Two Way Hard Three | Las Vegas Casino & Design Blog

November 22, 2006

Kerkorian Boosts MGM Mirage Stake

Posted by Hunter

This has been all over the financial news sites today. Billionaire Kirk Kerkorian, who already owns 56% of MGM Mirage, is planning on boosting that stake to almost 62%.

MGM Mirage is doing better than it ever has and has a very bright future with City Center coming online in a few years.

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Read archived comments (84 so far)
November 22, 2006 12:14 PM Posted by detroit1051

MGM is up 10% on the news. Kerkorian just announced he is selling 14 million shares of GM. I thought he was giving up on the company, but that's not what the WSJ says this afternoon. Kerkorian just won't slow down. Good for him!
Kerkorian's Tracinda Plans to Cut GM Stake
If this needs a subscription, here's an excerpt:
The move to sell shares raises more questions about Kerkorian's plans, including the possibility of Tracinda launching a proxy battle to get a slate of directors elected to GM's board of directors. By selling a portion of shares now, the investor could be eyeing an opportunity to buy those shares back at a later date in order to add weight to a proxy announcement.
Though Mr. Kerkorian had never directly indicated an interest in launching a proxy battle, top aide Jerome York had been highly critical of GM's turnaround strategy, and market participants have speculated that a proxy battle could start as soon as next month."

November 22, 2006 2:06 PM Posted by Leonard Stern

There is no question that Kerkorian appears to be planning on launching and otherwise staging a proxy battle in order to gain control of GM. That seems to be the primary reason, according to informed analysts that I have spoken to, why 'his inside guy' representing Tracinda, Jermone York, recently resigned from GM's board of directors in preparation for a possible major takeover, similar to Kerkorian's timely 'absorption' (or rather "cakewalk purchase") of Mirage Resorts, when the chips were down after Steve caused the stock to tank. That business decision has, after six years, proven itself to be an absolute masterwork on Kerkorian's behalf. Don't expect Kerkorian to make any of the same mistakes this time that occurred with his failed attempt at Chrysler back in the nineties. When considering that MGM/MIRAGE 3rd-quarter 2006 profits have reflected a 68% INCREASE, there is no question whatsoever as to which security represents the most stable gaming stock with the most profitable long-term future potential. When Kerkorian's increased stake in MIR is complete, resulting in what will amount to 62% controlling interest based on today's announcement, expect another major spike in MIR stock. I'm just glad that I hold shares of MIR instaed of WYNN. GO KIRK!!!

November 23, 2006 5:58 AM Posted by Brian Fey

MIR stock? What are you talking about? MIR has not been traded in years! MIR stock is long gone. Your inaccuracy on so many topics, especially Wynn, really make question your knowledge on Las Vegas topics.

November 23, 2006 8:30 AM Posted by John

Mr. Stern did you just serioursly say that you own, MIR stock. I would think that someone as informed as youself would know that MGM Mirage changed their stock ticker symbol, to MGM, after the private sale of Metro-Goldwyn-Mayer, and coinciding with closing of the Mandalay Deal.

November 24, 2006 12:29 PM Posted by Leonard Stern

Brian Fey, et al: From now on I guess that I will need to make sure that all of my future comments posted on this forum be reviewed by a professional proof reader in advance to check for accuracy of content. Anyone with two brain cells to rub together knows that I was referring to MGM/MIRAGE. Simply as a result of 'force-of-habit', I inadvertently used the ticker symbol MIR, instead of MGM (which was changed last year from MGG). Yes, we all are aware that the correct NYSE ticker symbol for MGM/MIRAGE is "MGM", so e-x-c-u-s-e m-e for making such a horrible + terribly innacurate error in my haste to post my comment. That being said, Brian, to try and infer that this "brings into question my lack of knowledge" in connection with Las Vegas topics is the most absurd statement I have ever heard in my entire life. Brian, buddy, please expound on all of those 'other' so-called "inaccuracies", you indicate inluding those involving the almighty Wynn, that I have made. What is so obvious to any reasonable thinking person is that this attack on my knowledge + credibility is once again grasping at straws. Pretty soon you mental giants will be correcting my syntax, grammer + spelling so you can then make the claim that I am illiterate! For Christ's sake, why don't you people get a real life? [BTW - in the interest of full disclosure, I did NOT proof read this post, so I apologize in advance for any errors or inaccuracies that might have accidentally been included.]

November 24, 2006 5:42 PM Posted by John

A simple apology, or a statement saying that you were doing it in haste would have been sufficient, Leonard. But, whatever, if you want to have a little tirade then go ahead. Just a quick FYI, Leonard I keep hearing that CZR is about to take off, maybe you might think about looking into that, befor someone comes into the buy them up. ;-)

November 24, 2006 7:20 PM Posted by Mike E

Stern wrote...

"Pretty soon you mental giants will be correcting my syntax, grammer + spelling..."

Please tell me your misspelling of the word "grammar" was an intentional joke. I can't stop laughing right now.

November 24, 2006 10:53 PM Posted by John

Jut FYI, for everyone, those spelling and grammar mistakes, were intentional. Oh, and buy the way Lenny, buddy, I think I've heard that MRG is planning some new development on the strip, I think its called Project Metro Middle, I'm not sure if it is MRG, MGM, MGG, or MIR. Oh you know, I think its MIR. I actually heard they got your father to come back and design a casino-resort hotel for them.

Just for everyone, that was either a very good joke or a very bad one ;-)

November 25, 2006 9:29 AM Posted by Leonard Stern

Hey "Johnny", my good buddy, are you planning on holding onto or selling your shares of "ASS"? From what I hear, that stock is about to really take off soon especially with all of the shareholders on this forum. BTW - Congrats to all of the [English teachers] here, you actually CAUGHT my intentional misspelling error! True to form as usual - I just have to keep you [guys] on your toes now, don't I? LOL

November 25, 2006 10:45 AM Posted by Leonard Stern

BTW John, I neglected to add in my previous post, considering that my father passed away back in 2001, your comment regarding having my father "come back" and design a casino-resort hotel for them is not only disrespectful, but entirely uncalled for! You can throw WHATEVER volleys you wish towards me, as I have absolutely no trouble fielding anything that you got, but crossing the line like you continue to do will not be tolerated. Frankly, I find your complete ignorance + consistently combative tone to be quite amusing, however maliciously attacking my dead father means war Johnny! Let's have at it then...If the almighty, uber-wealthy and all-powerful Steve Wynn couldn't 'bring me down', an insignificant pea-brained mere mortal like yourself is no more challenging to me than a minor speed bump! Why don't get a f**king real job! BTW - Make sure to call your broker on Monday, rumor has it that ASS is about to split sometime soon, considering the vast amount of shares you personally control in ASS, you could really make out like a bandit on this stock. "Johnny", I always knew that you were a shrewd investor. Congratulations are in order. LOL

November 25, 2006 12:25 PM Posted by John

That was uncalled for, sir. No one on the board, has personally attacked you and called you an "insignificant pea-brained mere mortal," yet you contine to maliciously attack anyone who disagrees with you, and trys to make a few "tounge and cheek" comments. You sir, need to know your place, and stop considering yourself to be royalty on this website.

