Michael Gaughan

So long, Sue, and thanks for playing

It’s back to her day job for Archon Corp. Secretary-Treasurer Sue Lowden, whose political aspirations experienced an embarrassing meltdown that some would call karmic,  redefining “epic fail.” Now she can focus on repairing a corporate image which The Newspaper That Must Not Be Cited rather generously characterized as that of “a successful casino executive.” (C’mon, Sherm, the Santa Fe was never held in high esteem when Mrs. Lowden ran it and the Pioneer Gambling Hall is about as low in the Laughlin pecking order as you can get.)

Perhaps the Lowdens can repay the $350 million they want to borrow for a North Strip stadium with 43,750,000 orders of chicken wings at Sassy Sue’s Saloon. They can also revert to being best known as the people who tore down Wet ‘n Wild, beginning the ghetto-ization of the north end of the Strip.

But will this be the end of the bizarre 11th-hour plot twist in which Mrs. Lowden produced a letter from then-Gaming Commissioner Harry Reid vouching to Illinois regulators for her good character? Did Reid wink at an alleged Mob involvement in a deal that enabled Paul Lowden to acquire two Strip casinos? (This deserves much additional scrutiny.)

Would Mrs. Lowden’s apparent ingratitude and her pooh-poohing of a bombing attempt on Reid — and, by implication, one on a fellow commissioner — cause him to take a special interest in her downfall? As for belatedly citing Reid as a character witness after calling him a liar … well, Reno Mayor Bob Cashell (R) didn’t crown her “Suicidal Sue” for nothing. It’s all very House of Borgia.

Now we come to the part of our program where we form a circle around

News flash: And then there were three

If you’re headed through Mesquite, take a good look at the former Si Redd’s Oasis, which Black Gaming CEO Randy Black wants to demolish — in a metaphorical demonstration of what he’s done to that market (another beneficiary of the “liberalized” regulation that Gary Loveman lurves). Actually, the idea is probably not Black’s but that of power-behind-the-throne Michael Gaughan.

With the Oasis gobbling up copious acreage for the sole purpose of sustaining 16 slot machines — making it surely the largest slot route location in Nevada — there’s considerable incentive to repurpose the property or sell the land to reduce Black Gaming’s $253 million debt load. At some future point, Black’s Virgin River Convention Center will supposedly revert to its origins as a casino …

Condos in Vegas … still? Manilow in Vegas … again

Richfield Village 1Undeterred by the complete tanking of the high-rise-condo market in Las Vegas, joint-venture partners Station Casinos and Fisher Bros. had still planned a pair of condo towers on or very near where Richfield Village currently stands (above). That’s probably the biggest surprise that turned up when I endeavored to find out what happens to the area now that it and a veritable grab-bag of Station-owned real estate will be back on the market, presuming that a Station/Deutsche Bank accord is OK’d by the bankruptcy court. Since the Feritta Brothers have indicated — via new Station CFO (and man to watch) Marc Falcone — that they intend to reacquire whatever’s put up for auction, that means that Station and Fisher, having already spent at least $95 million

An arena in every pot

A scrum of casino owners and would-be owners is swarming the Clark County Commission with proposed arenas. The Las Vegas City Council may be able to get into the act, as Cordish Cos. is studying the feasibility of a stadium that’d be a dice throw from the Gold Spike downtown (and believe me, that’s a huge improvement on the previous location favored by Mayor Oscar Goodman).

Tireless entrepreneur Christopher Milam still hopes to build upon the former Wet ‘n Wild site although he’s belayed his Burj Dubai-like tower in favor of a Silver State Arena. Some $330 million of the capital would be borrowed by Archon Corp. executives Sue and Paul Lowden. It would also involve dipping into the

Chronicle of a Black foretold; River City looking good

Randy Black, that is. The CEO who ran the Mesquite market straight into the ground (with a sizable assist from the Nevada Gaming Control Board and Gaming Commission) and turned the former Si Redd’s Oasis into a slot route — a pathetic 16 machines — has kept his promise to put Black Gaming into bankruptcy. Under the new arrangement, most of the heavy lifting will be done out of South Point, now that Michael Gaughan has emerged as the power behind Black’s tottering throne.

