Two Way Hard Three | Las Vegas Casino & Design Blog

From Wall Street Journal

May 21, 2007 4:39 p.m. EDT
Tracinda to Enter Into Talks
With MGM to Acquire Bellagio
May 21, 2007 4:39 p.m.

Billionaire investor Kirk Kerkorian's Tracinda Corp. announced Monday that it intends to enter into negotiations with MGM Mirage to purchase MGM's Bellagio Hotel and Casino and City Center properties.

In a filing with the Securities and Exchange Commission, Tracinda said it also wishes to pursue strategic alternatives with respect to its investment in the world's second-largest casino operator, which may include financial restructuring transactions involving all or a substantial portion of the remainder of the company.

Tracinda currently owns 158.8 million shares, or a 56% stake in the Las Vegas-based company, according to the SEC filing.

Tracinda said it has made no decision with respect to any such restructuring transactions and reserves the right not to engage in or approve any transaction.

Shares of the company closed Monday at $62.89.

Updated by Hunter / Tuesday Evening: In an interview with Steve Friess, Bill Weidner from Las Vegas Sands indicated that his company might be interested in The Mirage and Treasure Island if MGM Mirage's properties were to be sold off individually.

Ok - this is getting a bit out of hand. Now, Weidner has actually expressed interest in those two properties in the past. I don't have a link but when the MGM/Mandalay deal was going through, everyone wondered if the FTC would require an asset sale to complete the purchase (they did not in the end). It was at that time he mentioned that LVS would be interested in buying The Mirage and/or TI to include with their portfolio. We know how that story ended.

Of course LVS is interested in The Mirage and TI - and not just a close approximation - these are places that perform very well and have a long established record. I was at The Mirage earlier today for dinner and despite it being a Tuesday, it was quite busy and doing well with occupancy. LVS would do well to score either property but it is so extremely unlikely that there's no point discussing it. Kerkorian's motivations are unknown but it seems more likely that instead of trying to raise cash through selling properties, he's either making a first step toward an LBO for MGM Mirage or it is an attempt to impose a valuation on the company that is closer in line to what he can see as MGM Mirage's rightful place in the market. The latter would be a particularly shrewd move and U'I'm sure we we will discuss these motivations more as we learn more.

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Read archived comments (52 so far)
May 21, 2007 2:07 PM Posted by Dave Lifton

So what does this mean, that he's looking to purchase the remaining 44% of the stock and take the company private?

May 21, 2007 2:10 PM Posted by BrianFey

Yeah, the stock is up 17% maybe I should sell?

May 21, 2007 2:10 PM Posted by Mark D

Wow, the stock jumped $10 in after hours trading.

May 21, 2007 2:28 PM Posted by BrianFey

I don't understand what I don't understand. Does this mean he wants to take Bellagio and City Center private, and then possibly sell off the rest of the company or other assets?

May 21, 2007 2:46 PM Posted by Leonard Stern

detroit: I JUST now heard about this! Will you guys (on this forum) finally believe me when I make "predictions", however controversial, on this blog? I reported K.K.'s unconfirmed intentions months ago when he dumped his G.M. shares for Tracinda's plans. This is only the BEGINNING of Kerkorian's long term strategy, he is expected to acquire the 'equivilant' of Adelson's personal acquired shares (in LVS) in MGM/MIRAGE (in the range of 88%)+ then eventually take the company PRIVATE. Kerkorian will turn 90 years old this coming June. While this might boost the WYNN + others' share price, I'm just happy that I bet the farm on MGM/MIRAGE as opposed to WYNN. Depending on the outcome with the NLRB investigation matter against Wynn Resorts, Ltd., Steve might need to consider permanently retiring + just play golf for the remainder of his career. Oh sorry, I forgot that Kerkorian also OWNS Steve's (previously) most "prized possession", the 'Shadow Creek Golf Course' including Steve's 18th hole manse which was recently sold to the highest bidder. Hey Steve, I'm positive that you + "Kirk" can work out + negotiate some kind of arrangement so that you are allowed on (Shadow Creek) property like, as you falsely reported, when [he] devoured your former money-losing gaming company, Mirage Resorts, Inc. + finally made it profitable. Don't say that [I] didn't report this stuff FIRST here months ago. Stay tuned...

May 21, 2007 3:44 PM Posted by John

I don't understand this. Why buy the two properties, the two flagship properties? Why not just take the company private? I'm really sort of confused as to what Kerkorian's strategy is here.

