visit cachet when it opens in two weeks (March 1). The relative paucity of hotel rooms may bespeak caution over whether the stay-off-Strip/commute-to-Strip business model has worked yet. As they say on Wall Street, "visibility is limited" because like-minded Green Valley Ranch and South Point have gone private.

Also, by limiting their exposure on the hotel side -- where so much of the rest of the market is overexposed -- the Marnells should have supply/demand dynamics in their favor. A place like Morgans' Hard Rock Hotel, which only drew a third of its cash flow from gambling before Morgans went on a frenzied expansion binge, is super-exposed in the area that's most sensitive to price fluctuations -- hotel rooms -- and soon to become even more so. (The HRH puts a brave spin on it but it's no secret why the project is fully funded: It's 85% owned by the bank which, like the pig in the ham-and-egg-breakfast analogy, is committed while Morgans [i.e., the chicken] has but an interest.)

One also has to laud CEO Anthony Marnell III's incremental preparation for the Vegas market: a stint managing a tribal casino (giving him experience in the drive-in market), followed by acquisition of the Saddle West in Pahrump (ditto the locals market), then Laughlin. So his $1 billion dice-throw was approached via a circumspect route. George Maloof has already shown that a steady locals/hipsters mix can work as a business model. M Resort is the first project since The Palms to wholeheartedly go that route.

With nearby Olympia Gaming and Station (Inspirada) casino developments on indefinite hiatus, Marnell should be firmly entrenched before anyone else in the area gets a shovel in the ground. It's a serendipitous combination of preparation and circumstance. Of course, M could be either a succes d'estime or an outright bust, but the buzz I've been hearing is strong.

Tamares Group giveth (booking a new magic show into the Las Vegas Club) and Tamares taketh away, pulling back on a planned art museum (above). So if this is no time to invest $12 million in an art museum, maybe Tamares might want to invest it in its casinos. Comic relief is supplied by Mayor Oscar Goodman, who's been exceptionally obtuse this week. (See: President Obama, Silly Feud with)

Casinos in Texas are one of the longest of long shots but Galveston's name keeps coming up. The whole thing screams "Tilman Fertitta!", especially since we know he's wanted a casino there and was even rather colorfully accused of surreptitiously installing casino infrastructure in his Galveston convention center. He got a good chuckle out of that one, as I recall.

Trouble for Trump, praise for Gaughan

Tue, 14 Oct 2008 11:52:00 -0700

Prospects are less than rosy for Trump International, which is stuck at 22% occupancy, meaning that 78% of its units can't be rented out for hotel purposes, either. Even the bankrupt Cosmopolitan has an 84% closure rate. Both Donald Trump and sidekick Jack Wishna (third item) are both spinning the situation as best they can.

Still, it's not much of a testament to the brand equity of the Trump name, especially when other projects with far less name recognition are faring better. I feel for the St. Regis and Fontainebleau people, who are just about to go to market with their Strip condos. This is a devil of a time to be peddling timeshares.

South Point: No job cuts here.

Higher up in the Sun item, there's a nice testament to South Point owner Michael Gaughan. Now, Gaughan and LVA have had their differences in the past, but it's imperative to applaud any casino owner who's willing to ride out the current crisis with diminished profits in lieu of cutting staff.

There aren't many industries more customer-service intensive than the casino-hotel one, and the Gaughans get it. That's regarded as one of the cornerstones of their success. And don't forget that, in the post-9/11 panic, when other companies were slashing payroll with a scythe, Coast Resorts actually added staff. That's not something one easily forgets -- or fails to appreciate.

There's never a bad time for reinvesting in our highway infrastructure (or, as I like to think of if, facilitating weekend getaways to San Diego).

Case Bets: South Point, Gustav, Monte Carlo, Gold Spike, Excalibur, etc.

Tue, 02 Sep 2008 14:15:00 -0700

Why does a holiday weekend suck? Because it means that instead of having to dig through three days' worth of the Las Vegas Review-Journal on Monday (a depressing task under the best of circumstances), a Tuesday start means at least four days of windfall from what Hugh Jackson calls "the dead tree of record" through which one must cut brush. Solution? Chop it up into Insta-Blog fodder! Like ...

Horse dies at South Point, in front of 500 undoubtedly traumatized spectators. Leaving aside the equine tragedy, if South Point can only rustle up 500 attendees for a Friday-night event, its equestrian center may be even more of a gold-plated albatross than was originally thought.

Gulf Coast casinos ordered to close. Good grief, has common sense taken a leave of absence down there? Why was Mississippi required to force the issue?

Monte Carlo not up to code, says Clark County. Whereupon neither the county nor MGM Mirage takes responsibility for remediating the situation, each putting the onus on the other.

Wall Street comes around. The Street has a manic-depressive attitude toward gaming stocks and is coming out of its latest episode of depression. Even so, some of these stocks look ridiculously undervalued, especially Las Vegas Sands, which The Street used to think was worth three times as much.

Speaking of Sands, there's confidence and then there's foolhardiness. Then again, given the company's genius at protracting litigation to superhuman lengths, its sanguine attitude may be born of experience.

Somnolent editors awake from nap, find that Nevada's economic model isn't working, call for more of the same, go back to sleep. (BTW, here's one of those "Nevada Democrats" the editorial reflexively derides.)

First Nevada Palace fell and now the Gold Spike is half-renovated. We're going to have to come up with a new shorthand for "bottom-of-the-barrel casino" now that we won't have the Spike to kick around anymore. Stephen Siegel has done more with the place than his predecessors, absentee owners Tamares Group, accomplished in three years (unless you count the offerings they took out, like table games).

