MGM CEO sez, "Make me an offer"

Posted on January 8, 2009 by David McKee

“We are certainly not looking to aggressively sell assets, but the point is that we do have assets that are attractive and we are going to be very responsive.”

That's MGM Mirage CEO Jim Murren's way of saying that he's not going to hold a fire sale … but don't be shy with those purchase offers, either. He's identified drastic debt reduction as his top priority, which partly explains why the company is spinning its undoubtedly mortifying The Harmon fiasco as A Good Thing, Really, as it brings the moving target which is CityCenter's budget down to a svelte $8.6 billion … assuming they don't have to refund those $88 million worth of Harmon deposits. (Murren may have conceived CityCenter but it is his perceived rival, CityCenter CEO Bobby Baldwin, whose resumé is much likelier to be blotched by the forced truncation of a planned 47-story tower into a 25-story stump.)

CityCenter: Now with 50% less Harmon!

Elsewhere, Murren contends that MGM could have gone back and finished The Harmon at its intended height. Well, yes … but even if the bankers are reopening their checkbooks, as Murren says, it's difficult to imagine a scenario in which they happily agree to pile additional hundreds of millions in debt onto a project that still isn't fully funded. Unspecified Chinese banks are reportedly being supplicated for those elusive last few (millions of) dollars.

Perhaps Murren was being a mite tongue-in-cheek, as the odds of financiers underwriting a Harmon do-over are probably somewhere in the same realm of probability as flying pigs and Guy Laliberté admitting that Cirque du Soleil screwed the pooch with Believe. (Mais non, it's nothing that as much as six months of "fixations" can't cure, mes amis.)

The James Packer Jinx redux? This isn't reassuring: Soon-to-be Cannery Casino Resorts owner James Packer's Crown Ltd. is promising "a new Las Vegas-based senior management team and board" and that "many" current managers and employees will stay. Furthermore, the company will apply business models that have worked for it in Australia, Canada and Macao to improving the not-exactly-struggling Cannery performance.

Now, this is what's called fixing what isn't broken. Nor has the Vegas market been kind to operators who have come here from overseas and attempted to reinvent the wheel. One cautionary example Packer hopefully will heed is that of Swiss Casinos, whose somewhat pretentious Resort at Summerlin tanked unmercifully, to much glee within the industry. Swiss Casinos made it plain it didn't want to hear Word One about what worked in Las Vegas, they had it all figured out. Their pride went before a fall into Chapter 11. Ironically — or prophetically, perhaps — Packer will inherit the erstwhile Resort @ Summerlin, which Cannery manages in its current guise, the Rampart Casino.

Less the value of that management contract, Packer is paying $600 million apiece for two locals casinos and a Pennsylvania racino. That seems more than a bit steep, even in a good economy, but looked like a much better idea at the time it was hatched, before Wall Street did a face-plant and hindsight became 20/20.

Well, at least Packer was able to get a plane ticket to Las Vegas this time. (He missed his previous scheduled appearance.) That's a good start.

Posted in Boulder Strip, Cannery Casino Resorts, Cirque du Soleil, Economy, James Packer, MGM Mirage, Pennsylvania, The Strip, Wall Street | Comments Off on MGM CEO sez, "Make me an offer"

Bobby Ray Who?

Posted on January 7, 2009 by David McKee

Tamares Group's raggle-taggle bunch of downtown Vegas casinos is onto its third management company in four years. Its first stalking horse, Barrick Gaming, made a lot of grandiose noises but turned out to be a big bag of hot air. Navegante Group then tried to make a go of it, but ultimately chafed at the tightness of Tamares' purse strings.

Yesterday, some chance correspondence with Tamares' local PR reps gave me the opportunity to find out who'd succeeded Navegante as Tamares "beard," because whoever it was had done an impressive job of staying under the radar. The name that came back was BRH Gaming, formed 13 months ago by former Stratosphere executive Bobby Ray Harris. If the mailing address looks familiar, it's because it's … the Union Plaza, Tamares' downtown flagship. So we hardly even have one degree of separation between Tamares and BRH. Given that and the timing of the company's formation, it's reasonable to surmise that BRH was formed for the express purpose of doing Tamares' bidding once Navegante was out.

The offices of BRH Gaming.