November 25, 2006 1:23 PM Posted by Leonard Stern

Hey "Johnny", It is YOU SIR, who initiated and are solely responsible for what have evolved into obvious and "uncalled for", totally disrespectful malicious comments regarding my father and other personal issues, period! Read your OWN chronological posts and you will understand exactly where I am coming from. "Tounge and cheek comments", I think not, and yes your comment INDEED "was a very bad joke" by your own admission. Maybe you need to do a little bit more research yourself before posting ignorant comments like that in the future which only serve as a failed knee-jerk attempt on your part to continue to berate me (this behavior really is not conducive to the subject matter with which this forum is based upon - now is it?). If you don't agree with my informed comments or personal experienced opinions expressed here, NO PROBLEM, you are so entitled, but my counter-attacks are a direct result of this continued pounding and double-teaming that I keep receiving from several of you guys on a regular basis. UNTIL I hear an honest apology from you in that regard, there will be no truce, I suppose that it will now be up to YOU to "teach me my place" on this forum, right? Until you apologize and make at least a civil attempt to 'bury the hatchet', I will still consider you to be nothing more than an "insignificant pea-brained mere mortal". Signed, HRH, King "Lenny".
(In the future, would you kindly refer to me by my correct title, "King Leonard")

November 25, 2006 1:26 PM Posted by Hunter

Let's get back on topic please.

Thank you.

November 25, 2006 1:49 PM Posted by John

Well, staying back on topic, I keep wondering if Kerkorian is trying to take MGM Private. I mean, 62% is a large amount of the company, but I guess I don't know anything because I'm an "insignificant pea-brained mere mortal," who can't grasp what this industry is all about, unlike those of us, who are so much better, because we were born into it.

November 25, 2006 1:56 PM Posted by Hunter

That's an interesting question. I believe one of these stories went out of their way to say that going private wasn't the purpose but I don't know where they got that info - was it a quote or are they assuming?

I don't know what they would get out of taking MGM private. As it stands, management and the primary shareholder are getting along just fine, the company is making good money and even in the case of a few assets that might either be underperforming or not the best use of the land/capital, they are working to correct that.

November 25, 2006 2:05 PM Posted by Leonard Stern

Hunter: Thank you for FINALLY clarifying that - it is clearly getting out of hand! This is exactly what I have been saying over-and over-again to the regular contributors who keep behaving in this manner. I believe that my last constructive, non-defensive post on this thread dealt with the topic regarding specific details of Kerkorian's recent increased stake in MGM/MIRAGE as well as, in a related thread, the recent implications + negative impact that the dealer tipping controversy is apparently having on WLV and Wynn Resorts as a 'respected' gaming company. This is only the flash point for major problems that lie ahead for WYNN, and I do agree with your earlier comment that there is more to this recent Binion fiasco than meets the eye. In fact I'm willing to bet on it!

November 25, 2006 5:32 PM Posted by John

Honestly, I think that striking in front of the resort is a little too rash. If you look at today's issue of ther R-J:

It is saying that employees from competing resorts are striking in front of the resort, and that, an inactive union, that doesn't represent dealers from the resort, is organizing these strikes.

This is just weird, it seems like the dealers are trying to be too rash, and they aren't communicating with the Company. In addition to that, the Company, itself, isn't discussing any of this with the press. It just seems like there is too much in the dark right now.

November 25, 2006 11:43 PM Posted by Leonard Stern

That is not exactly correct, there was actually one WLV dealer picketing who is currently still employed at the property that had a PAPER BAG over his head with cut-outs for his eyes in order to protect his true identity. I have been informed that this type of icognito demonstrations are expected to escalate in numbers, and in a similar fashion, so that these employees do not have to fear losing there jobs simply by exercising their legal right to demonstrate by attempting to unionize the dealers. There is a definite distinction between the dealers and MANAGEMENT, this time Steve has clearly crossed that boundary and will be met with serious opposition that is continuing to erode morale property-wide. Note to Steve: Really dumb business move - your dealers are at the very front lines of your most valued gaming customers, get a clue, because as you have demonstrated in the past, your irresponsible policies and poor management style might just tumble your entire empire once again if you aren't careful. It has already been reported that Wynn himself evidently threatened to fire anyone opposing their new tip-shaing policy. I think old Steve might have just bitten off more than he can chew with this one. The "situation" will simply not just "go away" because Wynn wants it to. We are seeing a repeat of history with respect to this operator's ego-centric behavior, by once again, making reckless decisions that are not in the best interest of this publicly held corporation and the respective shareholders.

November 26, 2006 12:04 AM Posted by mike_ch

Did he, really? I mean, you don't know, since you don't know who he is. LV is a town where labor plays hardball with just as many explosions and headlines as the CEOs can make.

Seriously, the guy who works at Bellagio and gave his name and said that anyone who does this is a "jerk," he's got big brass ones.

November 26, 2006 8:23 AM Posted by John

Stern, there is no realy way to know if the "bag guy" is really employeed at WLV. The man was in a paper bag, saying that he was a dealer, it is really his word against the world's.

I have never had a problem with the tip reapportionment. It gives incentive to the better dealers, who are capable of effectively managing a pit, to put forth the effort, and climb the "food chain" of the resort.

Steve has been at the fore front of employer-employee relations for the last fifteen years, and I would assume that he is only looking at giving his best employees the ability to be the effective managers that they can be,

However, what do I know, I'm just a "pea-brained mere mortal" who can't nearly comprehend the true "ins and outs" of the gaming industry, as well as his Highness can....

November 26, 2006 1:44 PM Posted by Leonard Stern

Hey "Johnny": What's up with you bud? Do you want to start all over again trading personal insults, huh? Steve talks out of both sides of his mouth all the time, on the one hand he claims to respect ALL of his employees equally and treat them better than any other operator in the industry. What total hypocrisy! This dealer tip-sharing policy will ultimately be tested in the correct forum and that will be in Federal Court. Given the current state of affairs over there, I don't believe that many WLV employees will (in complete confidence so as not to compromise their jobs) will exactly agree with your analysis. From what I understand, one can literally cut the 'tension' building up on the casino floor over there with a knife. Johnny, I thought I told you to address me as King Leonard, not "his Highness"!

November 26, 2006 5:04 PM Posted by John

Well, Lenny it seems that we can have a little back in forth, as long as it is in good tast.

I'm okay, if you are with a little "friendly" back and forth. I do need to apologize for that little dig, about your father (it would ne nice if it was reciprocated) but I still have my opinions and you have yours.

The one thing about this is, I don't have a problem with the employees not liking the new tip policy, but I don't think striking is the right "move" to make. Striking only turns away more tips, it doesn't really "help" their cause in that sense. Honestly, I would just like this to be over as quickly as possible. So....

November 26, 2006 5:35 PM Posted by Hunter

This comment goes for both this and the 'Tip' thread... I don't *want* to close anything.

What I do want is for everyone to have interesting discussions on Las Vegas topics. Even if the discussion moves off-topic to other Vegas and industry related discussions, that is okay. I think everyone can apply common sense to determine what is and isn't on topic. I'm not overly strict about this but I am going to start applying some moderation for threads that just turn into people attacking each other.

I don't want to go back and place blame on anyone (and any comments that do that are basically off-topic so let's just NOT do that, ok?).

Let's just move forward. There is an interesting discussion topic here and I hope that all the issues can be put to bed, especially since i see some apologies here in the comment thread. Let's just leave it at that and get back to the Vegas talk!


November 27, 2006 9:17 PM Posted by mike_ch

"I have never had a problem with the tip reapportionment."

I do because I've seen enough of the gaming industry to understand that competence largely doesn't matter if you have connections and/or tenure.