May 21, 2007 3:47 PM Posted by detroit1051

I wouldn't be surprised to see MGM go private. Would MGM be interested in acquiring BYD and Echelon Place now? With Bellagio and CityCenter divested, would there be any obstacles to MGM taking over BYD even while MGM is still public? They could develop Echelon now and hold the Circus property in abeyance until Echelon is completed. I'd have a lot more confidence in Echelon if MGM were in charge.

May 21, 2007 4:23 PM Posted by Dave

I don't pretend to understand the intricacies of finance, I want to just say that over the past year MGM Mirage has been consciously positioning itself more as a real estate developer and general hospitality company than a gaming operator. Certainly Bellagio would be the company's top casino, but wouldn't the company's best real estate assets be their undeveloped holdings in Las Vegas and elsewhere, and their hospitality management team? So taking the entire company private seems to make sense, as opposed to doing it piecemeal.

May 21, 2007 4:46 PM Posted by Leonard Stern

detroit: As a major shareholder in MGM + NOT privy to any actutal "inside information", I can confirm, through sources, that Kerkorian has NO intention in acquirng Echelon Place or any of BYD's proposed projects in L.V. even though they are 50% partners in the highly successful Borgata in Atlantic City. Word is that MGM has already proposed selling their 50% stake in that A.C. property to Boyd. You can, however, expect MGM/MIRAGE to build an even more spectacular development than CityCenter in conjunction with "major" joint-venture partners based on their recent acquisition of the North Strip property across from the Sahara + the intended masterplan WILL ultimately require the entire demolition of Circus for absolute certainty! The recent cancellations of major competing high rise luxury condos like the "W" + others have caused the residential sales @ CityCenter to be far more successful then originally anticipated + way beyond expectations. Maybe Steve, if he were not so self-absorbed + arrogant, might consider passing the baton to a "new" CEO who has the capability + professionalism of, say, a Terry Lanni + just f*cking retire!!! (Steve, make sure that you ask Kerkorian permission in advance before you tee off @ Shadow Creek, I recently heard a rumor that you are no longer welcomed there!)

May 21, 2007 5:39 PM Posted by detroit1051

MGM's Board will meet Tuesday to discuss Tracinda's interest in Bellagio/CityCenter and the implicatons on MGM:

May 21, 2007 6:03 PM Posted by mike_ch

This is what you do in business. You build it up (aka MGM mergers and acquisitions) and then bust it down. I don't think KirKer is going to buy the whole company because he doesn't need to. He knows what properties have the best potential and what's not worth owning.

I'm expecting MGM to agree to this sale then invest the funds in moving forward the demise of Circus Circus and the development of that property.

Depending on what else stays or goes, they also can combine NY-NY and Monte Carlo to make a fairly sizable resort next to KirKer's properties if they want to go that route. I can't see that happening just because it might be bad PR for NY-NY to implode less than 10 years after 9/11, but MGM is going to have to face that elephant in the room sooner or later.

May 21, 2007 7:18 PM Posted by detroit1051

Something doesn't set right with me.
"The proposal appeared to catch MGM Mirage management off guard on the eve of the company's annual meeting today."
I can't believe there were secrets kept from Lanni or Baldwin. Kerkorian's strength has been the team of Lanni, Murren and Baldwin. He's going to split them off from each other and weaken the synergy? After MGM and Kerkorian's people talk, won't it likely remain one company, but privately held?
This link to Tuesday's WSJ should work for everyone:

May 21, 2007 9:19 PM Posted by hail2skins

Question for you smart folks: How do these gaming companies going private affect the pace of future resort development, if there is an effect? I know a lot of us are fans of monitoring new developments and we have more than enough to keep ourselves busy for the next few years with Palazzo, Encore, PCC, Echelon, Fountainbleau, and the Frontier/Plaza. I just know we haven't heard anything about the Harrah's redevelopment of mid-Strip for quite some time since its "privitazation." What do you guys think?

May 22, 2007 4:21 AM Posted by detroit1051

When the dust settles, I expect Kerkorian to still control all of MGM and CityCenter, but it will be held privately by Tracinda.

May 22, 2007 4:23 AM Posted by Trevor

Hi everyone. First time commenter but long time fan. Here is some food for thought...what could become of MGM's Macau joint venture? I put together an entry at . I think its worth checking out. The entry also talks in alittle detail about LBO finance.

As it pertains to the Las Vegas Strip, here are my thoughts. Why would a 90 year old guy want to LBO the whole company? That would be a huge debt burden and could be enought to send him to the grave. Isnt there a big conflict of interest that the Bellagio/City Center transaction needs to overcome. Its basically Kirk buying from Kirk so how can minority shareholders expect to get a fair price? Do you think that Kekorian foresees a bleak future for his second tier properties such as Mirage, TI, NYNY, MGM, etc with all the high-end capacity coming online in the next few years from Echelon, Encore, Palazzo, Foutaine, and the likes? Maybe he wants to get out before the value drops at those properties from the possible future revenue declines.