A search of local newspapers turned up exactly one mention of Harris, from mid-2003 when he was senior vice president of operations at the Stratosphere. The Strat was a well-run property in those days (one hears not-so-good things about Goldman Sachs' current stewardship) and perhaps Harris can achieve the turnaround that eluded his predecessors.

But, given the procession of management companies trooping in and out of the Union Plaza, Vegas Club, the Western, etc., it's more than time that the Nevada Gaming Control Board abandoned its gentlemanly fiction that Tamares is just a "passive landlord" and make it apply for a gaming license. It's pretty obvious who's calling the shots on Main Street and I'd lay money it's not Bobby Ray Harris.

Posted in Downtown, Regulation, Tamares Group | 1 Comment

A house divided

Posted on January 7, 2009 by David McKee

Give credit where it’s due to the Las Vegas Review-Journal for today’s interesting revelation that Columbia Sussex had been running the Las Vegas Tropicana with rival GMs overseeing the casino and hotel operations, respectively. This appears to confirm rumors I’d heard that ColSux likes to ‘silo’ the gambling and lodging aspects of its casino-hotels into separate profit centers which compete against each other instead of operating symbiotically.

With corporate thinking like that, it’s no wonder that even Global Gaming Business Editor Roger Gros said, at G2E, that ColSux “didn’t understand the [casino] industry.” A newspaper interview with Casino Aztar interim skipper Tom Dingman details the decimation that took place there on ColSux’s watch. Given how rundown the Casino Aztar infrastructure was when Dingman arrived, his ability to turn around business there is all the more impressive. Whoever succeeds Dingman shouldn’t tinker with his business model, as it’s proven to be an indisputable success.

Further down in the same assemblage of news briefs is the announcement of Brooke Dunn‘s New Years Eve resignation from Shuffle Master. The former Shuffle Master senior VP has been under a cloud ever since the SEC recommended civil prosecution against him for allegedly passing privileged information to an unrelated third party. Dunn’s resignation was sadly inevitable, as he can neither fuufill his job responsibilities nor be entrusted with sensitive information as long as the SEC’s accusations hang over his head.

Also out the door is the Ameristar Casinos Chief Accounting Officer Thomas Malone “who has resigned to pursue other opportunities,” such as the opportunity of not having the doorknob hit you in the butt. Former Progressive Gaming CFO Heather Rollo replaces Malone. Given the performance of its casinos despite the recession, Ameristar has been unaccountably jittery of late, with Malone’s abrupt departure being merely the latest tremor.

Update: Yet another executive who is choosing to “pursue other interests,” like updating his resumé, is Tropicana Entertainment CFO Robert Kocienski. After a brief tenure in the job, he’s been shown the door in favor of ex-Shuffle Master CFO Richard Baldwin, a long-tenured slot industry executive. Combine this with the hiring of Ron Thacker to run the LV Trop and it’s one ex-Cosmopolitan executive in, one out. So I guess they can put that big Cosmo Class of ’08 reunion on hold.

Posted in Ameristar, Columbia Sussex, Cosmopolitan, Indiana, Regulation, The Strip, Tropicana Entertainment | Comments Off on A house divided

Plaza officially in trouble (or not)

Posted on January 6, 2009 by David McKee

It wasn't good news when El Ad Properties asked its bankers for a second extension on a $625 million purchase loan for what used to be the New Frontier. Now (by way of TheMarker, Reuters and Howard Stutz) comes a report* El Ad is seeking money from Sheldon Adelson. If you really are rattling your tin cup in Adelson's direction — he who just diluted his ownership stake in Las Vegas Sands and stopped its leaks with $1 billion of his own capital — then you are desperate indeed. For the record, El Ad's partner, IDB Development, says talks with Adelson are neither being considered nor on the agenda.

*Update: Reuters has all parties involved denying everything, so this is looking like one of those news reports that's more entertaining than true. At the very least, it provides clarity as to how this rumor got started.

It's not clear what to make of the appointment of Ron Thacker as president of the Las Vegas Tropicana. The reconstituted Tropicana Entertainment is starting to looking like a reunion of the old Cosmopolitan gang, as CEO Scott Butera leapt from that sinking ship, as did TropEnt CFO Robert Kocienski. On the other hand, Thacker made the trip from the Cosmo to the Trop via an interval spent as VP of casino operations for Fontainebleau Resorts "where he was responsible for casino design, development, systems implementation and general casino operations" for a casino that hasn't been finished, let alone opened. So is Thacker going through a rough patch in his career or is his departure an ominous portent for the Vegas Fontainebleau?