I gave a larger than expected tip today to a waitress at the Mirage buffet because even though I've had faster service, she obviously had a lot of people and was working on overdrive. I gave that tip because she's a good worker and it would be unfortunate if she had to share it with someone who is a lazy worker, but it would be even more offensive if she had to share it with her manager who tolerates other workers' lazyness.

November 27, 2006 9:24 PM Posted by mike_ch

PS: As for the discussion at the center of the flamewar above, I see both sides. Including Leonard's side, which is one of the few times we see eye to eye.

Obviously Leonard doesn't like Wynn; but some things from Steve's past, including the waitress' weight incident I mentioned above, do not strike me as the "the fore front of employer-employee relations."

Everyone legitimately makes a few mistakes from time to time, whether their name is Wynn or Kerkorian. Wynn Resorts will have a more difficult time keeping on it's feet when Steve makes a mistake, because he takes so much direct control over the company. How many times you have seen Kerkorian give introductions and narrate web sites about his hotels? You don't.

There is a good-side and a down-side to this sort of thing. Obviously, by exerting so much control if the company spirals into trouble, Steve is almost certainly to blame.

November 30, 2006 4:08 PM Posted by Leonard Stern

John: I am extremely pleased to hear that you finally decided to apologize for your earlier comment(s) which were clearly unwarranted, and I accept your apology in the interest that we may now all be able to move on with constructive future dialogue on this forum. I have been out of town for the past several days and have not been able to catch up with some of the recent posts. I cannot believe that a few of you guys are actually in AGREEMENT with me on at least one of the issues that I have opined on RE Wynn! I just wanted to respond to mike_ch's 11-27 post, specifically addressing the comparative differences between Kerkorian + [even] Adelson as opposed to Steve Wynn as a manager/operator/developer and that is the fact that Kerkorian delegates 100% of daily operations to his apppointed, + superiorly competent executives, and although Adelson was initially a "micromanager" as well in the initial development of the Venetian, he is at least savvy enough at this juncture in his company's phenomenal growth to be able to realize that he now has to turn over the reigns to his very competent executives and thereby be able to take a step back by removing himself from the day-to-day operations of his empire in order to attain the position as the preeminent gaming operator. Steve will NEVER relinquish control of ANY aspect of design/construction/operations as the undisputed "micromanager" of Wynn Resorts, Ltd. by surrounding himself with executives who are nothing more than mere "yes men" and that will ultimately prove to be his [Wynn's] eventual downfall. BTW - I am very familiar with the architect that was awarded the contract for the newly announced C.P. $1B+ expansion, and it will ultimately turn that property into a far more integrated + efficient masterplan, assuming that Harrah's long-term plans are not substantially altered or sidetracked by the eventual private takeover.

November 30, 2006 7:00 PM Posted by Leonard Stern

Kerkorian has just reduced his stake in GM to 5% or less which means that he NO LONGER has to disclose when he decides to sell any additional shares. As a result of Kerkorian's dumping of his GM shares to this level, it certainly appears that 'something is in the works' from [his] selling off 50% of his holdings, GM stock has tumbled + MGM/MIRAGE has gained since his proposed increased stake was announced. Looks like a "double-edged sword" strategy is evolving here. Analysts are anxiously waiting for something major to occur, no one has ever been able to second-guess Kerkorian, but I can assure you that Wall Street is paying really serious attention to his latest maneuver...Stay tuned.

November 30, 2006 7:50 PM Posted by mike_ch

Leonard: You do have to keep in mind the other side, though. Which is that if WYNN beats your doubts and is successful, it will likely be to Steve's credit as a supreme micromanager as much as a failure would be his blame.

OTOH, I suppose if something disastrous happened at MGM, there'd be plenty of scapegoats to go around.

November 30, 2006 9:08 PM Posted by Leonard Stern

mike_ch: That might actually prove to be true, however, regardless of how successful WYNN becomes, particularly in Macau over the next year or so - and WYNN absolutely/positively MUST be in the BLACK by Q4, 2006, Steve has pissed off Adelson to the point, as Sheldon has already himself acknowledged, and whereby he [Adelson] intends to become the #1 billionaire in the U.S. surpassing both Buffett + Gates in short order, and, in addition, the industry expects him, at some point, to absorb WYNN at the mere stroke of the pen when the timing is right. If Steve had even half a brain and had not allowed his bloated + inflated ego to overcome him, both of them could actually work out a mutually acceptable, amicable competitive relationship/partnership of sorts that would benefit EVERYBODY in the long run. That's just not the way Steve works, and he will NEVER change his misguided business practices + poor management style, even if it means greater success + profitability for himself + the shareholders of his companies...

November 30, 2006 9:18 PM Posted by Hunter

Can anyone come up with a scenario by which Adelson actually passes Buffet and Gates?

I mean, does it require them to both give away all their money (which I'm sure everyone is aware they have already announced) or does Adelson think he'll overtake them without that minor detail?

I'm honestly curious because I am having a hard time imagining the math.

Take Gates... Microsoft is churning out new versions of their two cash cow products, Windows and Office, within the next 60 days (released today for enterprise customers and January for consumers). I've been using both on some of my machines for quite some time and while I can't say they are earth-shatteringly interesting, they will sell. Windows XP and Office 2003 were not a revolution compared to their predecessors (Windows 2000 and Office XP) but they both sold very, very well. What I'm getting at is that MS is gearing up for several quarters of heavy cash flow and while their stock has been somewhat flat, it's not going down.

On top of all this, Adelson has pledged 'billions' (he said this in his Charlie Rose interview) for his medical research projects (which I applaud him for big time). So, given that he's giving money away, how is he going to jet past Gates and Buffet to number one?

The other thing I thought was strange was that Adelson made the assertion he would be number one and that he had calculated when this would occur. I say strange because while I am sure he is proud of his success (and rightfully so of course), I have never thought of him as boastful (the opposite, really) and this seems out of character for him to make such a claim.

December 1, 2006 4:47 AM Posted by charlie

King Leonard,

How can Adelson take over Wynn "at the stroke of the pen" when Wynn+Aruze own the controlling interest in the company? This simply cannot happen.

December 1, 2006 11:12 AM Posted by Leonard Stern

Philanthropic commitments aside, in less than ten years time, Adelson currently has attained + amassed a net worth of almost one-half that of Buffett and approximately one-third of Gates' net worth and Adelson's wealth is now growing expodentially by the day at a greater rate than both of them. If Adelson's "grand plan" to become #1 proves successful, as he has quite confidently announced will be the case, there is more than a reasonable chance he will achieve that goal based on the incredibly ambitious direction his company is now headed toward + the fact that he PERSONALLY controls a whopping 88% of the company! If Cotai becomes the success that Adelson clearly envisions down the line in Macau, there will be no question that he will be able to meet that goal easily. The numbers are simply staggering when considering his personal enrichment from that venue alone. Then again, if Cotai flops, that's another story, however the likelihood of that happening is practically nill.
Off-topic: Tainted "Wynn-branded" water pulled from the entire resort:

December 2, 2006 4:30 PM Posted by Chris B

Leonard, I'd like to hear your thoughts on why Cotai has nil chance of being a flop (and how you define "flop"). An enormous number of problems to overcome: bad public transport / infrastructure, little Chinese interest in entertainment / quality restaurants, massive increase in table / slot numbers etc. Just for background, I live in HK and have been in Macau every few weeks for the last several years. I have a vested interest in Macau succeeding, but I can't help noticing each time I go there that Macau still has a long way to go and the Macau government is moving at a snail's pace with things like infrastructure.

