Two Way Hard Three | Las Vegas Casino & Design Blog

December 18, 2006

Harrah's Accepts Buyout Offer for $90/Share

Posted by Hunter

Not a lot of detail yet but it looks like Apollo/Texas Pacific boosting the bid to $90/share did the trick:

Harrah's Board have accepted the offer:

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Read archived comments (34 so far)
December 18, 2006 8:06 PM Posted by Brian Fey

What am I missing here? The stock is trading for $82. Why not buy it and make a quick $8? Maybe it will open close to $90 tomorrow, but I expected it to do that today, since the news was out, that it was basically a done deal.

December 18, 2006 11:49 PM Posted by Bert

News just come through that Melco PBL raised $1.15 billion for their Macau Casino projects.

Still be interesting to see how they go as they both are based on Cotai, and if the Venetian Macau will draw that traffic over the bridge. As it looks from here its still very much a no mans land!

Also its believed that the Galaxy Grand Waldo is not drawing in the crowds it expected!

Even though Melco PBL has bought a property on the Macau peninsula, if that happens it will be at least a few years of!

December 19, 2006 8:34 AM Posted by detroit1051

Will HET follow through on its Strip plans? I doubt it; any redevelopment will be much less ambitious. This is not good for Las Vegas.
>>With word that the board of directors at Harrah's Entertainment will accept a private buyout offer at $90 per share, observers say the company has reached a crossroads and may sacrifice long-term prospects in favor of short-term gains.

December 19, 2006 8:41 AM Posted by detroit1051

Is BYD next?

December 19, 2006 2:59 PM Posted by Andy

Is it just me or did the article about Boyd refer to the Venetian as a Wynn resort? What an insult!

I'm not sure I like the sound of this whole deal. It could shift the current trend in Vegas in a totally different direction and I don't think it will be a good one.

December 19, 2006 3:54 PM Posted by Leonard Stern

Andy, that article indeed does incorrectly list the Venetian as a Wynn property. However, I would hardly consider that an "insult", but quite the contrary, considering that LVS is outperforming WYNN by leaps and bounds as reflected in just three words: PROFITABILITY, UNPRECEDENTED GROWTH, something that Wynn Resorts has yet to be able to achieve! Too bad that WYNN is not currently considered suitable for privatization due to the fact that they are presently way overleveraged and have no viable track record history like Harrah's certainly has attained. Unfortunately being that Wynn Resorts is a public company, the pressure for [them] to be substantially in the black, along with the added scrutiny now imposed by the SEC (Sarbanes-Oxley compliance) limits Steve's options. Unfortunately, the recent HET privatization will most likely put an abrupt end to Harrah's grand plan for consolidating all of their Strip properties which totals something like 350 contiguous acres with their purchase of many additional sites to the east. The only possibilities now are the expectation for the recently announced new Caesars tower/expansion to proceed + maybe a Paris/Bally's addition + alteration of some type. Even those projects are questionable, Loveman has postponed any public announcement regarding their future plans as a direct of the pending, now likely private takeover of HET...

December 19, 2006 10:12 PM Posted by Andy

I am well aware of the financial situation at Wynn but I was speaking in terms of being a hotel guest, not an investor. It is my personal opinion that Wynn builds a higher quality resort than LVS.

December 20, 2006 5:21 AM Posted by cgriff

Is someone here selling short on WYNN?

December 20, 2006 7:39 PM Posted by Chris

I agree with Andy. Wynn is outperforming LVS in leaps and bounds as reflected in just two other words: QUALITY & SERVICE - something that, in nearly 8 years, Venetian has not been able to (or has simply not been attempting to) achieve to the level that Wynn has achieved in less than 2 years, as reflected in recent independent ratings and current quarter-to-quarter ADR. The profit margins at Venetian may be higher, but with nearly 50% more rooms and 5 more years of operation, higher margins would be expected even if Venetian was offering the same quality of product that Wynn does.

The profit margins and growth potential at McDonald's and Wal-Mart are probably higher than Wynn's also, but that doesn't mean Wynn should aspire to be anything like them.

As for Harrah's, I would actually prefer to see them not consolidate so much on the Strip and develop their individual brands a little more distinctly, even allow some internal competition in Vegas like MGM-Mirage does with it's mid-market properties. The last thing I'd want to see is a four-block long Total Rewards themed casino.

Outside of Vegas I'd love to see someone in Harrah's stand up and say "Hey, maybe we could make up some of our own ideas, instead of just using Jay Sarno's 40-year old Caesars theme for all our international projects, and the generic Harrah's theme for all our domestic projects."

