First, a clarification: It was father Tony Marnell, lead contractor on Bellagio and Wynn Las Vegas, who designed M Resort. But the project itself was the vision of his son, CEO Anthony Marnell III. (When the Marnell family owned the Rio, the younger Marnell was in charge of its marketing operations and gaming floor.) The latter looked at the Last Call Tavern truck stop, at the intersection of St. Rose Parkway and I-15, and saw opportunity. After all, at least 30,000 cars drove past his site every day. Besides, the land was literally dirt cheap: $3 million an acre at a time when Strip acreage went for up to $34 million per acre.
The venture looked so promising to MGM Mirage that then-CFO Jim Murren put $160 million of the company’s money into the Marnells’ pipe dream. (Marnell Junior had relieved MGM of two rinky-dink casinos in Laughlin.) But even Murren admitted, "They will be [cultivating] local customers, which is something we don't do well."
As to the "why" of the project, there were several incentives. Sitting at the southern end of the Las Vegas Valley, M would be the first casino that travelers from California passed upon nearing Sin City. It commanded a sweeping view of the Strip, 11 miles to the north. It sat near the mostly affluent Southern Highlands residential development and, at the time, home building was expected to bring more and more Las Vegans within M’s reach. As Murren put it, "It didn’t take a rocket scientist to realize the M Resort is in a great position to capitalize on the tremendous growth in that end of the valley."
And here we come to the kicker: The "tremendous growth" didn’t happen. M opened in March 2009, at a time when Las Vegas was nearly six months into the icy grip of the Great Recession. Housing starts had dried up. For most locals, M was a very, very long drive to make for a buffet, excellent though it was, never mind gambling. And it was inconveniently located for any tourist arriving by airplane. Even drive-in customers looking for somewhere to stay faced a long "commute" if they wanted to do anything on the Strip. A planned second phase was put on hold and eventually abandoned.
While M didn’t have a lot of business, one thing it possessed in abundance was debt. Enter Penn National Gaming. The company had been kicking various tires in the Las Vegas market for several years but had been unable to land the right property. So far from the Strip, M was not ideal but its debt load – which Penn gobbled up – made it vulnerable to a takeover and the casino-hotel would allow Penn to get some experience in the Vegas market while continuing to shop for a Strip property. (Which it finally found this year in the Tropicana.) The deal closed in June 2011, ending 27 months of Marnell ownership, although Anthony Marnell was kept on as CEO.
On paper, the Penn ownership brought greater marketing power to M, since the property could be hooked up to the parent company’s Marquee Rewards loyalty program. But the pieces didn’t really fall into place until this year, when Penn bought the Tropicana Las Vegas. That means that M’s shuttle service will now be reciprocal with the Trop, bringing tourists to/from the busy Trop/Excalibur/New York-New York/MGM Grand hub, at least theoretically diminishing its isolation. (Previously, M shuttles had serviced only the gaming-free Fashion Show Mall, at the north end of the casino corridor.)
It’s difficult to know what Penn executives think of their investment in M Resort, since it is rarely discussed on conference calls with Wall Street analysts, but they are bullish on the Trop. History will probably record M as either a risky experiment in reshaping the Vegas market or as an architecturally stunning mistake.
But Marnell was not the only Las Vegas mogul who thought the I-15/St. Rose nexus was the next great opportunity. Real estate tycoon Gary Goett planned a $1.3 billion Southern Highlands Resort on land immediately north of M. However, financing dried up as quickly as did the Las Vegas housing market and Goett put the land back on the market. Even were a significant number of houses to be built in the area, it is unlikely that the M Resort experiment will be repeated and Station Casinos recently put its 57-acre land parcel south of South Point on the market.