December 3, 2006 11:12 AM Posted by Leonard Stern

Chris B: I agree with you in that Macau has a long way to go in terms of its infrastructure development, creating a viable mass-transit solution, etc. that will require the government's full cooperation + support, both in terms of the 'politics' involved and the related red tape that the [Chinese] are infamous for, as well as in providing huge financial funding at an unprecedented scale, something [t]hey have already committed to, at least in principle. As far as the Cotai Strip becoming a runaway success, one must take into consideration the expected growth outlook for all existing + future proposed gaming properties there that will occur in a relatively short time frame. What you have in the Cotai Strip, is a deep-pocketed developer/operator who is willing and fully committed to put his money where his mouth is to the tune of a $10B+ investment. Secondly, by starting with a clean slate, the Cotai Strip respresents a unique opportunity of being a well thought out "masterplan", which allows for planning flexibility in making necessary changes as the project progresses, something which is not possible to achieve in the existing high-density site environment there. Also, Adelson has assembled top-flight luxury hospitality operators from both Asia + the U.S. that will become both financial participants + strategic partners, which further increases the chances of Cotai succeeding with flying colors. The current 'model' for Macau, is to evolve daytrippers, table game oriented guests into the Las Vegas style "experience", and that will require time, however the transformation is inevitable. Historically, Las Vegas teaches us quite a bit in terms of evolutionary growth and consumer demand regarding the gaming industry. In the late 1940's and early 1950's the Strip was nothing but vacant land out in the dusty boondocks, with the exception of a smattering of properties. The heart + soul of Vegas was initially downtown and as the city evolved, the Strip supported the newer, high-end product and downtown continued to decline. This will eventially be the case in Macau, albeit at a much, much faster pace, and the Cotai Strip will become the equivalent of what the L.V. Resort Corridor is today. Based on the diverse luxury product that Adelson is proposing, it's a no-brainer, that in due time, Cotai is destined to become home of the finest mega-resorts in all of Asia, including the future gaming offerings in Singapore where Adelson (LVS) will be the very first operator to build a new gaming mega-resort there as well!

December 3, 2006 11:37 AM Posted by Leonard Stern

Taken from Friday's R-J Applied Analyst gaming stocks report which was provided by Weidner, LVS has simply staggering future liquidity + inside financial vehicle funding potential to look forward to. The propspective phenomenal revenue stream outlook combined with the substantial contribution of valuable asset sales of various components in both their Las Vegas + Macau properties certainly points to Adelson as the industry leader in terms of sheer ealth, and like I had opined earlier, soon to become the "Bill Gates" of the gaming industry in very short order:

"Shares of Las Vegas Sands Corp. in November had an average daily price of $85.62, an increase of 15.4 percent over October. Comments by company President Bill Weidner spurred the rise. He said Las Vegas Sands has the potential of raising between $6 billion and $12 billion from the sale of retail space at its projects under construction in Las Vegas and Macau, China. He also said the company could realize another $1 billion to $4 billion from the sales of condominiums at those sites."

December 3, 2006 1:43 PM Posted by mike_ch

Uhm, Leonard, all your gushing about the world's best luxury hotel operators IS the problem with the Cotai Strip, IMO. There is no product for the Cotai Strip for someone who does not want luxury, but simply wants a place to put his head down. While the likes of Caesars Palace and the Desert Inn were the trailblazers of where Las Vegas was heading hotels like the Stardust and Riviera and Bally's-era MGM Grand offering gaming product en masse to the visitor who did not care about exclusivity.

Toyota would not make nearly as much money if they sold nothing but Lexus models, and I don't know how well Cotai can do offering nothing but five-star fare. How many whales are there, anyway?

December 3, 2006 2:52 PM Posted by Leonard Stern

mike_ch: My money's on Adelson 100%! Remember all of the pundits' predictions surrounding Adelson's decision in building the original massive Venetian resort in 1999 whereby drawing upon the convention clientele as its primary source of revenue (the volume in the convention business for Las Vegas having been credited to Adelson whereby he actually created + established the most successful convention venue in history with COMDEX in the late 1970's + then dumping it at the most opportune time). Let's see who has the last laugh. Anyone who can parlay several hundred million dollars into almost $21B in less than ten years has to be doing something right, don't you think? Adelson's forward-thinking expectations in connection with Cotai remain to be seen, however, you will soon find operators like Steve Wynn DESPERATE to try and play "catch-up" in Adelson's 'grand plan' for Macau, i.e Cotai Strip. The demand in order to redefine existing Chinese gambling habits in Macau will certainly change in time and will ultimately emulate the Las Vegas model. After all, isn't this the EXACT same foundation + business plan by which the almighty Steve Wynn is "counting on" over there in Macau in order to turn his company into becoming profitable? Shareholders are starting to grow impatient with Steve, he now NEEDS to PERFORM and end the continuous diatribe of hype! Only time will tell, but I would bet the farm that Adelson will ultimately walk away with the Grand Prize...Adelson is all about BUSINESS, Steve is all about FANTASY supported by nothing more than false expectations!

December 3, 2006 2:57 PM Posted by Hunter

Wynn Resorts has already made plans to have one or more properties on Cotai and Wynn himself has said several times that he expects Cotai to work long-term so I don't think there is much debate between those two on that issue, only on the issue of 'when' this will occur.

Has MGM Mirage made plans to do something on Cotai? They're clearly making a bet on the peninsula along with Wynn Resorts...

December 3, 2006 3:31 PM Posted by mike_ch

Leonard, I really don't think you addressed my point. You referred to Cotai as the center of turning Macau from a day-trippers market to an LV experience, but you ignored my comment that the Vegas Strip has had hotels for people who aren't wealthy almost from the start.

Macau is currently a place for Asian businessmen to go and do things they don't want their family seeing them do, and so long as they continue to build resorts that only wealthy businessmen can afford, I can't see Cotai changing that.

December 3, 2006 3:32 PM Posted by mike_ch

BTW, to clarify: I didn't make any comment that Adelson will/won't be successful, I'm saying that even if he is successful his product isn't changing the target market in the way you talked about.

December 3, 2006 4:20 PM Posted by Chris B

I agree with Leonard about the "clean slate" thing, and I've seen some of the concept pictures from the urban planning company that worked on the Cotai project and they look amazing. The Macau peninsula and Cotai are going to be chalk and cheese when it comes to quality and aesthetics. At the moment Wynn, Starworld and MGM are simply a few smaller scale nicer buildings among a fairly ugly bunch of rundown older buildings. I personally see Macau being a success not by necessarily bringing something new, but by evolving as a genuine alternative to HK for mainland Chinese and other Asians. At the moment most of them head to HK to shop and eat and stay in (for the most part) expensive hotels, few of which are great - but once Macau develops they can go to Macau not only to do the same shopping and eating as they can in HK, but also to relax and gamble. I think Adelson is distilling what is already available to varying degrees in other places into a single concentrated area and adding the gaming, which is going to be a very strong lure. I think the proposed Traders Hotel and the 3 hotels proposed by Far East (if they end up being built) are aimed at a more moderate price point.

