Two Way Hard Three | Las Vegas Casino & Design Blog

October 16, 2010

SIMPSON ON VEGAS #008: Jeff's Best and Worst

Posted by Hunter

Jeff's back and this time he's started up his own little 'gaming hall of fame/shame', picking the top and bottom of Las Vegas' operators for the past decade.

Would you rate 'em different? Reply in the comments.


The recent news that Penn National Gaming had acquired M Resort's debt and should soon be operating the beautiful casino Anthony Marnell III built in the southern Las Vegas Valley made me think about Marnell's experience. I remembered interviewing Marnell at the time his property opened for trade newsletter Gaming Industry Observer and asking him how he would know if his first year was a success.

He answered that staying in business would signify a success, a stunning but prescient response that showed he knew even then that the property's debt and the horrible Las Vegas economy cast the future of his creation in doubt.

The M Resort news inspired me to think about the casino owner/operators I've covered since I've been in Las Vegas and which ones have been the most and least successful at building, buying and/or operating casinos. The three-year recession has distorted results to such an extent that operators smart enough to sell right before the downturn proved, at least for now, to have made some of the smartest financial decisions. If that was the key metric, then New Frontier owner Phil Ruffin, then-Tropicana owner Aztar and the Bill Bennett estate that owned the Sahara would rank near the top of a best operators list, and that crew is not what I was going for. My lists are based on my opinion about what the owners created and how they have run their casinos.

Worst Casino Owners, 1999-2010

1. Bill Yung and his Columbia Sussex at the Tropicana

Yung paid $2.8 billion for the Tropicana and Aztar Corp.'s other casinos, and the redevelopment potential of the Trop and its sweet location were the deal's most important assets. Yung and his team broke out their ham-handed operations style, slashing staff, destroying employee morale and allowing the property to deteriorate. My long-standing disdain for Yung and his casino-business acumen proved accurate when he lost the Tropicana and most of his other casinos. The casino business is not the airport hotel business -- as Yung and his Kentucky cronies learned. He still owns the Westin here in town so it's a shame I can't say "Good riddance."

2. Becky Binion Behnen at Binion's Horseshoe

I liked Becky Behnen and felt sorry for her as she seemed to be in over her head as the owner of the Horseshoe. Her husband, Nick Behnen, was another story: A loud-mouthed boor forbidden by Nevada gaming regulators from being involved in the Horseshoe's operation who was nevertheless widely viewed as being the power behind Becky's throne and at least partly responsible for running the once-proud 'Shoe into the ground. The Horseshoe had a bloated staff, a ridiculously large security team and the Behnens seemed determined to prove that they could change the way the property was run by Becky's brother Jack. They succeeded in that, at least.

3. Tamares Group at the Plaza, Las Vegas Club and Western

I'm hesitant to include Tamares because I've long suspected their long-term strategy is to allow their trio of properties to deteriorate while they wait to capitalize on their underlying real estate. If so, they've sure accomplished the first part of that strategy but the economy has delayed their ability to capitalize on the real estate. As for Tamares' recent announced plan to close the Plaza and refurbish it -- I'll believe it when its fully reopened.

Best Casino Owners, 1999-2010

1. Steve Wynn at Wynn Las Vegas and Encore

Wynn took a lot of criticism when Kirk Kerkorian bought Mirage Resorts, but I think Wynn has had the last (or at least best and most recent) laugh. He traded his stake in Mirage for the Desert Inn site, and he and his partner Kazuo Okada built what I believe are the city's top resorts. Along with his Macau operations, the Las Vegas properties give Wynn the best properties on the Strip and in Macau, an enviable branding statement. Wynn's operational savvy allowed him to quickly capitalize on the fine-dining, nightclub and daylife trends while at the same time flexing his most powerful weapon in the casino: Big gamblers love betting against Steve Wynn.

2. Sheldon Adelson at the Venetian and Palazzo

While Adelson's biggest successes have come in Macau and (by most accounts) Singapore, his Strip hotels have demonstrated the power of the convention business to prop up midweek hotel and food and beverage revenues. Adelson's company sued me when I criticized the property's early regulatory problems (it lost) but its operations have by all accounts improved since then. Adelson's casinos aren't as successful as the gaming operations at Wynn/Encore and Bellagio, but his dining, nightlife and entertainment offerings are strong competitors. A lot of folks were skeptical of Adelson's ability as an industry neophyte to build and operate a casino resort, but he's proven them wrong.

3. George Maloof at the Palms

Even though Maloof and his partners may have borrowed too much to build the Palms' Fantasy Tower and Palms Place right before the economy and the Strip-area condo market imploded, there's no denying Maloof's brilliance and operating skill. A creative and hard-working innovator who knows the industry as well as any executive not named Steve Wynn or Michael Gaughan, Maloof created a powerful, high-end brand at his low-budget location. He's a master marketer who understands his customers and I think Maloof will eventually be regarded as one of the industry's all-time greats.
Other strong competitors included:

* Michael Gaughan at Coast Resorts and the South Point (Another genius who understands his customers, Gaughan's properties were constantly very profitable. He improved the execution of the hybrid locals-tourist casino at the Orleans and later, the South Point.

* Bill Boyd at Boyd Gaming (Boyd loves the city and cares for his employees. He recognized that completing Echelon could kill his company and quickly put on the brakes.)

* Kirk Kerkorian at MGM Resorts (Kerkorian made a couple of great buys in Mirage Resorts and Mandalay Resort Group and continued his pattern of building the city's biggest casino resorts, adding CityCenter to his earlier creations at the International, MGM Grand I and MGM Grand II. Recent financial results have hurt, but there's no denying that Kerkorian allowed his top executives to buy and then renovate an impressive collection of properties on the Strip).

