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who built the hotels?

Discussion in 'Casino Industry & Development' started by addicted, Jun 22, 2012.

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  1. addicted

    addicted Low-Roller

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    What happened to the people/companies that originally built the hotel and casinos on the strip?


    It seems like most of vegas has been bought by either mgm or caesars...

    I read that Circus Circus enterprises built luxor and excalibur. Wynn built the mirage, mirage built bellagio, which were all bought by mgm. At some point mgm builds nyny, and Mandalay Bay.


    Hilton hotels once owned a number of what are todays caesars properties. In 1999 Caesars (harrahs at the time) buys the rio. In 2005 harrahs buys/acquires Imperial palace, flamingo, ballys, caesars, paris and in 2010 gets Planet Hollywood.

    George Maloof built the palms, now only owns 2%.

    I've heard that the cosmo is in trouble, but I don't know much about it.

    If these places weren't profitable or have some sort of money trouble, how is it possible that mgm or caesars can buy the place and keep it running? (I'm not saying that mgm or caesars will buy either cosmo or palms)

    With the exception of wynncore, palazzo+Venetian, the trop and cosmo most all the other casinos/hotels on the strip are owned by one of two companies...


    Interesting, isn't it?
     
  2. ardee

    ardee VIP Whale

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    Well, we all know what happened to Bugsy Seigel and the Flamingo. :D
     
  3. travelfiend

    travelfiend High-Roller

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    Funny that you ask that, I have just today been reading this site that was listed earlier by someone. http://john-uk.com/LasVegasHistory/LVHISTORY.html

    Not an official history, but quite well done, the pix are great, has done good job mixing old and new.(well looks like this was done about 2008)
     
  4. hammie

    hammie VIP Whale

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    He borrowed to expand the Palms and when the economy tanked, he exchanged 98% ownership stake for $400 million in debt. He probably could have pulled a Donald Trump by declaring bankruptcy and use the court to negotiate a better deal. After all, Trump did this three times in Atlantic City, it's perfectly legal to use the court system explained "The Don". But, does that make it right?

    Trump seems like the character Otter in the movie Animal House when he explained to Flounder "you f*cked up, you trusted me". Maloof seems like a stand up guy by not putting a black mark on his property and dragging employees and vendors through bankruptcy court.
     
  5. JillyFromPhilly

    JillyFromPhilly Tourist

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    Consolidation - they gobbled each other up.

    Junk bonds, loans, private equity, etc. - leverage, basically - and back last decade when MGM & Harrah's were buying everybody else, they actually were all pretty much profitable - plus easy, cheap money was sloshing around in the credit markets that isn't as easily available now.

    You're likely not going to see much more consolidation - at least from MGM & Harrah's [because they're both already levereged up with all the debt they can practically afford] unless the spigots on the credit faucet open up again - but right now, it looks like globally we're in for more credit tightening in the near term [at least until the whole Euro mess sorts itself out]

    Wynn got most of his development money from when MGM bought Mirage, and from his buddy Okada - who he's now suing. Wynn is probably in a financial position to make some acquisitions - though I doubt it will actually happen given their plans for expansion in Asia plus the protracted legal battle he & Okada are about to get their company mired in for the foreseeable future.

    Most likely in the best position to expand through acquisitions in the near term - if he wants to, but I don't think he does - is Adelson. His debt level isn't nearly as high as the others, and he is minting money over in Macau & Singapore.
     
  6. smartone

    smartone VIP Whale

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    It wouldn't surprise me to see TI's Phil Ruffun make another acquisition (possibly The Mirage), but he's shrewd and frugal and would only do so if the "price was right." The "firesale" investment mentality is purvasive these days, and why not... years of speculation and over-spending almost brought the whole city down.
     
  7. addicted

    addicted Low-Roller

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    I read somewhere that caesars was trying to dump the rio, not sure if thats true, but it brings another question to mind...

    Is it likely that caesars and mgm will continue to hang on to all of the properties?

    Im just thinking about how long vegas will have one side of the strip owned by one company and the other side owned by another company.


    I've read quite a bit about George Maloof, he does seem like a stand up guy. There was an article about him on the suns website where he said he hadn't wrote himself a paycheck for something like an entire year, just trying to keep the company out of the red.
     
  8. leo21

    leo21 VIP Whale

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    I think Caesars intends to hang onto all their strip stuff, otherwise what was the point of Linq. But Rio and almost anything else outside of Vegas is on the block. MGM tries to play it off but it's pretty well know Mirage is up for sale. There is a chance some of their others are up for sale but they are keeping all that close to the vest.

    It was pretty amazing going around Vegas and pointing out to my mother all the hotels that changed hands because of the construction debt that couldn't be paid off.
     
  9. UKFanatic

    UKFanatic The Arbiter of Taste Caviar Kid

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    I think its a slight exageration to say they almost brough the whole city down......unless you're talking about CityCenter!