December 3, 2006 6:05 PM Posted by John

The way I've seen it is, that Wynn and MGM will create an ultra high end product on the peninsula, while Adelson is trying to get that, but he won't. There is no way, you will get a whale who values his/her privacy and like intimate surrondings, where he/she feels closed in, will find themselves at home in a 500,000 sp. ft. casino replica of Venice. It would probably be safe to assume that a high end customer likes a well-built and obviously luxurious surrounding (i.e.- Wynn or the forthcoming MGM). They way I would picture it is as this, having the tourist centered Cotai Strip, which will obviously attract people who just want to see this development, along with conventioners from the Pacific Rim. However, we'll see the true hardcore gamblers remain in the peninsula. I would look at it like this, the peninsula (Wynn and MGM) as the more refined Monaco style experience, compared to Cotai which will be the "Americanized" gaming experience. To sum it up, at Wynn and MGM you'll still see people using the term "croupier" (which is unheard of not to say at any of the private London gaming salons, or Casino Monte Carlo), while you'll people using the "Americanized" term dealer, at Venetian or some of the other cotai properties. Now, this only really applies for the short term, since Wynn and PBL won't be moving in, until after the Venetian Macao is complete.

December 3, 2006 6:13 PM Posted by Hunter

Interesting take, John.

Ultimately, I have no doubt that both will succeed and I think that Cotai, when built out and established, will truly be something to see.

I haven't yet been to Macau but my understanding is that the humidity makes the kind of walking traffic you get on the Las Vegas Strip unlikely.

That's too bad because that's one of my favorite parts of the Strip in Vegas - being able to just walk up and down and experience so many different concepts.

December 3, 2006 7:52 PM Posted by Leonard Stern

There is no doubt whatsoever that Steve + his aptly appointed "yes men" minions will carefully continue to monitor Adelson's Cotai Strip development progress in Macau, however, by the time that he [Wynn] is in a strong enough position to ably enter that market in a big way, as an equally competent competitor in relation to the other, much more established + respected hospitality companies (as in THE 'major players' worldwide whom Adelson has already brought on board) all who have signed-on from day one, Wynn will easily be superseded by far more upscale operators than himself, and subsequently prove himself to be "too late to the game" before he has amassed the required price of admission, that being the disposable + available financial resources in order to committ to becoming a major player in the Cotai Strip process after-the-fact, regardless of the property options that Wynn has reserved there. John, when Cotai eventually matures, it will undoubtedly prove to be the most profitable gaming operation of all time, surpassing the Las Vegas Strip by leaps and bounds. The primary difference that separates Wynn from Adelson is that Sheldon can easily ride out the tide while Steve is literally walking on egg shells by struggling to make sure that his limited (two) properties become significantly profitable, like as of yesterday! It's all about the big numbers people, and Adelson clearly has that to his advantage with plenty to spare when in comparison to Wynn's paltry net worth! Narcissism definately has its drawabacks, there is no question that Adelson himself is narcissistic, however he is most certainly entitled to make that claim by virtue of his own remarkable success. Steve Wynn has always, and continues to live in a self-created delusionary, sociopathic world.

December 3, 2006 8:23 PM Posted by John

There is still one thing that you have failed to account for Mr. Stern, and that is the fact, that you still haven't explained how you think day trippers, for the most part, will be able to sustain a 500,000 sq. ft. "Wal-Mart" of a casino. It may take time, and as you have said, Adelson has it, but you, yourself have said that investors are antsy with Wynn, what is there to make you not believe that they won't be just as antsy when the Venetian opens, and isn't pulling in the numbers it should, based on size, when it opens? The thing is just too much. Maybe opening a small portion (120,000 sq. ft.) at opening would have proven to be a better plan of action, but taking 500,000 sq. ft. of gaming space on line, in an, as of now, fairly, under developed area, doesn't sound like a good mix. Yes, I will say that Cotai will be profitable, but how long will that take. Even Adelson, with his vast wealth, can't wait more than three years for it to become profitable, and that was proven with Steve Wynn and Bellagio. The investing community can't wait that long, they want profits and they want them as soon as the property comes online.

So, my question is, what happens then?

December 3, 2006 8:29 PM Posted by John

Also, I forgot to mention this, we have seen that Wynn plans on pulling off a mini-Cotai, of his own, with his land (i.e.- building his own resort, along with two or three outside operators, controlling there own resorts). What is to stop Steve from bringing in his own luxury operators? I mean, the Peninsula group hasn't signed on to Cotai, while we still haven't seen anything from the Ritz-Carlton. One operator, that might be a steal for Wynn, to get, would be to consider talking with Mohamed al-Fayed, the man who owns both Harrods and the Hotel Ritz, in Paris. What if we could see a Hotel Ritz, Macau? Personally, I think that would be incredible. Think about it, what some consider the world's greatest hotel, in Macau. It would be incredible.

December 3, 2006 11:12 PM Posted by Chris B

John, I think one of the very savvy things about LVS's game plan in Macau is the development of real estate in and around the casino / entertainment venues. Property in Macau and south China generally has been going nuts lately and the general practice is to pre-sell 2-3 years in advance. One Macau development near Wynn / MGM sold two whole towers (one to an investment fund listed on the London AIM market, one to the investment arm of an Icelandic financial institution) for around HK$4500 per square foot and sold almost all of the remaining apartments to Macau / HK public buyers in a single day. And these apartments are not going to be completed until 2009!

With the proximity to gaming / shopping / restaurants / entertainment that LVS real estate will offer, as well as the brand that LVS has been able to develop since opening in Macau in 2004, I think they should do very well out of their Macau and Hengqin real estate. I also think that mainland Chinese will attach quite a bit of cache to having a holiday apartment or villa in Macau or Hengqin.

December 4, 2006 5:55 AM Posted by charlie

No so sure that Cotai Strip will be geared towards the mass market. A Four Seasons with a casino seems pretty high-end to me. If they only had that in Vegas.

December 4, 2006 6:21 AM Posted by charlie

I think Chris makes a good point about development. One consideration that should be made about Cotai is that it will be a development engine for Macau and the region. Once the critical mass is established, living and working near Cotai will be a pretty exciting proposition. So it is likely that in 5-8 years the center of gravity for the region shifts to Cotai and not the Macau peninsula.

The only thing I would worry about if I were Sheldon or Steve, is not if Macau/Cotai are successful, but HOW successful are they; and how will the Chinese government react to all of the profits and cash that are being churned out and send back to the US. We may actual start to get some of our USD$ back with these big casinos. We will find out how iron-clad these concession agreements are. It wouldn't surprise me if WYNN and LVS begin to hire big oil execs, either on the board or in management, as they have a keen understanding of managing geo-political risks and negotiating with foreign governments.

As for a 500,000 sq.ft. casino, it is probably too small. MGM Grand pushes 200,000 sq ft, and I have seen it near capacity several times I have visited it over the past 2 years. If the "Box of Baccarat" tought us anything, for the mass market, its all about good, clean design and floor space. "Quiet Areas" and "Intimate Design" don't make money. Mini-Bac tables do. Even Wynn is ripping out restaurants to put in slot machines and judging by the pace to open up Phase II, the floor space is way, way to small.

I'm sure Sheldon smiles when you compare the Venetian Macau to Wal-Mart. As Wal-Mart is the most successful retailer of all time, it bodes well for his chances in Cotai.

December 4, 2006 9:43 AM Posted by mike_ch

I feel like I'm on a video game message board. A certain poster here reminds me of the fanboys who say that X-box will rule the world because Bill Gates will buy out Nintendo on his personal wealth and dissolve it.