Posted in Cosmopolitan, Fontainebleau, Plaza, Sheldon Adelson, Tropicana Entertainment | Comments Off on Plaza officially in trouble (or not)

Unwanted Vegas bargain

Posted on January 5, 2009 by David McKee

So, after making the big bad Fire Department the fall guy for Dec. 31's sucktastic fireworks display (more of an obfuscation than a display, really) it turns out that the culprit was organizer Las Vegas Events. Perhaps, in a new bow to Truth in Packaging, it will rebrand itself Las Vegas Non-Events.

The problem wasn't that — as initially reported — new fire-safety rules prevented launching fireworks from Strip rooftops. Rather, LVE was too cheap to pay the $200K that compliance would have required. This is the first time I can recall hotel-tax money being spent thriftily, as the Las Vegas Convention & Visitors Authority (the prime room-tax beneficiary) is in the habit of flinging great gobs of it to the four winds. But spend an extra 200 grand on the Strip's single biggest party night? Nosiree Bob, can't have any of that. There's a recession on, you know. Or, "The first priority is the experience on the Strip," to borrow the excuse du jour. Although, if the latter is the case, why bother firing off pyrotechnics from the Convention Center (well off the Strip) and beneath the Fremont Street Experience canopy ('nuff said)?

Based on experience, I'd say to expect LVE to stay atop its high horse for maybe another fortnight and then, when it hopes nobody is looking, admit that "It was a mistake." Sort of like how NBA All-Star Weekend was the greatest thing since sliced bread — until it wasn't.

Posted in Current, Downtown, LVCVA, The Strip | Comments Off on Unwanted Vegas bargain

Happy New Year

Posted on January 2, 2009 by David McKee

Will it be a happy new year for the Strip? In terms of "supply shock," the timing could be a lot better, let's put it that way. Back on Aug. 14, JP Morgan issued an analyst report which showed 11,412 hotel rooms and 7,546 condos hitting the Las Vegas Valley in 2009. Aliante Station and Encore (an aggregate 2,235 rooms) relieved some of the pressure by opening sooner than Morgan analysts anticipated. But that still leaves a lot of product in the pipeline, headed right at us.

Persistent rumors have MGM Mirage's The Harmon, part of CityCenter, paralyzed by construction problems and perhaps deserted by operator Light Group. Even if that proves to be both true and a blessing in disguise, we're only talking 400 units. Seriously, we could stand to have a few more big projects (Cosmopolitan, anyone?) fall behind schedule.

After all, 2010 was to have been an absorption year, with only the St. Regis condo tower (300 units) at Palazzo slated to open. Now that's on indefinite hold, so the deck is clear for developers who'd like to push their opening date back. Any takers?

Posted in Cosmopolitan, Current, Economy, MGM Mirage, Sheldon Adelson, Station Casinos, Steve Wynn, The Strip, Wall Street | Comments Off on Happy New Year

21

Posted on December 31, 2008 by David McKee

That's the number of predictions for 2009 issued by Spectrum Gaming Group, an Atlantic City-based outfit. They are, in no particular order:

• Advancements in technology that impact revenues and cut costs will continue to be attractive to operators even in an economic downturn.

Continued …

• … conversion of racetracks to racinos, as well as non-gaming expansions to existing racinos.

• … elimination of jobs, both through cuts and attrition.

• … moratorium on development of big-box gaming resorts due to economic downturn.

• Convenience-based gaming continues to achieve better year-over-year results than destination-based gaming.

• Corporate and property debt restructuring in wake of declining revenues.

• Eastern European countries will increase their efforts to meet EU regulations, including smoking bans.

• Gaming companies increase efforts to export their brands globally.

• Gaming equipment manufacturers continue to invest in games that appeal to a younger demographic, including lotteries, bingo and server-based technology.

• Increased legislative acceptance of allowing the deduction of issued electronic promotional gaming credits from the gross revenue tax/fee calculation.

• Increased use of electronic games, including the emergence of scalable electronic table games in which players at different locations on the floor wager on a single outcome.