December 20, 2006 8:11 PM Posted by Leonard Stern

Chris, obviously you haven't yet had the opportunity to read or otherwise research the vast majority of recent mixed reviews submitted by guests, many of whom had extended stays at Wynn Las Vegas, which incidentally included accommodations in the Tower Suites, whereby [they] consistently remark that the most common complaint they all seem to have experienced with WLV was the total LACK OF QUALITY SERVICE and apparent aloofness + condescending attitude exhibited by the WLV staff on a collective basis.

December 20, 2006 8:28 PM Posted by John

Its too bad that, that is already what has happened with Harrah's properties, aside from Caesars which has some sort of personal identity. However, it is almost impossible to discern the blackjack felts at Ballys from those at Paris and Flamingo, etc. What I am waiting for out of all of this, is to see if the equity firms will push for the sale of some of their strip land, as far fetched as that may seem. However, at 15 million an acre, it wouldn't take much for Apollo and Texas Pacific to regain their investment.

About the Venetian, I'm staying there as I am writing this post, and can say, while it is no Wynn, the Venezia tower rooms, do have their own "flair". However, that is where it ends. The casino is in desparate need of a change, if it wants to be considered anything that is comparable to Wynn. Also, the main tower is where the renovations will count. I know this is off topic, but if LVS puts all of Palazzo at the same service level or higher of Venezia, it will be okay, but if they run it like they are running the main tower, it will not be pretty.

December 21, 2006 1:31 PM Posted by Leonard Stern

cgriff: WYNN continues to be further downgraded and has now consistently been downgraded by analysts across-the-board since its run-up back in mid-November. S&P rated WYNN at two stars (SELL), Citigroup also downgraded WYNN on November 21st. Morningstar assigned WYNN only a 'one-star rating' out of a possible five. On November 14th, an analyst with Stifel Nicolaus downgraded WYNN from BUY to HOLD, a result of the stock having experienced artificial run-ups as well. I've said it here before and I will repeat it again, WYNN is the most overvalued stock in the gaming sector at the present time.

December 21, 2006 1:40 PM Posted by Leonard Stern

cgriff: Oh, I had forgot to mention in my previous post that on Wednesday, Merrill Lynch also joined the club of analysts who are bearish on Wynn Resorts by downgrading WYNN to "SELL", from "NEUTRAL".

December 22, 2006 10:15 AM Posted by Chris

I have read many, many reviews on Tripadvisor and other public forums written by anonymous people that complain about Wynn, and also many, many that rave about Wynn. I find all these reviews to be so anecdotal and subjective as to be worthless when trying to evaluate a hotel.

However, as I said, when comparing the following:

2007 AAA Ratings
Wynn - 5 Diamonds
Tower Suites - 5 Diamonds
Venetian - 4 Diamonds

2007 Mobil Ratings
Wynn - 4 Stars
Tower Suites - 5 Stars
Venetian - 4 Stars

3rd quarter 2006 ADR
Wynn (incl. Tower Suites) $271
Venetian $221

Profitability, stock value, and long-term prospects can be argued back and forth forever, but it's hard to interpret these numbers as indicating anything other than Wynn having the edge in perception of quality and service.

In fact, I think it is fair to say that Wynn Las Vegas is generally perceived to be the finest hotel in the city at the moment, regardless of how accurate one may consider that perception to be.

December 22, 2006 12:11 PM Posted by mike_ch

Maybe visitors sucked in by hype or people who don't know about the quality non-megaresort hotels in Las Vegas.

Christ, in the LVRJ yearly poll Wynn was beaten down by Bellagio on nearly all fronts and given the lovely title of "Most Overrrated Hotel." And Bellagio's no great shakes either if you're willing to compare it to something like the Ritz or even the nicest Station properties.

Wynn is the nicest of the great big Strip properties, but great big Strip properties by their nature are at a disadvantage when it comes to competing against smaller competitors at the top.

December 22, 2006 12:14 PM Posted by mike_ch

Although Leonard, I'd also like to point out the funny highwire act you perform here nightly as both the biggest LVS cheerleader on the blog AND our self-proclaimed authority on art and architecture.

The Venetian is profitable, but I think we all can agree it wouldn't win any beauty contest that went more than skin deep, hm? And despite your proclimation two weeks ago that theme hotels are dead, LVS is just finishing up a big one in Cotai.