December 4, 2006 10:59 AM Posted by Leonard Stern

I'm trying to keep my response short and sweet, for a change, I second Chris B's above comments, not simply because he agrees with my POV, but he is clearly on-point and accurately reflects Adelson's brilliant long-term business plan for Cotai + the future of Macau in general. Maybe some of you guys should seriously take note of what [Chris B] has been offering since he lives in HK and evidently is intimately familiar with Macau development having extensively visited there over the past few years since gaming was initially launched in Macau. God forbid, you guys will NEVER agree with King Leonard, that is, until you are eventually proven to be wrong...BTW mike_ch, I'm sure if Gates thought that Nintendo was worth absorbing and had it represented a true threat as a competitor, he probably would already have absorbed them like he has done with just about every potential smaller software competitor to Microsoft in the past. Juggernaut monopolies like Microsoft, unfortunately, are the piranhas that have the resources to gobble up and "dissolve" their competition with relative ease. My analogy between Adelson + Gates will eventually prove to be right on-point for the future of the gaming industry, just wait and see...It's probably a good idea for Steve to try and make amends with Uncle Sheldon while he still can. LOL

December 4, 2006 1:26 PM Posted by mike_ch

Leonard: Microsoft did try to purchase Nintendo for $25 billion and they refused. That's discussed in a book called "Opening the Xbox" and basically is a point to gripe about your fallacy.

You seem to think that just having a lot of money to getting whatever the hell you want in this world. If business only actually worked like that...

December 4, 2006 2:46 PM Posted by Devon

Geez. All of these posts seem to bring up interesting points. I don't really think we can be to sure as to how this will work out. Do I think Wynn is losing serious ground by not having a public Cotai plan yet? Not really. But if Wynn Resorts doesn't begin construction within a reasonable time from when Venetian opens, I think they could lose huge. The thought of him not having and real top market luxury operators isn't a huge problem. Steve Wynn is Steve Wynn and no matter how hard some try, he'll always be the true gaming king. And knowing the level of mystery that surrounds his projects, I'm thinking that he's starting to line up prospects. Also, there are some big arguments over how the size of Venetian will work out. 500,000 square feet, no matter how well organized, is still massive and the thought of filling it while being surrounded by nothing is almost impossible. But for some reason, my gut feeling is that cotai will be a HUGE success before wynn will have a chance to get a footing. Who knows????/

BTW, Leonard...I'd really like to see you in the chatroom in some sort of Leonard VS. everybody.

December 4, 2006 2:48 PM Posted by Leonard Stern

mike_ch: Sorry, I wasn't aware of that, maybe Gates should have upped the ante if he really wanted Nintendo so badly ($25B is a pittance to him), I guess even zillionaires have their price points! However, the gaming industry presents a whole different dynamic altogether + those operators with the most dough always manage to win out at the end of the day. History confirms my assertion. It seems that you are being somewhat contradictory, Steve himself has most certainly, agruably adopted the position, that through the use of litigious intimidation against those mere mortals whom he has it out for, thereby proving my theory that "having lots of money will get [him] whatever he wants." Well, the difference is that in today's business world, the tables have now turned, and Wynn can no longer simply "bully" his way around anymore, lots of folks in the gaming industry can currently "eat Steve for breakfast", whereas ten or fifteen years ago, there were only a few handful willing (or able) to stand up to [his] questionably sociopathic + narcissistic manner of conducting his businesses.

December 4, 2006 3:35 PM Posted by Leonard Stern

Hey Devon: I just actually might take you up on your chatroom offer, however it would be more appropriate to refer to it as: "King Leonard vs ABSOLUTELY EVERYBODY" instead. :-) At any rate, I once again find myself dumbfounded that someone here actually agrees with my hypothesis in connection with Wynn's "late arrival as a major player" in Cotai. Let's all just wait to see the actual numbers when this 'so-called' massive, overly ambitious Venetian Macau property opens its doors for business and reports their Q1 earnings before we all stand in judgement of Adelson's business acumen...

December 4, 2006 3:48 PM Posted by mike_ch

Leonard: Let me just try and address your logical fallacies point-for-point.

First of all, Sheldon isn't just going to cash a check and put WYNN out of business because the majority of the stock is held by Wynn and Okada and they don't want to sell. So long as they hold onto most the stock, the chances of a shareholder revolt on the board if they deny Sheldon's takeover offer are pretty much nil.

So that means Sheldon would have to write a check with enough zeros to the point that Wynn and/or Okada drool at the fortune and decide to sell out. At which point, what has Sheldon accomplished? He's given a ton of money to the guy he's hated and he bought what with it? Two-and-a-half hotels that, according to you, are lousy tributes of self-flagellation and will be easily knocked out of competition by Cotai and CityCenter.

So even if he was insane enough to pay Wynn enough cash to retire, what would Adelson actually do with the holdings? Level WLV and build the parking garage that Venetian needs so badly?

December 4, 2006 5:28 PM Posted by Chris B

Just want to clear up a fallacy that seems to prevail among many about the Chinese government and Macau (and was touched on briefly by Charlie above). The Chinese government is not the same thing as the Macau government. Under the agreement signed between Portugal and China prior to Macau's return to Chinese sovereignty, it was agreed (in precisely the same way that it was agreed between England and China with respect to Hong Kong) that while Macau would become a part of Chinese territory, the Macau people and the Macau government would be left to their own devices for 50 years. So people in Macau still have Macau passports, the Macau government still collects and retains its own taxes, Macau has its own police force, and there are immigration and customs checks at the borders between Macau and China just as with any usual international border. So this idea that seems to float around (primarily in the US, it seems) that the Chinese government will somehow get jealous of the money being made by companies in Macau and decide to nationalize assets or take some other form of action is pure fantasy. The only way China could kill off Macau is by allowing casinos to open up in mainland China - and even then I doubt there will be much immediate effect because Macau will already have an enormous critical mass of casinos and (in a similar vein to the "what happens in vegas stays in vegas" line) Macau is a place where people can go to get away from mainland China to enjoy themselves in different surroundings far away from people who they may not want to see them gambling. Can you imagine how uneasy Chinese government officials with official salaries of less than US$500 a month would be walking into a casino in Beijing?

In any event, the big winner from all of the new developments in Macau is the Macau government - they are making nearly 40 cents in every dollar earned by the casinos. (On a slightly related note, many foreign companies have been taking large profits out of mainland China for years. Provided they pay their taxes to the Chinese government and make appropriate provisions for employee pension funds etc, there is nothing stopping them remitting profits offshore.)