• Increasing alliances between commercial gaming operators and outside investors, as well as between commercial and tribal operators.

• Internet gambling in U.S. will be a hot federal issue for the new administration and Congress; gaming companies will fund lobbying efforts on both sides.

• Major gaming operators commence deleveraging by selling off properties to emerging operators.

• More pronounced shift in market share among suppliers as operators attempt to shift away from IGT participation games.

• Native American tribal gaming revenue estimates remain on track to surpass U.S. commercial gaming totals.

• Prices for hotel rooms, shows and food and beverage will return to lower levels at large gaming resorts as operators need to fill their properties.

• Slow but continual advancement toward server-based gaming, as operators remain skeptical as to the potential financial returns on investment.

• States consider expanding or legalizing casino-style gaming to help fill state budget gaps.

• Support from China to ease visa restrictions, increasing flow of visitors into Macau.

• Uncertainty in various European countries concerning regulation, thus increasing cases being referred to the European Court of Justice.

We'll have to check back in a year, God willing, and see how clear Spectrum's crystal ball proved to be. There's nothing on that list that strikes me as off the beam and much of its seems dead on target. The only "WTF?" comes courtesy of a Spectrum exec who told a reporter, "In times like this, it's not like these are company-specific problems that can be attributed to some glaringly bad decision by the company."

I respectfully beg to differ. Choosing unreliable and/or overcommitted business partners (Boyd Gaming) was a decision. Opening in far-flung markets while your core properties were losing market share (Isle of Capri) was a decision. Taking on preposterous amounts of debt (Harrah's Entertainment) or simply assuming more debt than your cash flow and lavish spending tendencies can support (Station Casinos) were decisions. Trying to build metaresorts all at once (Boyd, MGM Mirage) was a decision. Rashly demolishing the Atlantic City Sands and thereby leaving yourself with empty, non-revenue-producing land (Pinnacle Entertainment), that's a decision.

Launching major projects that aren't fully capitalized (Las Vegas Sands, Cosmopolitan, Majestic Star) is a decision. Stubbdornly jeopardizing the license of the property that generates 40% of your cash flow (Columbia Sussex) is a decision. Making not one, but two major acquisitions at a time when your cash cow — slot routes — is giving less milk and then overpaying for some of the new assets (Herbst Gaming) is a decision.

Opening a $2.3 billion, years-in-the-making megaresort at the nadir-to-date of the economy (Wynn Las Vegas)? Now that, that was not a decision. That's playing the hand you were dealt.

Posted in Boyd Gaming, Colony Capital, Columbia Sussex, Cosmopolitan, Current, Don Barden, Economy, Harrah's, Herbst Gaming, IGT, International, Internet gambling, Isle of Capri, Macau, Marketing, MGM Mirage, Morgans Hotel Group, Pinnacle Entertainment, Politics, Regulation, Sheldon Adelson, Station Casinos, Steve Wynn, Technology, Tribal, Wall Street | Comments Off on 21

Atlantic City Death Watch III

Posted on December 30, 2008 by David McKee

It's business as usual at the Atlantic City Hilton tomorrow night. Only "private parties" to mark the New Year. "It's indicative of a very dire situation," says one industry veteran.

Posted in Atlantic City, Colony Capital, Economy | Comments Off on Atlantic City Death Watch III

More gems from Ruffin

Posted on December 29, 2008 by David McKee

During his days at the helm of the New Frontier, owner Phil Ruffin was pretty shy with media access. So when he talks, it behooves one to pay attention. To wit:

• He says his deal with MGM Mirage has a one-year lifespan and then Treasure Island has to become a stand-alone property. The question of what this means for Mystere (considering Cirque du Soleil's exclusive arrangement in Las Vegas with MGM Mirage) is simply begged.

• Despite having made $1.2 billion (before taxes) on the New Frontier sale, Ruffin describes himself as "tapped out." So speculation about "What will Ruffin buy next" is likely to peter out, too.

• Citing his low ($275 million) debt load, Ruffin says Treasure Island won't have to compete in the $200-$300/ADR niche. Which will probably make it one of the first stops for comparison shoppers in Vegas who are looking for something affordable … but classier than Circus Circus, let's say.

• According to Ruffin, he knew the handwriting was on the wall for the casino industry when people were taking out first and second mortgages against little or no equity. A pity others in the industry didn't twig to this as soon as he.