-- Jeff Simpson, October 2010


Comments

Read archived comments (14 so far)
October 16, 2010 2:42 PM Posted by Howard Park

I can't disagree with any of the choices but the unfinished condo tower plunked right in the middle of the Venetian really takes away from the craftsmanship & design of the complex. The constant, ever expanding ad banners also make the Venetian look like any ond Strip clip joint. It's a shame that one of the real jewels of the Strip is so degraded.

October 16, 2010 3:08 PM Posted by Steven Brown

Dead on in regards to the worst owners. Personally, Becky Binion Behnen would top my list since her actions led to the Binion's Horseshoe being shut down and eventually losing the Horseshoe name after selling to Harrah's. The joint is still suffering from her days of running the joint, as the rooms in that place (prior to the current owners shuttering them last December) from my two stays there in 2008 looked like they hadn't been updated since the main tower was still the Mint.

October 16, 2010 3:12 PM Posted by mike_ch

I'm not exactly sure how you're defining best and worst here. Shareholder? Customer? Employees?

Your #1 worst is based on their running their employees into the ground, but your #1 best is the guy who once harassed his cocktail waitresses for gaining weight and began the pit boss tipping scheme. People who have worked with Steve Wynn have said he's more acerbic in business the closer you work to him.

This kind of topic is the kind of thing where I hate to fling around terms like heroes and villains, but many of the most heroic figures on a list like this are actually just "Villains With Good Publicity."

October 16, 2010 3:46 PM Posted by parchedearth

I would drop both Adelson and Kerkorian from the best list. LVS and MGM are lucky they avoided bankruptcy and still have massive debt. Although I like his properties, Adelson is a terrible manager who refuses to listen to (and more often fires) his own executives. Much of Kerkorian's success was due to money made in other industries and buying really good properties built by others. Neither company will reach its full potential until these guys are gone.

October 16, 2010 8:16 PM Posted by Arthur

I'm guessing Jeff is basing this article on whether or not an operator is successful or not. Some of us may or may not like Steve Wynn, but there is no doubt that Wynn is a very successful man and is good at what he does.

October 17, 2010 7:34 AM Posted by Jeff in OKC

Great choices Jeff, especially remembering the Behnens. I wonder how the Horseshoe would be today if Jack Binion had been left alone as operator?
I am not disagreeing with your choice of Sheldon Adelson, but I sure don't like many of his past actions in regard to contractor payment and suing reporters (which Simpson could speak volumes about).
Maybe it's just a matter of how someone is perceived; I avoid spending any money or time in Adelson's properties, yet I think Steve Wynn is the best operator of all time, so his past actions don't bother me at all.

October 18, 2010 3:43 AM Posted by Benjy

Completely agree with Howard regarding the Venetian - hate that bit!

October 18, 2010 8:37 AM Posted by Ted

I totally agree with everyone on the worst list. I also agree with the top guy on the best list. I don;t completely understand the tip situation at Wynn's casino but I will say that every employee I have ever talked to at that resort ( and I have talked to quite a few of them) enjoys working there. And Wynn is the only profitable guy in town in this economy.

October 18, 2010 6:26 PM Posted by Ted Newkirk

@mike_ch

I'm at a total loss why Wynn is a bad buy for telling his cocktail waitresses to stay in shape. Their image is important to the overall appearance of the property, and any cocktail waitress hired who assumes that she's been chosen because she can carry a drink tray better than anyone else on the face of the earth is delusional.

If I hire a model on contract to work for my company, I expect her to stay looking good. No less should be expected out of a cocktail waitress. Especially at a high-end property that caters to the "beautiful people" and the wealthy.

October 19, 2010 2:13 AM Posted by mike_ch

Ted, Equal Opportunity laws don't work that way. You can't just move someone out of a job because you think they look fat. In Vegas there's a slight "look the other way" thing where all the most qualified waitresses tend to be of the beautiful crowd and possibly have some cosmetic surgery. However, even Steve Wynn cannot just ignore the law (though he seems to approach employee relations with that impression) and their job duties are officially to stiffen your drinks, not stiffen your pants.

Once upon a time, Disney used to put anyone overweight or unattractive into an unseen job. Their service employees still have a long bible of appearance guidelines, but their weight isn't and really can't be relevant. Vegas gets away with a bit of discrimination that wouldn't exist elsewhere simply because it's a company town and challenges against employers are few, far between, and not quite taken as seriously as they would anywhere else.

But the waitress incident was similar to Wynn's union situation. The one where it's strongly alleged that he was so comfortable in his position of power that said something he legally wasn't allowed to say, causing his "union buster" to resign after seeing what he had to work with.

October 21, 2010 5:00 PM Posted by jinx

Actually Mike_ch overweight isn't a protected status and since Nevada is a right to work state, unless they are union, I'm pretty sure he can hire/fire arbitrarily as long as it doesn't go against one of the protected statuses.

October 23, 2010 2:25 AM Posted by mike_ch

Actually, you're wrong. "Right-to-work" relates to union dues law, wherein an employee is not forced to join a union to work in a given occupation. Right to work means that if you want to work as, for sake of example, a Wynn dealer, you need not join the TWU-based dealer union to work there. Whereas in California, you'd join the union when you took that position regardless of whether you wanted it or not.

Unions complain about right-to-work means that non-union employees get all of the benefits without the obligation of paying dues, but it has nothing to do with reserving the right to fire a worker for any cause.

October 23, 2010 2:32 AM Posted by mike_ch

Furthermore, the CWs sued Wynn over discrimination law and he settled with all of them, so I'm not sure exactly what point you're trying to make here.

October 27, 2010 9:02 AM Posted by BMeek

Good points mike_ch. Game. Set. Match.