December 4, 2006 6:06 PM Posted by Leonard Stern

mike_ch: Let me address YOUR apparent fallacies, on a point-for-point basis. First of all, Wynn made it abundantly clear, after Kerkorian "stole" his comapny away from him (that being Mirage Resorts) that he would NEVER, EVER go public again in any of his future ventures, this is a matter of record. Well, needless to say, it appears that the great maestro Steve Wynn just didn't have the personal resources to pull off such an ambitious endeavour as the proposed WLV projcet (after purchasing the D.I. property for Elaine) by his lonesome and needed to, not only partner with a totally 'passive' billionaire investor which he found in Okada (Aruze), who at the time was under criminal investigation + faced charges for tax evasion plus other corporate criminal financial offenses in Japan, in addition, Wynn still had no other choice but to finally be forced to go public in order to raise the capital, against his own affirmations. Fortunately for Wynn, the Japanese government decided not to prosecute Okada + Aruze by subsequently dropping the charges against him thus paving the way for Okada's licensure as a gaming operator in Nevada + thereby creating an equal, equity 'silent partner' who appears, to be totally subservient to Wynn by all accounts. Had Okada been charged/indicted in THIS country under the current (equivalent) United States Codes, in connection with his alleged criminal activities (re Aruze) as he had been accused of in Japan, the chances are more than likely that he would now be serving time in a federal correctional institution. This is primarily due to the diffference in the comparative penalties that exist for financial crimes between the Japanese justice system and ours, based solely on the United States' ridiculous post-Sarbanes-Oxley Act of 2002. That being said, a little bit of related trivia for all of you Vegas "experts" here, Okada's own brother apparently commited suicide several years ago here in Las Vegas under "suspicious circumstances" regarding potential criminal activity in connection with a local, shuttered gaming enterprise that he controlled since the early nineties. If I recall correctly, he evidently poisoned himself with a lethal dose of Ricin, the local media made every effort to try and suppress reporting this tragic event, but it really did happen and many questions still are unanswered today as to the real reason why Okada's brother would take his own life when considering his family's vast wealth + secure financial oulook for the remainder of his natural life (they were both in business together). Food for thought, don't ya think?

December 4, 2006 7:11 PM Posted by Devon

I really think the idea of a battle between King Leonard and the common folk(aka everyone else)would be a pretty interesting idea. It's a whole lot easier to talk in chat rooms vs a blog. Anyone interested?

PS. Way way way off topic, but I'm watching Studio 60, and was just wondering if anyone has seen the talk of macau and steve wynn. The network owner is planning a $20 billion "las vegas of the east." Could this be good old sheldy!

December 4, 2006 7:18 PM Posted by Hunter

Regarding Studio 60, that was something I noticed.

On the topic of Wynn Resorts going public, I am very aware of both Steve's statement that he'd never go public again and of course then he had to go back on that.

With all the talk of 'going private' in the industry these days, I wonder how that would have shaken out if it happened today. I assume he probably could have found a partner with really deep pockets and done a private equity deal from the start.

December 5, 2006 1:02 AM Posted by mike_ch

King Leonard, I must admit you are very adept at bringing up dirt and broken promises but you must have some very selective reading skills as your information was totally irrelevant and didn't address a single concern I raised. Your whole "stroke of a pen" song and dance still falls flat under the scrutiny of my facts.

This pretty much confirms what I've thought all along; which is that you're so pre-occupied with the thought of Wynn leaving the industry (even if it means Adelson actually makes him richer to do it, a far cry from going bust) that simple things like facts and reason do not apply in your scenarios.

Hey, if those thoughts are what floats your boats, then dream on. But please don't present yourself as a knowledgeable expert the next time you have fantasies about Wynn as simple panhandler on a streetcorner in Cotai.

December 5, 2006 11:07 AM Posted by Leonard Stern

Hey mike_ch: Judging from your last post, I guess you want to go for another round of punishment, huh? "dirt and broken promises", "selective reading skills"; very creative indeed. WTF are you inferring? Just remember, for the record, who is THE instigator once again! I am willing to bet anything that you actually have some sort of 'shrine' in your home dedicated to everything "Wynn" that you probably pay homage to several times a day! LOL

December 5, 2006 11:10 AM Posted by Hunter

This seems dangerously close to veering off-topic and into mud-slinging. If it does, I will actively moderate the thread.

Let's get back to Kerkorian and MGM Mirage.

December 5, 2006 12:13 PM Posted by Leonard Stern

Hunter: That's perfectly acceptable to ME! Back to the tpoic of this thread, I have recently been made aware that there is currently quite reliable "speculation" circulating within the industry that Kerkorian, with his recent increased stake in MGM/MIRAGE, thereby returning controlling interest in MGM to his earlier position, might be "seriously considering" taking the comapany private. There's more than a reasonable likelihood that Tracinda might continue to increase its holdings in MGM by even a greater percentage in the near future, and if that occurs as rumored, the writing is clearly on the wall at that point. Kerkorian apparently has demonstrated enough confidence in CityCenter whereby he must believe that it has the potential of becoming the most successful mega-project in all Las Vegas history upon completion. When considering the pending Harrah's offer and the recently announced Fertitta bros./Colony intention to take Stations private (which will most likely happen), everyone is now betting that Kerkorian has grand plans to do the same with MGM/MIRAGE, especially when considering the staggering major investments the comapany is making on a go-forward basis. This could prove to be an obvious win-win (no pun intended) strategy + windfall for MGM investors.

December 5, 2006 3:55 PM Posted by Leonard Stern

Hunter: (not to stray off-topic) but I neglected to give my response to your earlier comment whereby you are creating a completely different diametric as reflected in today's financial market if Wynn were to launch Wynn Resorts, Ltd. now and still attempt to keep the company private as he originally intended. First of all, going back six years to the time of Kerkorian's buyout, Wynn personally controlled something like only 10-12% of Mirage Resorts, a minor stake indeed for a CEO. If I recall correctly, that netted him slightly over $500M after the sale to MGM whereby a substantial portion of those proceeds were used in acquiring the D.I. property. There would have been no conceivable way, at that time, were Wynn himself could otherwise raise the sufficient capital to have been able to pull off such an ambitious, essentially what amounts to a "start-up" gaming company, with NO previous revenue history as an ongoing concern, by simply banking on the "Wynn" name alone without having to peddle an IPO, which incidentially was NOT exactly well received as a result of his roadshow. As a matter of fact, it's no secret that Wall Street wasn't exactly enamored with anything that Wynn had to offer back then based on his dismal management record with the mishandling of Mirage Resorts. So it would not be a fair comparison to approach that scenario based on the current state of the gaming market. In addition, without a major, "passive" billionaire strategic partner (as he found in Okada) who was was willing to literally relinquish control of the day-to-day operations to Wynn and still share an equal equity stake whereby they both collectively were able to achieve a controlling interest, according to many informed accounts, Wynn Resorts would have NEVER come to fruition. There weren't exactly a whole handful of informed self-made multi-billionaires in THIS country who were that anxious to jump on board and make the kind of investment obligation + commitment in Wynn Resorts that Okada did and still "allow" Steve free reign in governing its operations. The apparent short-lived Jack Binion "reassignment of corporate responsibilities" could not provide better support for this argument. Enormously successful self-made multi-billionaires simply would not put up with Steve's ego-centric personality in order for them to both foster a mutually successful equal partnership. Wynn's own character is his ultimate weakness combined with the fact that he has not ever demonstrated a flexibility to be able to delegate major decisions to subordinate executives + managers without his personal approval beforehand.

December 5, 2006 5:48 PM Posted by detroit1051

Leonard, what kind of premium to MGM's share price do you see?
I need a scorecard to track ownership of Vegas properties:
Las Vegas Casino & Hotel Ownership

December 5, 2006 6:17 PM Posted by mike_ch

Leonard: Maybe this would be a good topic for a chat someday, but you simply never addressed my arguments that your whole buyout fantasy was not at all based on fact. You responded with a bunch of stories about Okada's scandals and near-trials but that had nothing to do with how the company would be bought out by Sheldon, why he would give Wynn money, or what he would do it for.

I'm not saying you're a liar or trying to discredit anything else you've said except what you've said on this topic because while you have provided with information that is good to know and I suppose factually correct, I don't see how it even answered my question.