• It's interesting to compare the career trajectories of Ruffin and Columbia Sussex grand poobah William J. Yung III (who could personally lose as much on the foolhardy Aztar Corp. acquisition as Ruffin spent out of pocket to acquire Treasure Island). The one started with a lone gas station, the other with a single motel. But Ruffin sold at the top of the market while Yung bought. Not only that, the latter publicly proclaimed himself to willing to pay any price — and piled the debt-laden Aztar buy atop a similarly costly acquisition of 14 Wyndham-branded hotels. Presented with a fiscal buffet, Ruffin was selective while Yung tried to eat everything in sight. Thus, when times are bad, Ruffin has money to burn (read: invest wisely) while Yung can only fume about the deals he might be making had he not splurged so shortsightedly. It'd make a good business-school case study.

• He may be the first casino owner to call for more regulation.

• On Iraq: "The fact that they might have better roads in Baghdad than we have in Massachusetts, that’s crazy."

• And if you wanted to summarize the casino crisis in three sentences, you couldn't do much better than Ruffin's "I don’t like a lot of debt and that’s what happened to very good companies, well operated, but they took that debt on, and that’s a real big problem. It’s not that they’re not doing business. They are doing business, but the debt loads are too heavy."

Posted in Columbia Sussex, Economy, MGM Mirage, Phil Ruffin, The Strip, Wall Street | Comments Off on More gems from Ruffin

Merry Christmas

Posted on December 24, 2008 by David McKee

LVA's Stiffs & Georges bureau is on holiday in Cameron Park, Calif., for the remainder of the week. As I write this, I'm only four miles or so from the new Red Hawk Casino (which looks to present as much of a competitive danger to Lake Tahoe that Thunder Valley did for Reno) but our schedule of family activities hasn't included a swing past Red Hawk … especially not when one's eight-year-old nephew and six-year-old niece are in tow.

Regardless of whichever late-December holiday (if any) you observe, may it be joyous and bountiful, and may it augur more of the same in the coming year.

Posted in California | Comments Off on Merry Christmas

Deep Red: Encore

Posted on December 22, 2008 by David McKee

As much as casino-watchers have been vexed by the total media clampdown on all but the smallest scintillae of revelation about Steve Wynn‘s Encore, it was worth the wait. Or, to put it differently, Aria and Fontainebleau have just been given an exceptionally difficult act to follow.

I say that as someone who was disappointed with Wynn Las Vegas when it debuted in 2005. Despite the modernity promised by the exterior, what I found inside was a pastel-colored version of Bellagio — smaller, muted, rearranged and more than a bit fussy.

Let it not be said that there is anything pastel about Encore, nor anything tentative. For starters, primary colors are back “in” with a vengeance, specifically red. Now, I like red but we’re talking RED!!! Continue reading →

Posted in Architecture, Cirque du Soleil, Cloverfield monster, Current, Dining, Economy, Encore, Fontainebleau, Harrah's, Macau, MGM Mirage, Planet Hollywood, Sheldon Adelson, Steve Wynn, The Strip | Comments Off on Deep Red: Encore

Quote of the Day

Posted on December 22, 2008 by David McKee

"My job is not to design the best hotel. My job is to design the best hotel experience … I hope people propose in my spaces." — Roger Thomas, design supremo for Steve Wynn, conducting a tour of Encore, which opens tonight (Dec. 22).

Posted in Architecture, Steve Wynn | Comments Off on Quote of the Day

Pinnacle's Bahamas debacle

Posted on December 19, 2008 by David McKee

It wasn’t so long ago that Pinnacle Entertainment was the fair-haired boy of the casino industry, especially after it hit a home run in the Lake Charles, La., market with tony L’Auberge du Lac. Then it nearly followed Columbia Sussex over the precipice in the crazy Aztar Corp. bidding war. Its much-anticipated Lumiere Place in St. Louis is now regarded as a succes d’estime, a budgetary overindulgence. (It’s certainly failed to make any significant dent in proximate Ameristar Casinos and Harrah’s Entertainment operations.)