Publicity ho Black makes a useful front man for the very media-shy Gaughan, who has also installed former Coast Casinos hand Anthony Toti at the levers of power (i.e., chief operating officer). Toti’s been around Black Gaming for a while but Randy B. was pulling all the important strings at the time. Unfortunately, as is so often the case,

Going … going … Gaughan

Having been handed a virtual monopoly on the Mesquite casino market by Nevada regulators, blowhard Randy Black proceeded to run it and his company into the ground. So he entered prepackaged bankruptcy this week and proclaimed victory. And why not? He gets to remain CEO and his primary sidekicks are allowed to keep their jobs, too. “I’m not selling and I am not going anywhere,” he gloats. This does not inspire confidence in Reorganized Black Gaming (yes, that’s what it’s called).

But he has to surrender 90% of the company, with secured creditors getting both cash and equity in the deal. Subordinated debtors have to choose between either the dough or the stock. Either way, they’re getting pennies on the dollar — taking a 72% haircut. Also, the deal broker turns out to be a certain Michael Gaughan. So while Randy Black gets to keep his office, his title and (presumably) his face on TV, it sounds for all the world as though the fate of the Mesquite market is now in the hands of the man behind South Point. If so, that’s a very good thing.

Thank you, dear readers, for the positive holiday wishes you sent to Fasolt, my gargantuan kitty and steadfast pal of nearly 15 years standing. Today, as the gloaming stretched over Las Vegas, I composed S&G Twitter bulletins with Fasolt in my lap and his step-brother, Mr. Bit, sleeping between the keyboard and the computer screen. Life doesn’t get much better than that.

Blast from the past

In this case, it’s a blast of hot air from the pages of the defunct and dreadful Liberty Watch magazine, whose back numbers still adorn the Web, but whose ink-and-paper incarnation has devolved into a loose smattering of blogs. Let’s take the Wayback Machine to December 2008, when the cover of Liberty Watch bore a fawning — and wisely anonymous — ode to “Our Top 10 Gamers: When Others Bust, These Guys Build.”

Given the parlous state of the casino industry in late 2008, Liberty Watch‘s pronouncements suggest the author was hunched over a crystal ball that was, if not cracked, exceptionally dusty. Of the 1oth man on the list, he writes, “[William] Weidner knows the right tone to adopt with every crisis, and he’s got what it takes to carry the [sic] Sands out of its funk and into another period of growth and prosperity.”

william_weidnerNever mind that Weidner’s testimony had recently sunk Las Vegas Sands‘ case against Richard Suen, who successfully sued for a “success fee” for helping get Sands into Macao. By early March, Weidner (left) would be history. Sands may yet emerge from its funk but ex-prez Weidner has done a disappearing act. As for always adopting the right tone, would that include Weidner’s witness-stand remark that all Chinese look alike? Perhaps the “witless stand” would have been an apter pulpit for such comments.

Harrah’s Entertainment CEO Gary Loveman (#6) is painted as “a leader who will speak the truth” and an apostle of fiscal restraint. Yes, and pay no attention to the $24 billion-plus debt load behind the curtain.

Frankie the ThirdStation Casinos supremos Frank III & Lorenzo Fertitta (#5) “always put their money where their passion lies.” (Like Orange County real estate, perhaps?) They were, we’re told, keeping the soon-to-go-bankrupt “Stations [sic] Casinos strong and credit-worthy.” The brothers “seem very likely to [but didn’t] loan the company between $450 million and $500 million” and — to be pedantic — most of the money would probably have come from hapless partner Colony Capital. The article also fails to ask why, if Station is the fifth-largest company in the business, CEO Frank Fertitta III (pictured) pays himself the highest base salary of any chief exec in the industry. (Strange that a magazine supposedly devoted to the ideals of fiscal conservatism would idolize some of the worst spendthrifts in gaming.)

As much as I admire Bill Boyd (#4), he’d long since vacated the chairman and CEO titles Liberty Watch re-appended upon him. Since January 2008, they’d been held by Keith Smith, and it is he who ought to be credited with having the huevos to call a halt on Echelon and with the successful relaunch of Blue Chip, up in Indiana. “Bill Boyd, Chairman and Chief Executive Officer of Boyd Gaming, [may have been] keeping up with the changing times instead of sticking too closely to the past models” but Liberty Watch sure wasn’t.