May 22, 2007 8:29 AM Posted by detroit1051

"Much like the Fairmont acquisition that has so preoccupied MGM Mirage bosses, Kerkorian could buy Bellagio and CityCenter and allow MGM Mirage to manage them. That way, the company keeps the properties in the family, so to speak - retaining control over those brands and cultivating the brand equity that's critical in the resort business. Kerkorian can pay top dollar knowing that the value of Strip property will continue to escalate."

May 22, 2007 8:48 AM Posted by BillyInLasVegas

We knew something was happening when the top MGM-Mirage and Bellagio brass didn't show up for any of the events during the first two days of the ICSC convention.

I wish I could say more right now.

And this might be a little off topic but this one is more for Leonard Stern, check out Steve's old house at Shadow Creek is for sale
Only 22 Million!

May 22, 2007 9:19 AM Posted by Mark D

Bond holder see things a little differently.
"...fears that buyout firms will come in and load up the casino company with debt (much as they are doing at Harrah�s Entertainment)."

May 22, 2007 9:55 AM Posted by Leonard Stern

There is no doubt that Kerkorian feels MGM is currently way undervalued + Tracinda's purchase of CityCenter + Bellagio are just a precursor to eventually taking the company private. Kerkorian's personal stake in MGM is more than enough to cover a private purchase of BOTH CityCenter + Bellagio. Tracinda's announcement leaves the possibility for "restructuring" of the company open-ended clearly indicating [their] eventual plans to go private. Tracinda's announcement also sent MGM shares surging through the roof this morning gaining a WHOPPING 27%! It also hellped propel all of the gaming sector stocks as well, so you Wynn fanboys can thank Kerkorian for WYNN's current 6.5% gain. WYNN has recently been tanking lately. My money is in MGM!!! Today's a good day for all MGM/Mirage shareholders, to say the least. Let's seee if WYNN can maintain the current gains after all of the negative publicity Wynn Resorts has been receiving lately + shareholders' apparent lack of confidence in Steve as a leader based upon his continued arrogance + possible illegal federal labor law violations that could send WYNN shares right down the toilet. Kerkorian is a damn genius who never even finished high school!

May 23, 2007 1:34 AM Posted by mike_ch

re LVS: If what Leonard says is true, Sheldy can just funnel his billions into this venture. And if the rumors of the feud are as legendary as can be believed, he'll do it simply to deliver a shock to the system to the guy on the other side of Sands Ave.

I'm not as big a believe in the hype. We'll see.

May 23, 2007 9:05 AM Posted by Leonard Stern

This is absolutely unreal. Today's RJ reports that in just ONE DAY, MGM/Mirage's market capitalization jumped from LESS than $18B to $22.7B overnight. Kerkorian's own net worth just jumped by an ADDITIONAL $2.6B in a single day!!!

May 23, 2007 10:09 AM Posted by Mark D

A couple months ago when the Harrah's deal was approved there was some talk that they might have to sell some assets and maybe Adelson would want to buy Harrah's hotel and the IP just south of Venetian, then he could raze those and replicate the Cotai Strip in Vegas.

May 23, 2007 11:17 AM Posted by Leonard Stern

There is no doubt whatsoever that Adelson has been eyeing the Mirage + T.I. for quite some time now. It is apparent that MGM will eventually concentrate on retaining their "glamour" properties [if] they take the company private + when/if Kerkorian personally absorbs CityCenter + Bellagio (as is widely expected). Adelson is absoluitely desperate for additional prime Strip frontage + LVS has plenty of cash to absorb whatever they want, wherever they want. Harrah's existing properties will most likely stay intact after they privatize, but they will definitely need to dump large amounts of their unused portion of the 350 acres they control in order to create additional revenue allowing them to continue to develop their existing properties, which are all performing well. I agree with mik_ch, Adelson has made it no secret that he plans on becoming the biggest pain in the ass + major thorn in the side of Stevie. Considering that Adelson's net worth is almost TEN times that of Wynn's, Steve made a very bold + stupid move by starting this "feud" in the first (I don't think another pathetic 'apology' speech by Wynn to Adelson himself will quite cut the mustard). Adelson is the type of personality that will not rest until he, as an ardent competitor + formidable opponent, sends Wynn packing his bags with his tail between his legs for good in the very near future. I predict that Adelson will absorb both the Mirage + T.I., eventually razing BOTH properties, starting with the T.I. first, + buid a new property which will be equal in scale + concept to say Echelon. I received an e-mail this AM from a fellow Wynn-hater who mentioned an interesting fact; that in ONE DAY OF TRADING Kerkorian's net worth (actually increased by $2.7B) is close to Steve's ENTIRE net worth after almost FORTY years in the gaming business! Food for thought. To Kerkorian, Steve Wynn is like that nasty zit that just won't clear up. To Adelson, on the other hand, Wynn represents a mere "challenge" to overtake + destroy using good old American capitalistic competition. The next few years are sure to prove to be the most exciting times in the history of Las Vegas. Steve should just thank his lucky stars that Kerkorian isn't the type who seeks retribution + destruction of [his] competitors. Maybe the Dalai Lama put in a good word for his good friend, ol' Steverino. LOL