Pinnacle paid a bundle to agglomerate land on Atlantic City‘s Boardwalk that it now can’t afford to develop — and may be regretting the precipitate fashion with which it shut down and demolished the Sands, which could have been generating a modest revenue stream all this time. A Baton Rouge riverboat project is behind schedule, and now …

Isle of Capri Casinos and Harrah’s now can welcome Pinnacle to the club of U.S. casino owners who have found nothing but a dead end in the Bahamas. (In fairness to Harrah’s, it never got a chance to operate there, its Baha Mar project having fallen victim to internecine plotting and counterplotting that still haven’t been sorted out.) The torrent of red ink from Exuma has done a number on Pinnacle’s bottom line, which really doesn’t need any more bloodletting right now.

It seems that Pinnacle decided last summer to either sell or outright close its casino on Exuma and will draw the blinds on Jan. 2 (which tells you just how bad business must be). Given that the Bahamas also turned out to be a fiscal graveyard for “Pile of Debris” (one of the bad decisions that ushered out the Goldstein Era), no wonder Pinnacle’s Exuma casino is wanting for takers. Yes, they couldn’t even get James Packer to take this turkey, so things must be very dire indeed. The ill-starred property has even been purged from Pinnacle’s corporate Web site. “Bahamas casino? What Bahamas casino? No, we never had one of those. Where did you read that?”

I’m tempted to say this is the end of U.S. casino operators trying to reinvent the Bahamas as a market for Vegas-style gambling. But this is an industry with no shortage of persistence and optimism, mostly justified but sometimes not.

Last-minute reminder: The final episode, “Vegas” of Stargate Atlantis — partly shot on the Strip — airs tonight at 9 p.m. Eastern and Pacific. I’m just sayin’.

Posted in Atlantic City, Columbia Sussex, Harrah's, International, Isle of Capri, James Packer, Pinnacle Entertainment, Planet Hollywood, The Strip, TV | Comments Off on Pinnacle's Bahamas debacle

Next up: Gladiators, orgies & bear-baiting

Posted on December 19, 2008 by David McKee

“In Atlantic City, whose casinos saw revenue decline by 8 percent last month compared with the same period last year, the Tropicana staged its own version of Pamplona’s Running of the Bulls on Saturday — participants dressed as Santa Claus ran through the casino chasing scantily clad Hooters waitresses.” — If de facto Trop President Pam Popielarski is trying to make Columbia Sussex look good by comparison, she’s off to what you might call a running start.

Posted in Atlantic City, Columbia Sussex, Tropicana Entertainment | Comments Off on Next up: Gladiators, orgies & bear-baiting

Quote of the Day

Posted on December 18, 2008 by David McKee

"[T]he fact that he's from a somewhat Western state is good." — a congressional spokesman, reacting to the nomination of Sen. Ken Salazar to head the Interior Department. Salazar is from the "somewhat" (but apparently not very) Western state of … Colorado.

Posted in Colorado, Current, Tribal | Comments Off on Quote of the Day

Right from the beginning

Posted on December 17, 2008 by David McKee

Time Magazine, no less, has designated the LBO of Harrah’s Entertainment by Texas Pacific Group and Apollo (Mis)Management the third-worst business deal of 2008. Harrah’s CEO Gary Loveman sought out this deal — and these particular buyers — out at a time when it made precious little economic sense, so I guess he earns sole possession of this “award,” having been the architect of the debacle. Those of us who were skeptical from Day One get a small measure of vindication to keep us warm on a day when the snowfall in Las Vegas is so heavy that I can’t even see Harrah’s The Rio, two blocks distant, from my office window.

Way to extend that brand! Moving from triumph to triumph, Harrah’s has found a way to perfume the pig that is its $578 million golf course in Macao. It is now Caesars Golf Macau (y’know, for when Total Rewards members get a sudden golfing jones that can only be sated via a trans-Pacific commute). Yup, Harrah’s sure is getting every inch of mileage out of its Caesars brand … if you mean frequent-flier mileage, that is. At least Harrah’s is maintaining its investment, not proposing to abandon it to the rough mercies of Mother Nature, like some.

Criss Angel goes to Disneyland, Hefbot in tow. Isn’t that special?