    Casinos will always make money. People have always liked to gamble and casinos, with their house edges, are a safe place to do it. Doesn't mean there will not be contraction in the future as we have seen in the recent past (Sahara), but Vegas is not going anywhere. Despite years of increased competition, Vegas has continued to grow until a global economic meltdown. It will reach those pre-2008 levels again one day, just not sure how long it will take
     
  10. smartone

    smartone VIP Whale

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    I wasn't just referring to the gaming industry, I should have been more clear... speculation and overspending was rampant in the building industry as well. A quick drive around the valley and you will see entire vacant strip centers and other less than 50% occupied. Cruise any neighborhood and the numbers of homes that are vacant and obviously foreclosed are staggering. Las Vegas was hit HARD, though not alone (Arizona, Florida, parts of California come to mind too). North Las Vegas is a classic example... one step from "bankruptcy" (though in Nevada an political-subdivision is taken over by the state) and that may well happen in the next 60 days.
     
  11. john meriman

    john meriman merri by name merry by nature

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    have a look at this - i love vegas and the history here is a very good read-:wink2::beer::drunk::wave:
     
  12. UKFanatic

    UKFanatic The Arbiter of Taste Caviar Kid

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    Well, you're dead on right about that! When I was first out of law school a decade ago, I did a lot of real estate work and remember thinking at that time how unsustainable the market speculation appeared to be (did a lot of work with Florida developments back then). Tried to warn my clients. Very few of them listened
     
  13. Auggie

    Auggie Dovahkiin

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    There has been speculation that The RIO is up for sale for the last five years now. It all stems from when CET traded the land Westward Ho was on for Barbary Coast back in 2007 - people just figured that CET was trying to consolidate itself on to one side of The Strip and so surely they must want to sell The RIO now.

    Are they shopping the property around? I doubt it, it would have been sold by now if they were. There are plenty of other out of state casino companies that would buy up The RIO to establish a foothold in Las Vegas.

    Would they sell it? Likely yes if the right offer came along.

    As The Strip is now its probably largely how its going to be for a few years to come, though probably in the next year or two MGM will buy up Cosmopolitan and further down the road CET will acquire Casino Royale.

    The rest are all big resorts and that goes back to your original question of what happened:

    Years ago Las Vegas was mostly nothing but smaller hotels and casinos.

    Then it entered the mega resort phase and that really put the hurt on the smaller hotels and casinos - they just couldn't compete with the all-in-one style luxury and grandeur of the giant resorts.

    The problem the small hotels and casinos faced was: they had been only making a few million dollars a year and in order to compete with the big mega resorts they'd have to become one themselves. That would mean shutting their doors down (and closing off their revenue stream) for a couple of years and basically investing what would amount to all their profits of the last 20-30 years back in to building a big resort.

    The alternative was to sell: because here were these big companies coming along that had buckets of cash and were willing to pay top dollar for the land.

    So it got to the point where the land the casinos were on was worth 15-20 times the annual income of the casino itself.

    At that points its a pretty easy business decision: they can keep the casino and continue to operate and hope that they don't lose any more business to the big mega resorts and face that uncertain future, or they can pretty much sell out and get whats about the equivalent of 20-25 years worth of the profits their casino would make as it is now, all in one lump sum.


    And thats what happened to a lot of the small guys. With some of the big guys it was really all about debt.

    Like with Circus Circus and MGM, thats what happened there: Circus Circus expanded and built Luxor and Excalibur... then Mandalay Bay and Monte Carlo as well as another casino in Reno.

    It was an ambitious move spanned over quite a few years, but in the end it just left them with a mountain of debt that they couldn't pay off.

    Then along came MGM with loads of money to spend, offering to take on their debt and pay about 20% per share more than they were worth.

    And thats the same thing that happened with The Palms: the amount of profit above operating costs they generated in a year was about $5-10M short of the amount of interest their debt grew by each year.


    And thats largely what happened: the small guys couldn't compete with the big guys so they sold out... the middle of the road guys got themselves in to so much debt that they became easy prey for those with the money to spend.
     
  14. wigwam_salesman

    wigwam_salesman VIP Whale

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    Er...don't blame us for the mess you made in the first place. You can't get credit because of your own ridiculous financial management, not ours. :)

    As for us, we'd be fine if Greece hadn't bunged all its money in a giant wooden horse.
     
  15. BackInVegas

    BackInVegas VIP Whale

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    Cosmopolitan = Deutstch Bank

    The Developer defaulted and the bank took over.
     
  16. Onlyoneoklahoma

    Onlyoneoklahoma Tourist

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    Spain's government that allowed Bankia to form is also to blame. They had no business forming a Mega bank from all those tiny ones.

    Who owns Fountainblu and that skeleton by Circus Circus?
     
  17. wigwam_salesman

    wigwam_salesman VIP Whale

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    I thought the smiley face and Greek comment made it obvious I was joking :eek:
     
  18. Frankr163

    Frankr163 Low-Roller

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    Who owns Fountainblu and that skeleton by Circus Circus?[/QUOTE]


    The empty Echelon property is owned by the Boyd Casinos, and the Fountainbleu is now owned by corporate raider Carl Icahn.
    Both projects may never see completion.
     
  19. UKFanatic

    UKFanatic The Arbiter of Taste Caviar Kid

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    And I think Ichan already sold everything inside that was removable. That's a bad sign for its ultimate completion
     
  20. sammasseur

    sammasseur VIP Whale

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    But you can sleep on their furniture for less than $30 a night at PLAZA downtown. :beer:
     
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