“[C]utting payroll is the first thing most corporate executives look to do in order to justify their cushy salaries,” the writer says by way of praising South Point owner Michael Gaughan‘s (#3) refusal to do so. And yet, MGM Mirage CEO Jim Murren (#7) is lauded for “an expense reduction program, which began as an initiative to streamline operations following a string of mergers but became more focused on cutting costs to offset earnings that have declined from a year ago. That’s what a leader does.” [Cue fanfare] That also sounds like a long-winded euphemism for “cutting payroll.” Intellectual inconsistency much?

Finally, there’s this plaudit for the #2 man on the list: “Don’t expect [Fontainebleau CEO Glenn] Schaeffer to cut any corners whatsoever in constructing what will surely be one of the most elegant pleasure palaces in Las Vegas.” One year and countless cost overruns later, truer words may never have been written. And say, whatever happened to that Schaeffer guy?

“Fontainebleau will be boldly going where few other hotels have gone before.” If F-bleau becomes — as some have recommended — the first Strip megaresort to be imploded prior to completion, yes, it will have achieved an historic first. But if Liberty Watch meant going into bankruptcy, F-bleau needn’t worry: It will find plenty of company there … including “Stations Casinos.”

From the mailbag #12

A former colleague, a person of upbeat disposition and someone who, along with his wife, achieved the American Dream here, recently sent ’round the following dispatch. Were it coming from somebody who was a congenital naysayer, that’d be one thing. Flowing from the keyboard of a person who’s been around the bidness block a long time and was a believer in Las Vegas‘ growth … well, that’s quite different. Read on.

“I think the town is dying and smart people need to get ahead of that. CityCenter has been jinxed and those hoping it will be some kind of savior are going to be disappointed. I’ve been reading coverage of the Global Gaming Expo and the experts seem to think that there is some God-given level of demand to visit Las Vegas, and as soon as people feel more secure in their jobs they will come flocking back. Ha.

“Well, jobs aren’t coming back. Not here. Not anywhere. There is so much excess to work out (residential, commercial, retail, people) that it will take years before people regain their confidence. And when the town was filled with folks seeing how much they could spend in three days, didn’t you used to wonder,’Don’t they know any better?’ Well, now they do.

City Center_1

“When your neighbor is in foreclosure and your brother is out of work, it’s hard to get excited about coming to Las Vegas and wiping your ass with $100 bills. So as the town reaches for the lowest common denominator to prevent the properties from looking like ghost towns, it’s driving away the high-end corporate business and expense-account-funded debauchery that the new Las Vegas was built around. You can only put so much regular gas into an engine built to run on premium before it sputters and dies.

“I don’t know if President Obama saw the stories about the stripper-mobile, but if he did he could be forgiven for feeling some smug satisfaction. The dude was right that companies on the dole should not come to Las Vegas. There are a lot of good people in this country who don’t buy what we sell and should not be forced to subsidize it.

“I hate being proved right on this, but do you remember Jeremy Aguero‘s Little-Mary-Sunshine speech to the PRSA? I told the dude then we were f’d, but he had the data on his side and when he showed people all the construction cranes they knew Las Vegas was going continue on its unabated trajectory toward heaven on Earth. I guess that wisdom got him booked for the 2010 Preview Las Vegas, put on by our Chamber of Commerce, which I believe is headquartered in a failing retail and entertainment complex.”

Which reminds me that even when the new affordability of Las Vegas brings people to Strip resorts, the result is starchy huffing they’re not the right sort of people. I mean, bringing a pizza to your hotel room? How déclassé!
Don’t those people know they’re supposed to be getting wasted at Rehab, performing public sex acts at Privé or engaging in traditionally comme il faut Vegas conduct? And if Michael G … er, Casino Executive X would prefer those pizza boxes and coolers went somewhere else, there are plenty of empty hotel rooms here that would be glad to have them.

Reality check

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

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.)

Looking for good news in Vegas

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.

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

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.

We're no Pyongyang!

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 …

Lamest casino promotion. Ever

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

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