Speaking of Mr. Angel (if we must), it’s conventional wisdom to the nth power that Vegas isn’t going to make it as “Broadway West.” Of course not. If Cirque du Soleil opened an $85 million headliner show on the Great White Way to terrible reviews and — if possible — even worse word of mouth, we’d be talking about Believe very much in the past tense. Heck, it probably would closed after one performance, and all the king’s “fixations” and all the king’s clowns couldn’t have put it back together again. So producers of half-assed shows like Fuego Raw Talent Live ought to thank their lucky stars they’re not on Broadway West.

Posted in Cirque du Soleil, Harrah's, International, Macau, MGM Mirage, Wall Street | Comments Off on Right from the beginning

When all is said and done

Posted on December 16, 2008 by David McKee

The way old friends do. Last Sunday, I received an early Christmas present in the form of tickets to Mamma Mia!, entering its antepenultimate week on the Strip (where it's still the best entertainment value around). Happily, the cast was still grabbing all the gusto they could, to paraphrase an old beer commercial. You'd never know this particular ensemble had been together for three of the production's six years.

 

… to fill the hole in your soul.

The visitors. Anyway, I figured that might be my last-ever look at the show that's successfully flouted conventional wisdom about what "won't work in Vegas." And which is still packing them in, I might add. Well, the ABBA gods (or goddesses, for those who worship at the shrines of Frida and Agnetha) must have smiled upon us, as the Better Half just scored tickets to Jan. 4's last-ever performance of Mamma Mia! at Mandalay Bay.

It's liable to be a bittersweet experience. I'm sorry to see it end but we can take some consolation in observing that — like ABBA itself — it's going out with a full head of steam instead of being put out of its misery. (Compared to, say, Fuego Raw Talent Live, where you expect the closing notice to be posted in mid-show.) Besides, the same evening sees the final performance of Stomp Out Loud at Planet Hollywood, so it will be a dark night indeed for theatre on the Strip.

Why did it have to be me? At least in the case of Mamma Mia!, if it had to depart, I can think of no more auspicious successor than The Lion King.* (Did subliminal associations with Leo the MGM lion play any part in the decision?) Second-hand word from last week's media preview is that it will be the full-scale Lion King, without any of the downsizing that was hinted at in the initial announcement. Also, the Lion King's producers are prepared to go into the M'Bay theatre "as is," which must have endeared them to MGM Mirage no end. A seventh (God forbid) Cirque du Soleil show would have required expensive, er, I mean extensive customization of the space.

(* — Of the mooted replacement for Stomp Out Loud, the less said the better.)

Nonetheless, Cirque high pajandrum Guy Laliberté has continued to play the role of spider on the valentine, openly coveting the M'Bay space for himself even before Lion King has planted its first paw there. Hey, M. Laliberté, don't you have a Criss Angel vanity project that's stinking up the joint over at Luxor? Why don't concentrate on your three months of "fixations," as you call them, while MGM Mirage gets on with a show that's certain to succeed (and I don't mean Believe).

Oh, and thanks for asking people to shell out $160 apiece to see a work in progress. Quel schmuque.

Here's to six long years or more of The Lion King — and at least as many before we have to endure any more of M. Laliberté nicotene-stained bombast. The silver lining to Jan. 4's dark cloud is that Mamma Mia! will be making room for another class act.

Posted in Cirque du Soleil, MGM Mirage, Planet Hollywood, The Strip | Comments Off on When all is said and done

Scary clown at Echelon!

Posted on December 16, 2008 by David McKee

Let me say at the outset, I do not like Ronald McDonald. He gave me creeps as a child and still does. (The thought of him wanting to buddy up to you … it's just disturbing.) The Ronald McDonald Houses, on the other hand, are a great and good thing.

However, after tasking MGM Mirage — perhaps excessively — over its $5K donation to Clark County's Music in the Schools program (a drop in the bucket in a year when Gov. Jim Gibbons is taking a flamethrower to Nevada's education budgets), some perspective is in order. MGM's donation absolutely blows away the meager $1,576.10 donated to Ronald McDonald House Charities of Greater Las Vegas at the opening of Viva McDonalds, the only part of the Echelon master plan to open as … as … well, as planned. (See the yellow box, halfway down the "Echelon" page.)

The guy in the goofy suit to Ronald McD's right is Mac King, magician and fellow alumnus of Macalester College. (He was two years ahead of me scholastically and remains light years ahead of me career-wise.)

At least RHMC of Greater LV doesn't need to feel quite so bad. It made out like a bandit compared to Mayor Oscar Goodman. He got a shoe.

