April 2005 was the end

April 27, 2005 was the day before the Wynn opened. The fruition of years of planning starting with Steve Wynn purchasing the 50 year old Desert Inn on April 27, 2000.

It can be argued that everything that happened to Vegas after this date has ultimately led to something financially ruinous.

April 26, 2005 was the $7.6 billion acquisition by MGM-MIRAGE of Mandalay Bay Resort Group. Even today the core original properties of MGM-MIRAGE: Mirage, Bellagio, MGM Grand & Treasure Island (If they hadn't sold it) remain the profitable core of the corporation. While some of the other properties have a good operational income, they don't make nearly enough money to pay for the massive acquisition costs. The vision for the massive money losing City Center was taking shape.

June 13, 2005 the acquisition of Ceasars Entertainment by Harrah's started the corporation into it's massive indebtedness that would end with their private takeover in January 2008 that would turn them into the debt pig that created 6:5 blackjack.

Boyd's decision to knock down the Stardust to create a $0.5 billion dollar structural steel art sculpture. The knocking down of the New Frontier to make a field. The construction of the Encore, and the Palazzo which will never make enough money to pay for their massive construction costs. The acquisition of the Hard Rock Casino which turned a nicely profitable hotel casino into another money pit. The construction of the endless number of condominium towers full of overpriced apartments that can't be sold. The decision to purchase the Golden Nugget downtown for $113 million more than it was bought for just a year earlier and the $300 million in renovations only to have revenue return to year 2000 levels. The private equity purchase of Station Casinos. The overbuilding of the Planet Hollywood to drive them into bankruptcy. Overpaying for acquisition of the Sahara Casino and the Tropicana. The purchase of the Stratosphere and other corporate casinos for $1.3 billion even though they were acquired for roughly $300 million.

I realize that I am applying what happened to the entire world economy to Vegas. A massive money fueled super low interest rate hangover that we may never wake up from. It makes the construction boom prior to the millennium that resulted in Mandalay Bay, Paris, New York New York and Bellagio seem like quaint old fashioned projects. People comment that the Bellagio land acquisition was $75 million (for old Dunes hotel). After so many new mega projects, you almost forget that Bellagio was the most expensive hotel in the world when it was built. The meltdown after 9-11 was almost a fluctuation by today's standards.

There is almost a nostalgia for things the way they were only 5 years ago, when it seemed that most companies made money. We wish the goofy old New Frontier and the Stardust were still there.

Interesting thread topic.

Vegas will return. Count on it.

It always reinvents itself.

I realize that people have been writing articles about Las Vegas being overbuilt for 55 years.
(Las Vegas - Is Boom Overextended on the cover)


So it is well worn ground, but I think that Vegas needs to give up some properties from the 1950's, 1960's and 1970's to remove some of this glut. In January there were over 50K rooms sitting empty midweek. Most cities don't even have that many hotel rooms.

Room rates are critical to the recovery. There is no way to increase them with all this capacity.

Such a negative thought to start a Tuesday morning!!!

I think Vegas will reinvent itself as well, as always. I think a big part of the problem is the corporate 'gluttony' that has taken over the strip. I don't see and end to that, and perhaps what happens on Wall Street happens on Las Vegas Blvd. It's only a matter of time before Onex sells off Tropicana to MGM or Caesars. The independent operators will run out of money and their property values will continue to deteriorate while the bug corporations can avoid bankruptcy.

At the same time, I am confident that the recession will come to an end and that businesses will start to operate again in a mode that will allow them to have their conventions again which will drive up the mid-week business. Tourists will come back as well.

Still, I agree that the north end properties are in alot of trouble as long as Echelon and Fontainebleau continue to sit. But with MGM, Caesars, Sands, and Wynn diversified away from Vegas, they can afford the downswings and sell off their least lucrative properties to independents who will make a go of it and sink. Maybe if we're lucky, Caesars and MGM will sell off enough of their properties and the independents will get by with enough money to last through the comeback and be real competition for Caesars and MGM.

Quote: boymimbo

Such a negative thought to start a Tuesday morning!!!

I think Vegas will reinvent itself as well, as always. I think a big part of the problem is the corporate 'gluttony' that has taken over the strip. I don't see and end to that, and perhaps what happens on Wall Street happens on Las Vegas Blvd. It's only a matter of time before Onex sells off Tropicana to MGM or Caesars.

I didn't start out Vegas bashing, but in investigating all of these business arrangements I came to the realization that I couldn't find one done in the last year that is making money. I think the fact that Mirage had $135 million revenue last quarter, Bellagio had $249 million and ARIA had $160 million just really struck home. ARIA is supposed to be on it's honeymoon.

Hard Rock Casino alway made money. It was only about $6,000 a day normally, but it was reliable. Now with all these renovations and new hotel towers finished it loses $70,000 a day.

Tropicana has a lot of unused space. You may not remember but the Tropicana received approval in March 2007 from Clark County commissioners to expand the 34-acre property from its current inventory of 1,880 rooms. Those plans call for a mixed-use, five-tower, 10,000-room development. The budget was $2.5 billion.



The COO of Onex resigned his position as an executive at MGM to run this company. They have a $120 million budget to renovate the rooms. I am sure that if there was a dramatic turnaround in five years, that he dreams of selling out to his old company.

Well said Paco...
Hopefully, one day, Vegas will remember it use to cater to the gambler...not the clubber, nor the shopper, nor the food fanatic, etc....