OTOH, you and I already have agreed that Wynn's greatest weakness as an operator is that he can't stop smothering himself and his likeness on every facet of the company. I think Kerkorian has the best style as the head of a casino operator, delegating tasks and mostly staying out of the limelight. I don't necessarily believe in his philosophy building nothing but the biggest possible hotel a site can accommodate (which is what he's done with Hilton/Ballys/MGM/PCC) since I feel that makes a hotel lose charm, intimacy and personality. However, this is just another one of those places where we agree to disagree.

December 5, 2006 8:30 PM Posted by mike_ch

I know it was mentioned earlier that Kerkorian sold some of his GM stock, but it appears he's getting rid of all of it:

Fine with me, the guy needs to keep to casinos and he doesn't understand a thing about the auto industry and had nothing but bad ideas that would have made the company even worse.

December 5, 2006 8:33 PM Posted by Hunter

Yeah, he dumped it all... But he still made a $100MM on the deal...

And didn't he make almost a billion dollars investing in Chrysler when they merged with Daimler?

Sounds like you don't see his solutions as the right ones for GM but he certainly made some well-timed bets if nothing else.

December 5, 2006 8:44 PM Posted by mike_ch

Oh of course he did, what he lost in stock trades was well more than made up in dividends. He probably made this decision some time ago.

He's certainly a smart cookie, but I never took him as a serious savior here.

December 5, 2006 9:13 PM Posted by John

Well, I was just wondering, I think I said a few weeks ago, that maybe Kerkorian was taking MGM private. I'm still not sure if this is a good idea, etc. I mean, the company, has no real reason than flexibility to go private. The company is one of the most highly regarded, for their conference calls, etc., by the gaming analysts. I guess this is just purely a fiscal move by Kerkorian

December 6, 2006 4:52 AM Posted by detroit1051

Kerkorian doesn't profess to be an auto industry expert, but he does understand what works in business. The ongoing danger with GM is that the old Detroit mindset will continue to believe that things will improve without drastic measures. Although GM is stronger than Ford, it's not making progress fast enough. Kerkorian could have made a significant contribution had GM's Board not been successful in blocking any deal with Ghosn.
The weekend Wall Street Journal had a fascinating piece on Kerkorian. If you have access, it's at

December 6, 2006 12:18 PM Posted by mike_ch

Detroit: GM was swimming in more messes than the federal government for a while there, but it's seeing improvement, and if that improvement keeps up for the next 5-10 years, they will be trustworthy again.

Kerkorian is clever, I'm sure he noticed that GM stock wasn't going to be doing that well for a number of years and so he promoted the Renault talks to kick the stock up a few notches, and it worked in the end.

December 6, 2006 4:12 PM Posted by detroit1051

"When I joined the company in 1998 I felt the only way to the promised land was through a public vehicle," said Jim Murren, president and chief financial officer of MGM Mirage and a former Wall Street banker. "But being public is not as fun as it used to be."

From the LV Sun on going private:
Casinos see private funds as a way to go

December 6, 2006 4:23 PM Posted by detroit1051

"Thursday morning, Mr. Kerkorian gave the giant sell order that ended his time as GM's largest individual shareholder. Although he didn't reap the profit he initially had hoped for, he will earn about $100 million on his investment, once he collects the forthcoming GM dividend to which he is entitled."
From the WSJ article linked above. I don't believe Kerkorian would have risked $1.7 Billion on GM, put York on the Board and gone through all the grief for $100 million. If he's worth $10 Billion, a $100 Million gain is pocket change. After all, he made $3 Billion on Chrysler and wanted more.

December 6, 2006 5:08 PM Posted by Leonard Stern

detroit: How can you possibly extrapolate Kerkorian's $100M net profit after selling off his position in GM, including subsequently cashing in on its dividend by referring to this as "pocket change". When considering the overall time frame in which Tracinda participated as a major 10% shareholder in GM, any reasonably informed investor would agree that a $100M profit is nothing to sneeze at. I personally wouldn't mind having a $100M windfall in my bank account, and I'm sure you would agree.

December 6, 2006 5:10 PM Posted by John

Mr. Stern, you mention LVS' international brands. What I don't understand is that the only realy "international" brand the have is the Venetian. There have been no plans for a Palazzo Cotai, or a new Sands Las Vegas. Now, I can see the obvious marketing tool that a casino website can obviously become, but I wouldn't really call Palazo a brand, just as I wouldn't call Bellagio a brand.

About the whole brand idea, though, I've recently been thinking about whether or not certain strip resorts, could make the carry over and have a sister property. We already know the Venetian, has been able to do it, but what about other resorts, like Bellagio or say, the Mirage. Honestly, I think the only reason the Venetian could have a sister resort, is because it is a replica itself. I've sort of come to noticed that most resorts, under the same name, have been themed replicas (Venetian, Caesars Palace), however that changes when you think about MGM. I'm sorry, I'm rambling.

December 6, 2006 8:28 PM Posted by mike_ch

He made a 5.5% increase on return. Not bad.

Honestly I think the guy just rode in thinking he was a knight in shining armor and then was surprised when he found out that there was already a long-term restoration plan in progress. If they followed his advice they'd probably heading down the path that is Ford right now.

""I like to gamble," the newspaper said Kerkorian told his adviser, Terry Christensen. "But I stop gambling when there's no chance to win.""

See, I think he had this exit strategy ready for quite some time. The Renault deal was just a part of that.

December 7, 2006 1:39 AM Posted by Chris B

Hang on, he might have used finance to buy those GM shares, so unless his cost of finance was less than the GM dividend yield, then he didn't make anything. He may also need to pay tax on those dividends. If you want to be real picky you could also adjust for inflation.

Either way, no arguments that taking a big risk and coming out even or thereabouts is a good outcome.

December 7, 2006 9:14 AM Posted by detroit1051

Leonard, my "pocket change" comment was flippant, but I do believe Kerkorian had much bigger plans for GM which were foiled, and he bailed. Mike_ch and I don't agree on this.

December 7, 2006 11:41 AM Posted by Leonard Stern

John: The Las Vegas Sands "brands" extend beyond just the Venetian. How they decide to market those brands are purely speculative, however, this online gaming enterprise was launced for the specific purpose of placing the LVS and their respective gaming entities out there well in advance of expanding it's empire. MGM Grand clearly has been quite successful at being able to take its brand international as with Macau, which today was further supported by their announcement of partnering in the development of non-gaming properties in the U.A.E., as well as other future locations worldwide.

December 7, 2006 11:56 AM Posted by Leonard Stern

Chris B, It has been my understanding, at least throughout his past history, that Tracinda Corp. (Kerkorian's holding company) is completely privately financed and wholly owned by [h]im. His strategy apparently has been to move mass amounts of investment capital by transferring it from one deal to the other, as he has done again by selling off his GM shares in order to increase his stake in MGM/MIRAGE. From anyone's perspective, he certainly appears to be making a free and clear, unleveraged profit in ever subsequent deal he makes. It simply doesn't get much better than that!

December 7, 2006 6:19 PM Posted by mike_ch

Good points, all.

I don't think Kerkorian made great profits on this venture but I don't think he lost money either.

The whole Ghosn talks thing was just such a lousy idea, it reminds me of what Ford has been doing, acquiring names like Volvo and Mazda to basically cross their hardware (especially in the case of Mazda) into Fords. It hasn't gotten Ford anywhere and it wouldn't have gotten GM anywhere either.

GM's biggest hurdle at this rate is convincing people their cars can go 10 years without all the features breaking and the knobs falling off. Unfortunately, they'll have to wait at least 10 years to prove it.