Posted in Boyd Gaming, Charity, MGM Mirage, The Strip | Comments Off on Scary clown at Echelon!

Phil Ruffin's big deal

Posted on December 15, 2008 by David McKee

As you've already read umpteen times over by now, MGM Mirage sold Treasure Island over the weekend to Phil Ruffin. The latter's sitting on a massive chunk of change ever since playing El Ad Group to the tune of $1.24 billion — or $36 million/acre) for what used to be the New Frontier.

(Slightly less than three acres of undeveloped land, previously destined for Tower II of Trump International — which now appears to be on permanent hold — remain in the hands of one Phillip G. Ruffin of Wichita, Kansas. The land directly titled to El Ad — 18.4 acres would work out to a staggering $67.3 million/acre, so the exact breakdown of Ruffin's bonanza can be difficult to ascertain.)

At $775 million (7-8X projected cash for flow 2008-09), it's an entirely reasonable price — and at 6X EBITDA for 2007, it borders on a steal. "I would not be able to get a property like [Treasure Island] in normal times," the billionaire candidly told Forbes. Moreover, it leaves Ruffin still theoretically sitting atop a veritable throne of cash, with casinos aplenty to be had — not always worth having, but other top-tier properties may soon be on offer.

Already the 'Net is abuzz with speculation as to what MGM might part with next, in order to close the financing gap on CityCenter: MGM Grand (aka "the Green Monster"), New York-New York, Monte Carlo, Circus Circus, maybe even The Mirage itself … not to mention various and sundry pieces of raw land, although the greater appeal of an up-and-running, brand-name casino is obvious. As for Ruffin, with greyhound racinos in his native Kansas having a snowball's chance in Hell of happening, it's no wonder that he decided to re-enter the fray on the Strip, especially at such a favorable price.

Not only that, he'll help make the deal pencil out by keeping Treasure Island affiliated with MGM Mirage's loyalty-card program. As MGM explains, "We're working out a Technical Services Agreement to provide for that and a variety of services including hotel and accounting systems, parking, tram, etc." And if Ruffin's going to affiliate with MGM on one property, why not two?

Between the fact that A) nobody expects Ruffin to tear down Treasure Island, unlike the New Frontier, and B) it and The Mirage are listed jointly as one property for tax-assessment purposes, it's difficult to use this transaction as a benchmark of land value on the Strip. Thomas Weisel Partners analyst Jake Fuller approximates a $15 million/acre valuation for the deal. (Since that'd work out to an improbable 52.6 acres, Fuller is obviously building a valuation of the existing casino-hotel into his math.)

MGM's Alan Feldman responds that the purchase price was arrived upon strictly on an EBITDA-multiple-basis, "not per acre. That's because [Ruffin is] buying the operation rather than making a real estate development deal. We'll know the acreage once we go to subdivide as part of the close." Even if Ruffin winds up with considerably less than half of the 84 shared Mirage-Treasure Island acres (plus 14 acres' worth of parking lot out back), we're looking a substantial downward correction in the value of being on Strip, compared to the giddy heights reached in '06, especially in the El Ad and Columbia Sussex deals.

Posted in Columbia Sussex, Donald Trump, MGM Mirage, Phil Ruffin, The Strip | Comments Off on Phil Ruffin's big deal

Isle of Capri Biloxi previewed

Posted on December 15, 2008 by David McKee

Ironically, now that Isle of Capri has put its Biloxi plans on hold, we finally get a look at what the revamped Isle (minus the “of Capri” and the parrot) would look like. It’s not beauty-contest winner but, if it can be financed, would be an improvement on the very sparse-looking hotel-casino presently on the site. The current Isle Biloxi has been dubbed “the Tropicana of Biloxi,” which is almost the worst insult anyone can level at the place.

Meanwhile, Isle’s market cap continues to dwindle ($88.6 million as of today), as the executive makeover continues. It’s difficult to foresee a turnaround scenario for Isle that doesn’t involve a stopover in Chapter 11, given the size of the hole dug by previous management, but Glenn Curtis thinks Isle’s an attractive takeover target (for whom, I wonder?) and a bargain play among current stocks.

Posted in Architecture, Isle of Capri, Mississippi, Wall Street | Comments Off on Isle of Capri Biloxi previewed