May 23, 2007 11:37 AM Posted by Dave

There is a precedent for KK buying the Bellagio and City Center and then signing a management contract with MGM Mirage, though for much different purposes. In 1961, Del Webb (a publicly-traded company) wanted to increase it's 20% stake in Milton Prell's Sahara and Mint casinos to outright ownership. Since all shareholders needed to be licesned, a few of the company's top officers set up their own management company that paid an annual rental to a Del Webb subsidiary that equalled its profits.

Traditionally, regulators tended to tolerate lots of this stuff when clean--or big--money was involved: that's why Howard Hughes was allowed to buy 7 casinos without ever appearing before the Gaming Control Board.

If this kind of background interests you, check out my book Suburban Xanadu--that's where I detailed the Del Webb stuff.

As far as this buyout goes, I think that, as Detroit said, the real value in MGM Mirage is the management team, and splitting it up doesn't make much sense, at least from the outside.

It seems that we're at a transition period much like the early 1970s, with private equity gradually pushing out publicly-traded companies, just as the public companies displaced the closed syndicates of the previous generation.

May 23, 2007 12:12 PM Posted by Leonard Stern

Hey Dave: In a related topic, you probably already know this, but my father had an original ownership stake in Del Webb's Sahara (as well as other Del Webb properties) + ended up also personally owning an 8 1/2% partnership stake in the Aladdin Hotel under Milton Prell's reign in the mid-late 1960's. Unfortunately, those days are long gone allowing for architectural "fee-swapping" in exchange for equity partner ownership (back then as long as it were less than 10% the NGC did not require licensure). My father didn't become a wealty man due to revenue generated from architectural fees, quite the contrary, he always complained on losing money on every project he designed. Today, an architect-designed/owner-operator is limited to the likes of Tony Marnell.

May 23, 2007 12:51 PM Posted by trewil

Ok... So this is the basic way I see/understand the MGM issue. Big K has this desire to take total control of the company, and as he has tried to do in the past wants to increase his stake in the company to a Wynn/Sands level. In the past when he has flat out attempted to buy the stock he has been unable to get a sales volume which would give him the number he would like...
So this latest move is just the latest attempt to gain more control in the company. Tracinda cannot just up and buy the two properties from MGMirage, short arm selling property from a corp. to its major investor is very difficult to accomplish due to legal restrictions. So Tracinda must have other motives behind this filing.
It seems to me that it is an attempt to strong arm the investors into selling the remaining 44% of the company. This leads to two possible outcomes: Tracinda buys back the remaining shares and takes complete control, or a third party partner comes in a purchases the remaining shares and splits the company into smaller private companies (the company is already structured in a manor that makes that easy from a management standpoint, don't forget about Mandalay).
I wouldn't be surprised if something different happens however, I kind of feel that MGMirage may split into two companies, one a Tracinda lead land development company and the other will become more of a Starwood type management company, controlled by Lanni (at least until 2010 when he announces he�s leaving to run for President, but more on that later). After all with all the recent partnership deals MGMirage looked as if it may be expanding by management anyway. The question is does Lanni have the money to by the remaining 44% on his own or would he need help (say a 50/50 joint venture between Lanni and Tracinda maybe)?
Obviously the timing of the filing was engineered by Tracinda to get the investors all worked up before the meetings, and it appears to have worked with MGMirage announcing today it will look into the filing (as if it had a choice). PS I don�t think Lanni was as surprised by the filing as he is letting on either, but what do I know I'm just a dumb college kid.

May 23, 2007 2:46 PM Posted by Brian Fey

Leonard, Sheldon is no dummy, you are right. However, I say he dies before he is could possibly take Steve out in LV. His health isn't the greatest. As for Kirk, Hell, I am not even sure he's human. He might just be a robot or something. Has any other Billionaire, kept doing multi Billion dollar deals when they were 90?