December 22, 2006 1:11 PM Posted by Leonard Stern

mike_ch: I personally do not consider myself a "self-proclaimed" expert on architecture (but if you guys wish to that's fine with me), but rather, I am indeed a qualified "expert" on the subject to the extent that architecture + its related disciplines have served as the impetus behind my entire professional life and, if I might add, I happen to have been quite successful at it. However, I personally have never claimed to be a fine art expert and any comments that I have either shared or posted in that regard (i.e. 'Le Reve') were relayed to me by some of the most qualified + respected experts in the field. Also, after singing the praises of LVS + Adelson's undeniable success from a business standpoint, I never once opined that either the existing Venetian, the upcoming Palazzo nor the Venetian Macau currently under construction, were architectural masterpieces worthy of distinction. With Las Vegas Sands' recent selection to build the first and world's most expensive single ($3.16B+) luxury gaming property in Signapore, you can expect a far more architecturally sophisticated product to result there in order to be congruous with Singapore's leading edge existing high rise architecture. And yes, Venetian Macau notwithstanding, "themed" gaming mega-resorts will fortunately be relegated to history with absolute certainty giving rise to potentially really superior + notable design opportunities such as that which will be reflected in PCC as well as some other recently announced proposals for L.V. Don't expect LVS to be building a "Venetian Singapore"! We are about to experience a true architectural renaissance impacting the future of the gaming hospitality industry in a very big way - this is simply the process of "design evolution".

December 22, 2006 1:44 PM Posted by mike_ch

So is there anything else down the pike that you know of that represents this turn in architecture other than PCC?

Because one project alone does not a trend make. And while I'm honestly excited to experience these new designs you talk about, PCC is a ways off yet.

December 22, 2006 2:22 PM Posted by John

Well, I was finally able to see the CityCenter model for myself, this weekend, and I was impressed. While a sixty-six acre parcel isn't much to fit a project like CityCenter into, Gensler has created a very detailed site plan that, aside from the Veer Towers, has maximized the design, appearance, and location of each residential or hotel tower. However, like you said Mike, PCC is a long way off, and one project can only do so much. I'm still waiting, with baited breath, to see Boyd's plans for Echelon (even though I have heard the entrances might have to be re-worked, due to massive traffic backups), and whatever Wynn has planned for the Golf Course Re-development. I'm still waiting to see what Wynn has for the re-development, in that, he's got about two City Centers sitting back there, even though he won't develop them in such a high density manor, considering he wants to put a giant lake out there, which I am expecting to blow away the "pond" at Bellagio.

December 22, 2006 5:13 PM Posted by Leonard Stern

John, the major problem which continues to prevail over and over again with Steve's outdated management policies, even when considering the ultimate future development potential that exists in the WLV golf course property, is that Wynn will continue abiding by his steadfast insistence of keeping the design of his projects basically "in-house" and therefore under his strict personal control. Steve Wynn cannot design his way out of a paper bag! Talk about "self-appointed" design experts, Wynn certainly is a perfect example. mike_ch, I would love to share with you the many [proposed] next generation projcets which I consider to be equal to the level of sophistication as represented in CityCenter's design, however, unfortunately at this time I simply cannot compromise the position of the many people + frims who are actively working on such projects. John, BTW - that CityCenter scale model is only a temporary/interim masterplan model, which was intentionally built to depict simply a schemtic representation only. Expect extremely detailed larger scale presentation models to be unveiled in the new CityCenter marketing center that will more accuratley represent the final exterior facades/site development of each and every one of the individual buildings as well as much more detailed masterplan scale model depicting the final design.

December 22, 2006 7:05 PM Posted by Hunter

One interesting note:

On the last edition of the 'Strip' podcast, they talk briefly with Mark Fuller of Wet Design, designers of the Fountains of Bellagio.

Mark says that they have something planned for City Center that he expects will equal or exceed the Bellagio project.

December 22, 2006 8:21 PM Posted by mike_ch

Hunter: Thanks, I think I found the interest in PCC that I've been missing all this time. :P

December 22, 2006 9:18 PM Posted by John

Interesting, I keep seeing a rendering that has a "Bellagio"-esque fountain feature placed near the hotel/casino.

I've always found it interesting that it was Steve Wynn that has really helped MGM survive, post-merger. I mean, if it wasn't for the contracts that Wynn had signed with Cirque and WET Design have been very, very profitable for MGM in the long term. I guess that is both a good thing and a bad thing.