Still, Siegel's being a wee bit charitable when he says "most people underestimate the Gold Spike." Stephen, it is impossible to underestimate the Spike, the only Nevada casino for which I would have used "vile" as a description, back in its Tamares days.

Comment threads in newspapers can be a very mixed blessing, but much of the back-and-forth that follows this story about electronic poker at Excalibur is well worth reading, as it provides a great deal of hard information and a player's-eye perspective on the experiment.

Gaughan: Capitalism sucks

Tue, 12 Aug 2008 18:24:00 -0700

"The main problem in my market ... is the price of gasoline. [South Point] has been full every weekend, but I am not getting the rate I want." -- South Point owner Michael Gaughan.

Welcome to the free market, sir.

We're no Pyongyang!

Tue, 29 Jul 2008 18:25:00 -0700

A story about an unsightly, unfinished ziggurat in Pyongyang, North Korea afforded an architecture critic an opportunity to throw a roundhouse right at Las Vegas. Lumping it together with Shanghai as the bad-architecture capital of the world, California Polytechnic State University (San Obispo) Architecture Dept. professor Bruno Gilberti couldn't single out a single Vegas property for opprobrium, lumping the entire Strip together as something that “has no authentic sense of place and is thus more than a little soulless.”

Well, unlike Gilberti, I can nominate a single-worst building in Las Vegas and it's ...

Yes, Harrah's Las Vegas, the hotel that put the "Ugh!" in "ugly." This weird behemoth brings the charm of Warsaw Pact architecture to Sin City. The Bulgarian State Central Bureau of Collective Internal & External Revenue would feel right at home here.

Harrah's LV is also the despair of photographers, partly because of the extreme width of its façade (not shown) and the considerable distance that the hotel towers (I wanted to say "clump") are set back from the street. I'm reliably told there are only two decent photographic angles on this place: right up close to the façade, concentrating on one or two details (like the jester), or an extreme wide angle -- in which case you'll be lucky to pick out any detail at all.

Harrah's big makeover plan for the east side of the Strip is generally believed to start with the demolition of the Imperial Palace (just barely visible to the right). But at least the IP looks good at night, under the blue wash of its floodlamps. No amount of lipstick can spruce up the pig that is Harrah's LV. (But its casino does an extremely good volume of business, possibly the best on the Strip, so what do I know?)

In second place ...

If Michael Gaughan's South Point doesn't eclipse the fugliness of Harrah's it's not for lack of trying. Not only does it obtrude from the South Strip landscape like a swollen thumb on steroids, it's as unimaginative as all get-out. It's just one gargantuan Stalinist block, its charmlessness ever so slightly ameliorated by its canary yellow paint job.

In Gilberti's defense, he singles out the much-abused (but still lovable) Tropicana for embodying the "real and popular style that the old Las Vegas ... once had," which was pretty much my reaction when I walked in there for the first time in 1998. Of course, that was before Aztar Corp. began letting the place go to seed and then allowed Columbia Sussex to club it like a baby seal.

Gilberti also lauds the old Golden Nugget but I think he ought to take a gander at its current incarnation. Anyone nostalgic for golden age Vegas ought to feel at home there, since Tilman Fertitta has the place looking like the hundreds of millions of bucks he's reinvested there.

And as for the clunker "that has sat unfinished for more than a decade [it's North Korea; whaddya expect?] and has been ... called 'The Hotel of Doom'," surely Kim Jong-il can get his bosom buddy Stanley Ho to take on the task of finishing it. The Hotel of Doom looks like the sort of white elephant that old Stanley goes bananas over, thinking himself on the very cutting edge. If Kim Il-sung's degenerate playboy heir throws in a casino concession, it's a done deal.

Lamest casino promotion. Ever

Tue, 29 Jul 2008 12:06:00 -0700

Not long ago, I received an oversized postcard in the mail from Eastside Cannery Casino Hotel (or E-Can, in LVA parlance). They want me to go to www.cannerycasinos.com and sign up for a players' card. And what do I get for adding my personal info to Cannery's database? Just you wait!

Woo-hoo! I get to motor down to E-Can and pick up a free commemorative grand opening T-shirt! I could practically "Squee!" from the excitement. It's almost as thrilling as meeting Amanda Tapping.

Well, no, actually it isn't.

I mean, how many free-tchotchke promos are out there? And haven't you lost count of the free T-shirts you receive from charities (I get so many I have to donate them to charity; there's irony for you) or at company events?

And, worst of all, other than having to actually be on-premises to get your freebie, there's nothing in this promo to incentivize you to play. Nada. Squat. Bubkes, baby. How about ... oh, I dunno ... some free slot play? Five bucks matchplay on blackjack? A discount at the buffet?

Legend has it that, when Excalibur opened, Circus Circus execs (including the late Bill Bennett, of sainted memory) were nearly trampled by hordes of patrons bulldozing their way into the casino for one free slot pull. Imagine what E-Can* could do if it gave players' club members a reason to plunk their fannies down and start, y'know, playing.

* -- Is it just me or does Cannery Gal, in the logo, look like the twin sister of Casino Boy?

Wizard in Oz. One of HP's favorite numbers-crunchers, Michael "Wizard of Odds" Shackleford, will be speaking next month at the Australasian Gaming Expo, in case we have any readers Down Under.

Shackleford played an important role in LVA history. After some exhaustive research, several years ago, he was able to quantify that the slots at George Maloof's The Palms were looser than those at Michael Gaughan's Coast Casinos properties.

Gaughan never forgave us. Even after Coast was devoured by Boyd Gaming, its casinos continued to boycott our Pocketbook of Values. Once Gaughan huffed off and left Boyd, taking South Coast, er, Point with him, the Coasts soon came onboard the PoV. But if you ever see an announcement that LVA is holding an event at South Point, you can be sure someone's pulling your leg.