May 23, 2007 3:19 PM Posted by Leonard Stern

trewil: First of all, Steve Wynn does NOT personally have a majority contolling interest in WYNN as an 'individual shareholder', as does Kerkorian in relation to his stake in MGM. Wynn's ONLY chance at moving forward with his original IPO was to lock-up an agreement with what amounts to a "straw" multi-billionaire equal joint-venture partner, i.e. Kazuo Okada! BFD, Okada has been awarded the title of "Vice-Chairman" of WYNN, who continues to not only be a SILENT PARTNER, but allows Steve to call ALL of the shots. BTW - Okada himself + his 'monopoly' gaming device company ARUZE were under criminal investigation + indictment for tax evasion, among several other criminal charges in his native country of Japan. Subsequently, these charges were dropped, allowing for Okada's unlimited gaming licensure here in Nevada to be approved. Okada is nothing more than Steve's PUPPET + that has a lot of WYNN investors seriously concerned. Had Okada not been granted licensure, there would be NO Wynn Resorts, Ltd. today! There doesn't exist ANY other multi-billionaire foolish enough to become an EQUAL equity partner with Steve Wynn + simply stand on the sidelines. That explains the fact why Jack Binion bailed as fast as he could even before Wynn Macau even opened for business. Jack is a multi-billionaire himself + probably one of the best "seat-of-the-pants" gaming operators in the entire business with the ability to bring in the Chinese 'whales' that Wynn so desperately needs to survive in Macau. Secondly, there still exists a whole lot of controversy regarding the reputation of the Okada family + their long history here in Las Vegas (dating back to the early 1990's). His very own brother, committed suicide (or should I say "hari-kari") right here in his southwest Las Vegas home over rumored reports of a criminal investigaton in connection with a "supposed" defunct, but still active gaming device concern that the feds believed to be an alleged money-laundering operation. Unfortunately, after Okada's brother's suicide, the feds dropped the case. Steve is sleeping with the enemy + now that he might become a new target for the feds, since he has [them] crawling up his ass with these serious NLRB charges. It doesn't exactly make Stevie the best choice for being voted "gaming operator of the year"! I also predict that the coveted 5-Star rating, which WLV was recently endowed with, to be demoted within the next year - guaranteed. He has lost ALL respect from his employees + as soon as the newer competing properties are launced, Stevie will be faced with having to hire second tier level unqualified staff.

May 23, 2007 4:43 PM Posted by Leonard Stern

Brian: I first met Kerkorian when I was only 13 years old, that was in 1967 when [he] had recently commissioned my father to design the International Hotel, which was then, the biggest resort hotel in the world. All I remember is that my father held a "really big" birthday party for Kerkorian, that included major Hollywood luminaries at the time, such as the late Cary Grant among dozens of Kerkorian's personal celebrity friends like the late Robert Mitchum + many, many other top Hollywood stars. Since I was a "budding" professional photographer at the time, I was elected to be the official (unpaid) photographer for the entire event which had an attendance of over 250+ people. What I remember most, like it actually occurred yesterday, is my father had hired a belly dancer to actually perform, what is equivilant to a 'lap dance', for Kerkorian. I remember taking hundreds of pictures of the event with my two bulk-loaded motor-driven Nikon cameras. Kerkorian's face turned as red as a beet + she didn't stop the lap dance for at least 20 minutes or so, but at 13 years old I had NO idea of the significance of what was going on. I don't believe that Kerkorian has ever been so publicly embarassed ever since (in a good way), but nonetheless my father really knew how to throw a party! Several dozen guests (no, not Kerkorian) ended up jumping into the pool, fully clothed with their jewelry + all). Imagine what I could sell these images for today to like TMZ! If you think that @ 90 Kerkorian has reached the end of the road, think again. Not only has he recently lost his most trusted long time partner from the early 1960's, plus Fred Benninger's passing, Kerkorian will continue to thrive + achieve his one cause, deal maker + "owner of the Strip". Ask yourself why Kerkorian doesn't have a need to exhibit the narcissistic behavior of Steve Wynn, because all he cares about is the art of making the "deal". For Christ's sake, as I reported here before, Kerkorian drives around Beverly Hills in a f*cking Jeep! If you think that @ 90 yearts old he is finished, you had better think again. Adelson's health might not be the best (but Kerkorian still plays tennis several time each week), however, Steve's degenerative gradual blindness will ceratinly be a far worse curse. I have been told, by experts, that Steve has only a few years left before his peripheral vision will reduce his vison to near ZERO.

May 23, 2007 8:07 PM Posted by Pikes

This was an interesting thread!