December 22, 2006 9:20 PM Posted by Hunter

I'm sure that if Wynn had the option he would have engaged firms like Wet Design, Cirque, etc... for Wynn Resorts projects in Las Vegas but of course, the contracts he oversaw at Mirage Resorts preclude that...

December 22, 2006 10:04 PM Posted by John

Well, bringing up WET Design questions, I wonder if Steve has signed a contract, similar to the Mirage contract, that gives him exclusive rights to WET in the Peoples Republic of China, or at least Macau?

December 22, 2006 10:31 PM Posted by Hunter

I don't know but I wouldn't be surprised.

I should ask Mark Fuller - I met him at an event a few years ago and we talked for an extended period. Very nice guy.

The Wynn Macau feature is clearly a descendent of the Bellagio attraction. It does appear to have fire, which you can sorta see here:

For some reason, the fire seems appropriate to me in Macau (don't ask me why - I know very little about Chinese culture or history).

I personally appreciate the fact that the Bellagio fountain system does not have color - I find the white light to be more amazing... That said, Wynn's Macau version does look great.

Those Wet Design guys are a class act. Very nice and very talented.

December 23, 2006 1:01 PM Posted by MARLYMARR

I feel that if Wynn founded the company and controls it. He has a right to oversee the designs. Regardless of what anyone personally feels about him, he seems to be doing a great job by me. Then again, i dont have access to the ummm great designs in the pipeline as others more fortunate than i seem to.

All gripes aside Wynn is credited with a revitalization that can be argued but his contributions will go down with industry greats ie Jay Sarno, Howard Hughes, Martin Stern etc... Sorry Leonard, I put your fathers name in a statement that included Steve Wynn.

December 23, 2006 6:49 PM Posted by Leonard Stern

MARLYMARR: No offense taken by your commingling Steve Wynn's name with that of my father's, included within the same statement, however you neglected to mention Kerkorian in your list of 'greats', who arguably has had the greatest singular impact in developing what would become the 'transitional evolution' of modern day Las Vegas mega-resorts, more than ANY other operator to date, although Hughes did indeed pave the way for the newfound "corporate" ownership of casino resorts in L.V., he actually elected to leave the gaming component + casino operations in the administration of his properties 'status guo' (if you get my drift). When Hughes opened his Landmark Hotel/Casino tower at the same time as the International Hotel, in an effort to try and compete head to head with Kerkorian, that project failed to compare to the [International] which was the largest hotel in the world at the time when launched. There is absolutely NO WAY that Steve Wynn, even when considering the much "overhyped" development of the Mirage back in 1989, could even be considered to be in the same league as these guys who were the true trendsetters + visionaries willing to take on the biggest risks at that time. Wynn, historically, cannot even begin to approach this level of "pioneering spirit" reflected by the likes of Jay Sarno, Kerkorian, + to a limited extent, Howard Hughes. Wynn is so "after-the-fact" that this is a completely preposterous assumption. Of all of Hughes' properties, the ONLY time that Howard Hughes personally commissioned an independent architect to design a major tower or a substantial expansion to any of his multiple gaming properties in Las Vegas (Hughes actually had his own capitive architectural design arm known as Archisystems International under his umbrella holding company at the time, Summa Corp. which later did an update to the Desert Inn) was when he retained my father's firm in order to design the now infamous circular Sands tower back in 1966. Subsequent to Hughes' permanent departure from Las Vegas, my father was working on a secret MASSIVE multiple tower casino/resort project for Hughes which has never "officially" been made public, that exceeded 6,000+ rooms and would have been located on the vast amount of property that currently encompasses Howard Hughes Center which Hughes purchased as part and parcel of the Sands Hotel acquisition. Just because Wynn + Okada collectively maintain a controlling interest in WYNN, does not necessarily give Steve the exclusive right to make autonomous design decisions when he is clearly not qualified as a professional, without review. Let us not forget that Wynn Resorts, Ltd. happens to be a PUBLIC company, period. IF Steve actually possessed the ability to take WYNN private, thereby avoiding the type of scrutiny which public comapnies are now subjected to, I am sure that he would do so in order to continue to try and operate [his] properties in the manner that he so desperately wants to maintain. The irony regarding my father's business relationship with Howard Hughes, although he never actually met with him personally, back in 1965, the same period that he was designing the Sands tower, my father was living at the Chateau Marmont in Los Angeles and Howard Hughes occupied the entire sixth floor penthouse directly above my father's own place for about a year!

