Treasure Island owner Phil Ruffin and his beloved mechanical bull made a guest appearance on CNBC and, characteristically, pulled no punches. (Ruffin, that is. The bull had no comment.) Even as MGM Resorts International, Harrah’s Entertainment and Las Vegas Sands talk “recovery,” Ruffin sees continued softening of demand on the Strip and no turnaround until next year. He brands Fontainebleau “toxic,” thanks to its mind-boggling completion budget and the costs attendant upon running such a behemoth. Dr. Ruffin also pronounces the condo market “dead,” with joint venture Trump International severely undersold and only marginally profitable, by his account. Once you get used to Ruffin’s increasingly Liberace-like countenance, he makes a helluva lot more sense than most of his competitors on the Strip.
For instance, if MGM Grand/Mirage/Resorts International/[Your Name Here] thinks it can get 14X cash flow for The Mirage — in this economy — you’ve gotta wonder what’s in the drinking water at MGM HQ. Maybe you could have found somebody euphoric enough to have paid that multiple when the Strip economy was at its most overheated, three years back. But that ship sailed long ago and with so much undeveloped (and unfinanceable) real estate gathering tumbleweeds along Las Vegas Boulevard South, it’ll be a cold day in Hell before somebody forks over essentially a 100% premium for what is no longer one of MGM’s top three Strip properties.
Ruffin makes a stark contrast to an apparently delusional Donald Trump. Even though condo prices have fallen as far as 70% at Trump Int’l, now starting around $155K, Das Donald actually says, “We’re doing really well.” Then again, Trump is so perennially full of it, he might actually believe that upside-down logic of his. But even if Trump can’t give away timeshares …
What kind of person buys a Veer Towers condo? A millionaire like Brian Fettner, that’s who:
I swear Phil looks like Bernie from weekend at Bernie’s more and more I see him and those sunglasses.
In the long run Phil Ruffin will do well with his Treasure Island investment. Good location, reasonably priced restaurants, and (hopefully) good gambling odds should make TI a winner.
under the current, “boot on the neck” administration, it’s unlikely that there will be a rebound in las vegas visitor traffic. in the foreseeable future. unemployed citizens have little discretionary income.
the traditional asian players need no longer fly to nevada for classy gaming venues.
ruffin is sensible. since he apparently wrote a check for the joint, his largest concern is enough hold to cover the nut.
times will get better but it may be a decade or more before the u.s. economy recovers from the “change” regime.
Jinx, I think that is my favorite S&G comment of 2010. Hilarious! Wish I’d thought of it.
Ray, would I buy in this market? As in a house? Or a condo? If I had the money, yes. Condos are going to be a (very relatively speaking) bargain play for years to come because Vegas so grossly “misoverestimated” the extent of demand. It’s going to take a lot of time to soak up that inventory. Unfortunately, most of us don’t have Brian Fettner’s discretionary income with which to make our play.
It is impossible for any educated investor to buy real estate in a market where prices continue to plummet ( or at the very least no appreciation in sight for the foreseeable future. )
Renting is a sound alternative for a down market with 14% +
unemployment.
Money is scarce and should be allocated where one could get the highest rate of return, and even 0% return is better than the negative rate of return; such as that of the Vegas housing market.
It’s easy for anyone to blah, blah, blah ” if I had the $$, I would do this and that in Vegas. ” because you DON’T ACTUALLY DO IT. All these irresponsible B.S. don’t mean nothing until you put your money where your mouth is.
I bet if you do indeed have the hard-earned dough, you would instead be more cautious and prudent than blowing away another 20% by buying into a down market where no recovery will ever be realized.
Who are the kings of Vegas and who Vegas has benefited the most financially in the last 2 decades ?
Sheldon is putting his money elsewhere in Macau and Singapore and Wynn is very focus on Macau.
Don’t you get it ?
What a refreshing interview with Ruffin and his straight, honest talk. No sugar coating there, but I guess if I pulled off the Frontier into TI parlay with an extra $400 million or so extra in the bank, I could do some honest talking about the real business climate as well. I have little doubt that this will pay off for him in the long run, because like he said, he can afford to wait for the turnaround.
Great find, David. I’m a big fan of Phil and I’m also looking forward to see how Alex Y’s turnaround at the Trop turns out.