May 23, 2007 8:51 PM Posted by Chris B

Let's not forget that despite Steve's stupidity, limitations, lack of vision, ineptitude, selfishness, delusional behaviour etc etc WYNN stock has gone up roughly 900% since IPO less than 5 years ago - so "poor" Okada hasn't exactly done too badly out of this. Unless of course he's completely locked-in for the long term and Steve drives the company into the ground, which it seems you think is a dead-set certainty.

May 23, 2007 9:36 PM Posted by Mark D

At first I was kind of wondering if this was just a ploy to boost the stock price up where it should be? Kerkorian has history of making buyout bids for companies that he has a stake in but the stock is underperforming, and subsequently the stock goes up. GM and Chrysler for example. Probably not though, because this certainly presents a lot of logical options for MGM/Mirage, so there probably is more to it than that. For instance, if they split the company between real estate development and gaming management, then they might be able to keep the Atlantic City property if their Macau partner is found unsuitable by the New Jersey Casino Control Commission. Currently, Boyd has right of first refusal on that land if MGM/Mirage is forced to exit that jurisdiction. Also, such a split might help them gain the partnerships they need for the chain of nongaming hotels they want to build around the world.

May 24, 2007 12:12 PM Posted by trewil

Thank you for clearing that up Mr. Stern, I must say I wasn't aware of that. I don't watch/study Wynn very carefully as I am not an investor. Personally I think it�s over-inflated, too much debt and way too much invested in hospitality in Macau. People are not there to stay in the hotel or drink, they are simply there to game and it�s going to take more then Wynn to change that part of the culture.

May 24, 2007 12:20 PM Posted by motoman

Pikes, I agree!
Wow. Mea culpa. Forget I ever mentioned jumping the shark; this discussion has been fascinating, with many new contributors chiming in.

See how nice it can be when information trumps attitude!

(PS--wasn't there a thread here awhile ago, about companies splitting their casino/hotel management and real estate operations? Sounds familiar, and now here we see a possibility for it to happen.)

May 24, 2007 12:20 PM Posted by Leonard Stern

Well Chris B, "let's NOT forget" the fact that when Wynn was at the helm of Mirage Resorts, its share value DROPPED, under his tenure, by TWO-THIRDS market capitalization before Kerkorian came in + saved the day for investors, including myself. Let's see that translates into something like a 66% decline, Hello! Currently, WYNN has already given back + retreated 50% of its recent share price value gains after benefiting from Kerkorian's announcement. MGM is down less that 1 point. Steve Wynn is a complete fuck-up + I stick with my prediction that WYNN will eventually TANK, all due to his stupid arrogance. Chris B, history has a way of repeating itself. BTW - For those of you that inquired earlier about David McKee's column in the Business PRESS, it appears that the world's most litigious, sight-impaired (blind), ego-centric, narcassistic + self-absorbed BULLY has evidently "put the breaks" by releasing his leagl army of overpaid Pit Bull attorneys assuring that any further "negative" Wynn pieces on behalf of contributing/staff editors appearing in future Business PRESS articles will no longer be published.

May 24, 2007 8:13 PM Posted by Brian Fey

Leonard, I think in some cases you know what you're talking about. I think you do have some good insight into the business. But when you get on this site, and post bad info, I have corrected you, and will keep doing so. I will not let you mislead others with bad information. Wynn has given up %50 of its gains this week, but you state MGM has only slid 1 point. That is totally and completely wrong. MGM stock hit $82.25 on Tuesday. Since that time the stock has slid down to $76.76. I don't know where you took math, but in Missouri, that is $5.49. Which I might point out is more in both dollars and percentage than Wynn has fallen. You can hate Wynn, and bash him all you want. But the second you post false information to make things look worse than they are, for your personal goals and pleasure, then I will correct you, over and over again. You might have met your match. You see... Imagine how deeply you hate Wynn Resorts, well, I love them twice as much!

May 25, 2007 11:54 AM Posted by Leonard Stern

Brian: You are welcome to correct me ANYTIME you wish on the "numbers". However, lets do the present math at the moment, current trading share price for WYNN, down almost two points to 94.75 (I believe the share price before its run-up after the announcement by Kerkorian was @ 90! Presently MGM is down one-third point @ 76.44. So percentage wise, WYNN is retreating far faster than MGM + has indeed lost 50% of any gains it benefited from by the Kerkorian proposed offer. It is likely to continue to retreat to 90 or below next week after the holiday.