December 24, 2006 4:47 PM Posted by MARLYMARR

Youre right Leonard, i should have mentioned Kerkorian as well but that why i put the etc. I find your take on most things very entertaining.

December 24, 2006 4:49 PM Posted by Chris B

Leonard, what are your views on the jerde partnership? They are involved in
the design of Melco PBL's "City of Dreams" in Cotai. Have they been
involved in anything decent in Las Vegas?

I know you've used the words "not necessarily" which qualifies the
statement a bit, but just because a company is public doesn't mean that
company management needs to consult shareholders on all decisions
(including design decisions). Steve & Okada control a majority of the
company's stock, and through that control are able to elect the board
members of their choice, and through the board of directors are able to
decide how the company is managed on a day-to-day basis. It is entirely up
to the board to decide whether they are willing to defer design decisions
to one man or a small team, and if the board is happy with it then minority
shareholders can either put up with it or sell their stock.

December 24, 2006 5:02 PM Posted by John

Chris, I don't want to speak for Leonard, and I know he's going to disagree with me on at least one comment I'm about to make, but the only things aside from Wynn Las Vegas and Bellagio, that Jerde has been apart of, are not the most stellar of designs. In fact, they are rather repetitive. By that I mean, the striking similarities between the Palms tower and the Casino Morongo tower, in Cabazon, Ca. However, the team at Morongo was going for an almost exact Palms knockoff, so....

Also, I couldn't agree more with you on your last comment.

December 25, 2006 9:52 AM Posted by Leonard Stern

I'm just about to catch a plane, but I wanted to respond to the last comments. Chris B, if you scrutinize the composition of the Wynn Resorts board of directors, it predominately is made up of family members and Wynn's "cronies", includng former pro-Wynn politicians. This was no accident, since Steve runs this public company no different than if it were his own little private enterprise. With respect to the Jerde Partnership, my company first started working with Jon Jerde's firm back in the late 1970's. They were primarily known as retail experience architects at the time, but since then they have evolved into an international mega-firm with emphasis on retail + hospitality design. With the exception of the Bellagio, where I understand that Jerde had much more design influence overall than with the WLV tower, I am quite disappointed in his representative work here in Las Vegas. The Palms is a complete disaster with all three high rise towers completely incongrous with one another. I had hopes for the new Fantasy Tower, but unfortunately they over designed the esat elevation and it way too busy. Palms Place will turn out to be similar in that there will be no harmony in tying the design together. It is possible to individualize multiple towers within a single project and still maintain design consistency, a good example is Klai Juba's Panorama Towers. The World Market Center by the Jerde Partnership is an absolute abortion, particularly the recently completed phase two building which looks like a high rise prison facility! Jerde's work has evolved into what can only be described as "quirky" ecletic design. Bellagio is definately Jerde's best projcet in Las Vegas, his firm had far less influence on the WLV tower than Bellagio + concentrated more on the pedestrian level aspects of the project which explains why the WLV tower is seriously lacking in terms of notable design influence. There are some striking similarities to the Palms tower + that of Morongo, however, the original Palms tower was built on the cheap since Maloof had no idea how successful the Palms would turn out to become. Finally, MARLYMARR, the one true "great" whom I neglected to mention was Del Webb who actually became the very first corporate property owner in the the casino industry with the Sahara Hotel. My father was his exclusive architect for every project that Del Webb built starting with the Sahara, up to including, the Kuilima Hotel (Turtle Bay Resort) on Oahu's north shore. Del Webb preceded Kerkorian, Sarno, + Hughes by many years.

December 25, 2006 3:46 PM Posted by mike_ch

Leonard, do you have any response to my claim that, despite your rejection, Steve Wynn's properties (excluding WLV since it's future is uncertain) seem to be successful?

Granted, I give Kirkorian's firm a lot of credit for going to the top-drawer with their Mirage redo. However uncreative they are and how poorly operated they were (IYHO, of course), the public seems to approve of Steve Wynn's vision of luxury. That includes the water features and the use of skylights and exotic animals, art on display, and basically many other ways to spend your dollars aside from rooms, food, and gambling.

Hunter mentioned the WET/Cirque thing above already, too. Although really I feel that the large Jubilee-style extravaganzas were on their way out with or without Cirque and these new-wave circus acts just happen to debut at the right time.

Unless you can show me numbers otherwise (and Macau doesn't count because the dynamics are very different) many of Wynn's properties are, despite your objections, established.

January 30, 2007 7:05 PM Posted by detroit1051

"This isn't personal. It's business."