corporate ethics and publicity

Many of you know that I was working with the Vegas Sun reporter on a story about Circus Circus. The property was making $3m per month in 2008 in operating income. Despite making $1.5m a month in cost cuts, the property is now losing a little over $1m per month. She seemed to think that as long as they weren't losing something overwhelming per month they would keep the property open because of negative publicity.

While I agree that a million per month is tolerable to a $6 billion a year company, the corporation is feeling the massive sting of a $1.2 billion drop in only one year. If the bleeding gets much worse, they won't care about bad publicity. They will simply close the place and turn it into a giant KOA campground and keep the Slots-A-Fun casino open. Basically the stripped down operation may make enough money to pay some fixed costs like real estate taxes.

Also, I found a report from 2006 that says that Adventure Dome attendance at Circus Circus was 4.2 million in the year 2006. It was in an annual report for 2006 of Themed Entertainment Association (TEA) which is an international non-profit association representing theme parks. But there are no statistics after the year 2006. Has anyone ever seen attendance figures that are more recent? Since overall revenue for the property was $200m in 2009, and $51m came from rooms alone, I can't imagine that anywhere near 4m people bought $25 tickets for the Dome. That would be $100m just from the park. I figure attendance figures have dropped well below 3m for the year. They don't report this statistic in their annual report.

I did find the following note in the 2008 annual report of MGM-MIRAGE. Until the completion of CityCenter, substantially all of the assets of Circus Circus Las Vegas and certain adjacent land serve to support our obligations under the CityCenter completion guarantee. Now that City Center is complete MGM-MIRAGE is free to do what they want with the property. It seems to me that once a property begins losing money, it take a substantial investment in renovated rooms, attractions, or dining to make it profitable again. If the corporation is unwilling to make the investment then their choices are limited.

I don't think selling the property would be in their interest. It would only attract bottom feeders who are bolstered by Carl Icahn's acquisition of the Fountainbleau and the 24 acres of land for $150 million. I am not sure if more cost cutting and lower maintenance standards are possible. It seems to me that the only realistic option is to base a reduced operation around Slots-A-Fun (which is being renovated and rebranded) which may be able to break even.

I'm not an expert in this area, but I'll put in my two cents. I agree with your premise that it doesn't look good for Circus Circus. You need to only visit the place to know that. As you suggested, I think MGM would be happy to get rid of the place. If I bought it, I would turn the main casino into a big arcade. My marketing angle would be to turn the place into a big amusement park. If I needed to, I would consider selling off the annex buildings and RV park. It would be nice to add a water park. Vegas could use one badly.

Yeah, I doubt they'll close, unless things get really dire. Casinos almost never close. They are just too lucrative, and Circus generates a lot of hotel traffic from families, etc., who visit the amusement park. Somebody might be able to make it profitable again with just a small investment.

I do think they might sell it.

Quote: Wizard

I'm not an expert in this area, but I'll put in my two cents. I agree with your premise that it doesn't look good for Circus Circus. You need to only visit the place to know that. As you suggested, I think MGM would be happy to get rid of the place. If I bought it, I would turn the main casino into a big arcade. My marketing angle would be to turn the place into a big amusement park. If I needed to, I would consider selling off the annex buildings and RV park. It would be nice to add a water park. Vegas could use one badly.

I'm not sure that there are really experts. I doubt that anyone in the Western world has ever closed a 4000 room hotel before. I understand that there was one in Red Square built in the '60s, but the rooms were incredibly tiny with barely room for a cot.

I think MGM wants the land. Remember that only three years ago they partnered with the group that built the Aquarius Resort in the Bahamas to build a new casino on the corner of Las Vegas Blvd and Sahara. If they sell the land for $5m an acre it might cost three times that in five years.

But to turn it into an empty lot costs money as well. You have implosion costs, and you still must pay real estate taxes. That's why I thought they might build something small around the SLOTS-A-FUN casino, just to make enough profit to keep the property at break - even.

To turn it into an amusement park with water attractions seems to be the concept that every resort abandoned ten years ago. The land prices just got to expensive. I am curious what the attendance is at the Adventuredome.

I could be wrong here. Perhaps MGM has decided to only build near it's high end resorts. I know they own some land across from Mandalay Bay. Perhaps they might be trying to purchase the land in front of the Polo Towers where the Elvis Themed resort was going to be built. They could purchase the Hooters, and the Motel 6 and build there. The land along Tropicana as you are leaving the airport has never been developed.


Sometimes every property seems to have a buyer. Even Starwood is trying to buy the Riviera .

Thought this thread on another forum was interesting: $25 a night on average, including Friday night.

Circus Sets Record At LV Opening

Frank Winston
Saturday, Oct. 19, 1968 | 6 a.m.

Upwards of 10,000 Las Vegas and out-of-town guests ushered in what may become a new medium in casinos last night when the first "family-style" casino opened.

"Circus Circus is a new type for Las Vegas. We have a kiddy room for the little ones, a second floor where teenagers can play games with beautiful prizes, but no money, and a pit on the ground floor with the finest games for adults in town," Jay Sarno, innovator of the new idea in casinos, pointed out.

When asked about the question of the regular headline-type circus acts disturbing big gamblers in the casino, Sarno scoffed, adding"

"The old story of the man who made four sevens in a row and when his wife fainted, he stepped over her to reach for the dice to make the fifth pass...holds true here. The show will attract others and never phase the real players."

On the teen-age entertainment level, the second floor, running completely around the pit on a balcony, houses ball toss games, skee ball, electronic shooting galleries, several varieties of horse race games, a fortune teller, fish pond with prize and a myriad of other attractions.

All these games offer prize coupons and tokens redeemable for gifts in a premium shop. One management spokesman said the organization plans to give away upwards of $200,000 worth of gifts a month from the second floor games.

For the invitational opening, set from 7 to 10 p.m., costumes were suggested. Among those seen wandering around were Little Bo Peep, complete with crook and one black sheep, several in native African attire, many, many harem girls, both in and out of costume, desert and Arab characters and a large smattering of costumes representative of shows and attractions at other casinos on the Strip.

When the new establishment opened to the general public at 10 p.m., the hold-out crowd stretched, four abreast, for over a block.

One casino spokesman said he expected the total to pass the door on opening day to exceed the 20,000 mark, a record for a Strip casino.

And a nice shot of the Sahara when it opened.