This is for both Chris B + Brian, which pretty much echoes my OWN predictions re WYNN:

Morningstar�s Most Recent Commentary/Analysis of WYNN (@ the end of February 2007) Long-term view:

Associated Risk Factors: �Wynn Resorts carries �substantial� risk. The firm is �highly leveraged�, and any significant cost overruns in its Las Vegas or Macau projects could be devastating. �Wynn�s properties must live up to very high expectations to avoid financial problems, though the Macau subconcession sale has alleviated much of the balance sheet risk.�

�Wynn has taken on an enormous amount of debt supported by very little cash flow. A disruption of either of its properties could trigger liquidity problems. High-end competition on the Strip is intensifying and a host of upscale capacity is scheduled to come online in 2007. The company depends �a great deal� on Steve Wynn. Not only is he the visionary and prime fund-raiser, but his departure for reasons not related to health can trigger accelerated debt repayments.�

Financial Health: �Wynn is highly leveraged, with about $2 billion of debt on its balance sheet as of year-end 2005. Leverage will remain high in the near term, but as Wynn Las Vegas and Wynn Macau hit run-rate profitability and Encore opens, debt should be manageable. The windfall from the Macau subconcession sale does wonders for Wynn�s financial health, in our view.�

Profitability: �Wynn was a development-stage company until Wynn Las Vegas opened in April 2005. We expect debt payments and depreciation expenses to �strain� profitability in the near-term, but cash flow should be strong.�

Management: �Compensation is �high� on an absolute basis, but on par with that of other large casinos. We�d prefer to see the positions and chairman �separated� and the board of directors declassified.�

May 25, 2007 12:14 PM Posted by Leonard Stern

OK, so Brian: While I am 100% ABSOLUTELY CORRECT that WYNN gave back 50% of any gains they benefited from, I "officially" for the record correct + otherwise retract my "1 point" comment to accurately reflect precisely "5.45". BTW - I attended U.C. Berkeley, School of Architecture and maintained a consistent 4.0 GPA. Back then in the mid-1970's I owned one of the very first HP state-of-the-art engineer's calculators + I guess that my math skills much have sufferred somewhat since then. Current score: Brian - 1, Leonard - 0. The game's not over yet Brian. :-)

May 25, 2007 7:09 PM Posted by Chris B

Not sure how you calculate Mirage's share price dropping 66% over the course of Steve's 27 year tenure - or maybe you mean dropping 66% from its peak? I don't know Steve, I've never met him, and I don't care either way for the strong opinions (good + bad) expressed about him on this site, but I can form an opinion about numbers. In the 5 years since Wynn's IPO, MGM has gone from $20 to $76 while Wynn has gone from $10 to $94.

You've got some great, insightful opinions Leonard, but I think you lose a bit of your impact when you make illogical, emotional remarks about objective things like numbers. So you can feel free to label Wynn a fuck-up because of a prediced future tank in the Wynn share price, but the very simple objective fact remains that in the 5 years up to today Wynn has returned $84 on a $10 investment (840% return), which is precisely 3 times the $56 on a $20 investment (280% return) that MGM has delivered - and that is even after MGM's leap from $62 to $76 over the last 4-5 trading sessions (go back a week and the comparison becomes even less flattering for MGM).

May 25, 2007 9:26 PM Posted by Hunter

Thanks to Brian for this link:

May 25, 2007 9:33 PM Posted by Leonard Stern

Chris B: It's actually really quite simple, do the math for yourself, under Wynn's tenure of Mirage Resorts, Inc. (MIR), no not during the time that he was CEO of Golden Nugget, Inc., which was privately held until 1991, share price value went from over $30+ per share to around $10 per share in 2000 when Kerkorian finallay offered $21 per share as a non-negotiable leveraged buyout. Steve's COMPLETE B.S. statement that he + Kerkorian "agreed" to work out a "deal" between themselves is utter crap!!! Yes or no? I am referring to Mirage Resorts, Inc. drop in market capitalization by "two thirds" from its peak in the early 1990's until Kerkorian absorded it for over TWICE the [current] share value price, when Steve's personal holdings amounted to less than 12% + the shareholders collectively kicked his ass right out the front door handing Wynn around $510M in cash. Wynn should be kissing Kerkorian's ass - big time! Chris, you are forgetting the fact that MGM had also subsequently SPLIT after absorbing Mirage Resorts, Inc. Now, YOU do the math + figure out the valuation of WYNN vs MGM!!! Chris B, you need to understand that Golden Nugget, Inc. was a struggling privately held corporation until 1991, when Wynn first had no choice but to go public in order to raise the funds, with the help of a soon to be convicted felon, Michael Milken, in order to raise the junk bonds that Steve so desperately needed to construct the Mirage in the first place.
The fact that Steve Wynn STILL retains a personal relationship with a known + convicted felon (Michael Milken), is a direct VIOLATION of [his] unlimied NGC license.

