Two Way Hard Three | Las Vegas Casino & Design Blog

April 14, 2011

Kerkorian leaving marks end of era

Posted by daveschwartz

Kirk Kerkorian is stepping down from his position on the board of MGM Resorts International in June. It's a significant milestone for Las Vegas gaming, since he's one of the few remaining links with pre-corporate gaming.

Kerkorian owned a share of the Dunes in 1955, but really got involved with the industry in 1964, when he agreed to lease land he owned across from the Flamingo for the construction of Caesars Palace. For a while he was Caesars' landlord, and even had an office in Caesars after its 1966 opening, but he decided to sell the land to Caesars and focus on building his own casino hotel.

So in 1967 Kerkorian did two things: he hired architect Martin Stern, Jr. to begin building the International, whose tri-form hotel tower set the template for the next generation of Strip casinos, and he bought the Flamingo to train the staff who would run the International, which was slated to be the world's biggest hotel, and have the world's biggest casino floor.

It's worth noting that members of the group that Kerkorian bought from were later convicted of skimming money and hiding Meyer Lansky's stake in the property, so this represented a real changing of the guard. A few years ago I interviewed Alex Shoofey, who Kerkorian hired away from the Sahara to run the place, and he spoke about the challenges of making the transition from the old school to the new school--a process that would continue until the Boyd Group's purchase of the Stardust in 1985.

Kerkorian opened the International in 1969, and it was the first of the second generation casino resorts, which integrated every aspect of the resort into one large tower-and-podium structure. After selling it to Hilton in 1971/72, he built the first MGM Grand, which was at the time the world's largest hotel, selling it to Bally's in 1986. That same year he organized MGM Grand, Inc, and for the next few years owned a few casinos, including the Sands, Desert Inn, and Marina--the last of which was incorporated into the new MGM Grand that opened in 1993 as, again, the world's largest hotel.

From this point on, most people are familiar with the MGM Grand/MGM MIRAGE/MGM Resorts story, so I won't rehash it, but I thought it was important to point out Kerkorian's constant involvement with the industry since 1967. With him leaving it in June, Steve Wynn is the senior figure in the Strip game--he first got involved in 1967 at the Frontier, but really started making a mark on the business at the Golden Nugget in 1973.

Even though Kerkorian isn't the same public presence as Wynn, Adelson, or even Loveman, he's hardly an absentee owner, and his stepping down from an active role on the board of MGM Resorts really does signify the end of an era.


Read archived comments (3 so far)
April 16, 2011 7:47 PM Posted by Amar Chhabra

Dr. Dave,
Just wanted to get your perspective on the following. As time has elapsed Kerkorian seems to have given more and more leeway/control of the operations of the company to his appointed CEOs, particurarly Terri Lani and Jim Murren. With Kerkorian stepping down from the board, well ok he's taking a "retired" position in which he won't be voting, what do you see happening to the CEO seat? Do you see the non Kerkorian Board of Directors keeping him or do you see a replacement? Murren did not come from the gaming industry where as Bobby Baldwin seems to have. Do you see Bobby being given the CEO seat anytime soon?

April 16, 2011 8:32 PM Posted by Hunter

This is an excellent question.

Murren's been somewhat controversial as CEO, given the performance of the company and it's execution on CityCenter (though in his defense, these have been turbulent times).

Kerkorian seemed like a solid voting block for Jimbo. Will that remain to be the case?

April 16, 2011 8:44 PM Posted by Dave

That's a great question that it's difficult to answer, unless you've got a hidden tape recorder in the boardroom.

I don't see much chance of Baldwin getting the top spot--gaming companies generally don't go for people from the operations side in that position these days. Murren's managed to deliver CityCenter (partially on time and not quite under budget, but it's mostly open) and has managed to buy another 2-3 years from the debt-holders. To me that says he stays for the time being.

The things that most of us would consider grounds for looking for new leadership are, unfortunately, not things that matter to most stockholders.