May 26, 2007 5:23 AM Posted by detroit1051

Leonard, I'm repeating myself, but Steve Wynn is responsible for my interest in gaming companies. When I saw The Mirage site (an empty plot of land) and learned Steve was going to build Las Vegas' most unbelievable property in its history, I bought Golden Nugget (GNG). As much as I like all of Steve's properties, both former and current, I agree he forced the share price downward. MIR should have been $50+ at the time Kerkorian took it out at $21.
Regarding your statement about Milken, are you sure it's that black and white? If there is a violation, why hasn't it been pursued?

May 26, 2007 8:11 AM Posted by Leonard Stern

detroit: I'm 100% positive - please don't make me look up the NGB regulation(s). Any holder of an "unlimited" gaming license (such as Wynn) is NOT permitted to associate, either personally or in a business relationship, with a 'known convicted felon'. The reason that the NGC has not taken any action is because it is STEVE WYNN, plain + simple!

May 26, 2007 9:00 AM Posted by Leonard Stern

detroit: Former Clark County Councilman Steve Miller even makes mention of Wynn's association with Milken in this older article (towards the bottom). Not only is it in violation of NRS, but additional language regarding "ethtical" conduct + behavior by unlimited gaming licensee holders include not "associating with known convicted felons". Obviously, it is clear that "other" operators in the past either had their license suspended or permanently revoked by associating with known felons. Clearly, the NGB "cherry-picks" what individuals they choose to enforce this violation against, + obviously Steve apparently is immune from any such "enforcement."

May 26, 2007 6:01 PM Posted by mike_ch

I wouldn't trust that guy on issues like this. Miller is one of these guys that likes to go on at length with conspiracies about how the casinos are running the government, the media, the internet, etc.

I mean, sheesh, give us all a clue and put on a tinfoil hat first.

May 29, 2007 1:48 PM Posted by Mark D

Interview with Gamal Aziz who will be heading up MGM's new non-gaming hospitality division.

May 29, 2007 1:58 PM Posted by detroit1051

Mark, thanks for the article. Aziz deserves a lot of credit for successfully transforming MGM Grand into the property it is today. Also, since MGM has previously said it will initially focus on non-gaming resorts in Abu Dhabi, Aziz will be helpful. He grew up in Cairo and certainly understand the Middle East better than most. The LV Sun story said he will continue to head up MGM Grand. I bet they'll replace him as soon as they identify the right person. The non-gaming resort position will be more than a full time job.

May 29, 2007 7:12 PM Posted by Leonard Stern

Hey Chris B: Sorry for my late response. BTW, Wynn did NOT have a "27 year tenure" over Mirage Resorts, Inc. Mirage Resorts once enjoyed an all time high, even with Steve at the helm, of a few points less than $30/share. At the time when Kerkorian came in + purchased Mirage Resorts outright for $21.00/share, MIR was currently trading at around $10.00/share! You do the math for yourself!

June 10, 2007 3:49 AM Posted by detroit1051

Happy 90th Birthday, Kirk!

June 10, 2007 10:26 AM Posted by Leonard Stern

detroit: That was an excellent piece about Kerkorian in the RJ. I'll bet he will still be going strong at 100. I have to laugh at the fact that even Steve "bows down to the man" + practically kisses his feet! Steve Wynn, you are NO Kirk Kerkorian that's for sure + you will NEVER even approach the level of [his] vision, tenacity + business acumen, even at the end of your own career (which hopefully won't be too far-off)!

June 11, 2007 9:41 AM Posted by Glibster

"share price value went from over $30+ per share to around $10 per share in 2000 when Kerkorian finallay offered $21 per share as a non-negotiable leveraged buyout." are ignoring a simple event that comprised 50% of that drop. In February 2000 there was a 2 for 1 stock split that cut the stock's nominal value in half.

June 11, 2007 3:16 PM Posted by Leonard Stern


MGM closed trading today at a mere 1.56 points less than their 52 week high of 84.02. MGM is continuing to hold its share price position ever since Kerkorian�s proposal to absorb both CityCenter + Bellagio which drove the stock up 27% in a single day.

That being said, WYNN, on the other hand, closed today at 20.27 points BELOW their RECENT 52 week high of 114.60. My brother, who happens to be a prominent + highly respected CPA, gaming sector analyst + auditor, has always been bearish on WYNN + bullish on MGM from the very begining. I will admit to, other than my substantial investment in MGM which [he] had advised, I completely ignored [his] other investment recommendations because of sibling rivalry + my own independent stubbornness. Thankfully, I DID listen to his advice + invested heavily in MGM way before the split. I will admit to subsequently losing my ass based on my OWN choices in "other" public gaming company stock picks at the time. This does not necessarily mean that I am willing to concede to the opinions of my own brother, but I have to admit, he certainly called it when it came to MGM!.